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Facebook: Postmortem for a Bear With Psychological Problems

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Facebook reported better-than-expected earnings after the close yesterday.

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So why did I pass up easy money to swing for a homer on the short side?

Because I wanted to hit a big home run instead of going for a high-probability single. In fact, as the clock ticked down to 4:00 p.m yesterday., I was strongly considering buying some Facebook calls to turn my position into a straddle. I'm not exaggerating this at all. I had buy orders entered literally at 3:59:45 p.m., but I failed to pull the trigger.

But no, I wanted to be a big boy swinging for the fences instead of the single.

And as we all know now, that high-probability single turned out to be a grand slam.

Compounding my frustration is the fact that throughout 2012, my most consistently profitable short-term trades have come from speculating on underreactions or overreactions to earnings reports on momentum stocks!

Now, I've always felt that this type of public mea culpa was slightly self-aggrandizing, as if to say, "Ooh! Look at how modest I am!"

However, there are lessons to be learned here.

Know thyself. Do your best to monitor your emotions, so you can get some sense of when you're crossing over to a land of irrationality, and counteract it.

And in terms of actual trading, never pass up easy money in the chase for big money, because the easy trades are few and far between.

Twitter: @MichaelComeau

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Position in AAPL
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