Finally read a book

20th August 2015 and I'd been looking at OCDO:Ocado. I'd never heard of them before, but since buying the shares I've noticed their vans more often. There seemed to be some concern that they may be affected by competition from Amazon Fresh, which was about to be introduced to the UK. However there was also speculation that Amazon couldn't be bothered setting up their own systems and may just buy out Ocado.

I added another £350 to my account, and bought 227 at 371.796p. With commission and £2.36 stamp duty that came to £487.04

It was not long after that I decided I really need to know more about what I'm doing, so I downloaded The Naked Trader by Robbie Burns. With hindsight, I should have done that before buying any shares, although fortunately I don't think I did anything too catastrophic as a result - just a few daft things that taught me a lesson early on.

The book opened up my eyes to what spread was, what market cap meant, and the importance of research. It also gave a few good pointers - like avoiding too much debt and spotting over-priced shares.

This was great - I could  set up a spreadsheet and start putting summary stats in it. Naturally I was horrified when I saw the state of Glencore's debt, and realised that blindly buying shares just because they were at their lowest prices ever wasn't a sure fire way to make money.

The book also had a mantra given many times over - that you have to lose money in order to make money. I discovered what a stop-loss order was. I didn't want to risk an odd market movement selling my shares prematurely, so instead set up a stop-loss column in my spreadsheet that would turn orange when the share fell to 15% below what I had paid. Glencore was already well past this, but it was too late to sell - I was determined to see that one through the roller-coaster.

However, Ocado had been plummeting. It triggered the 15% stop-loss on my spreadsheet at 332.76p and so I decided to sell my first shares. They sold at 320.12 and with commission I had lost £92.99. I had very mixed emotions. Partly relief that they couldn't fall any further, and partly misery that my attempts at making money with shares were already in the red, with the threat of Glencore making things worse.

Ocado shares are currently selling at 370.7p, just 1p less than I paid for them. Why didn't I hold on? There was no particular reason why the price had gone down, other than the market was generally down at the time. I realised that I am not a day trader - although there are messages to take from the book, selling out automatically at 15% loss isn't the right thing to do unless there is a clear reason why the price is dropping and is likely to continue dropping.

From now on, I will do as much research before selling the share as I do when buying. If there's no reason for the drop, then I will hold.