Reminder On Why I Quit Equities

Comfort Delgro Daily

The above chart is a good reminder on why I quit equities. To me the equity market is just a freaking mine field if you do not have insider information. You can be the best technical analyst and it will not save you from ridiculous unexpected events that can severely damage your account overnight. So take the above chart for example, supposed you manage to catch either of the breakouts. You decided to implement a trailing stop and as the stock climbed so did your profits. Your stop is far above breakeven and you know that profits are secured. All of a sudden, this news occurred. A major shareholder decided to offload its stake. The stock gapped down 12% overnight, erasing almost all of your profits if you were in since the first breakout and taking you out for a loss if you took the second breakout. $*!&%*??!!

Now what do you make of it? How could you have avoided it? Mind you this is not an earnings report kind of news which one can avoid because he knows the date. There is absolutely no warning! And if you were to say "Oh well shit happens, as long as your method is sound you'll make money over time", I say to you "If my method is sound, why the heck would I not use it on Forex, Futures, or some instrument where I do not even need to worry about such ridiculous events?!" If you can make money on equities, I really don't see how you cannot make a lot more on other instruments simply because you lose a lot lesser on stupid events. Overnight gaps suck big time, and no one deserves to be a victim of it just because of some totally unavoidable news. Sure the news might cause price to gap in your favor and if you love excitement and don't mind a spiky equity curve, go ahead stick to stocks. I prefer my equity curve to be smooth. Besides, I realized that when price gaps in my favor, I only feel good for a while, but when it gaps against me, I get really annoyed and my psychology/emotions get pretty affected.

If you think this is a rare occurrence, do some research and you'll realize it is NOT. Companies suddenly getting investigated for accounting inconsistencies, announcement of property measures (I got caught by this three times, yes I'm that unlucky), various sorts of rumors, you name it... The equity market is a mine field. Of course, it could simply be because I am not skilled enough to spot signs like hidden selling.