Panic when you're trading is crap, not when good trades fail to work out. Well, I made good trades this week. They didn't work out and I lost money. I'm meant to say, "c'est la vie, monkey boy". Only I'm not. I've taken a hammering over the last few weeks and it's taking its toll. What to do next? I'll come to that later. Let's get the trades out of the way first.

Ebay took a dip after reporting earnings last week, dropping from $41 to $38. The company beat estimates and raised on guidance but the market had been expecting as much. Some concerns were also raised about its revenue growth and a couple of analyst downgrades saw traders take profits after a very strong September.

Anyway, the stock's uptrend remained intact so I was looking to buy on a test of technical support at $37.

The stock's 50-day moving average was also nearby so I had no hesitation when some pretty vicious selling took Ebay down with it over the following days. The stock's response was disappointing, to say the least. I was underwater from the very start and got stopped out on Wednesday after the stock broke $35.50.

IBM was an almost identical trade. It too dipped after reporting earnings and it too had decent technical support.

Completing the 'it too' trilogy, it too failed to hold. I bought at $115 only to get quickly stopped out after the stock breached $113.

It may sound like my stop order was too tight but IBM is a slow-moving stock.

Besides, it went as low as $109 so a loose stop wouldn't have done the trick in any case.

I also bought into the Dow after some savage selling (a one-day drop of 300+ points) brought its 50-day average into play. I thought the selling was overdone and was expecting a snapback rally.

Obviously I underestimated the panic because the market opened another 100 points lower the next morning and came very close to stopping me out.

I was very, very tempted to add to my position. Brett Steenbarger (www. traderfeed. com) published some fascinating research that morning which showed that the odds of a partial recovery were extremely good. However, this would have meant breaking a couple of my rules . . . first, averaging down on a losing position, and second, risking more than 2% on an individual trade. I passed on the trade and exited when the Dow rose back to my entry point.

I was relieved not to lose money but angry that I didn't obey my instincts. The Dow rose almost 200 points off its low that day, so I'd likely have made a profit of at least 1,500. Strict adherence to the rules is a good idea for newbie traders but I'm pretty experienced at this stage.

Every now and again you have to throw a bit of caution to the wind. Who knows, maybe my 'rules' were just an excuse and maybe I was just too chicken after my recent string of losses. In any case, I've resolved to become a bit more flexible with such trades. Averaging down on a losing position is a bad business but it's forgivable in certain circumstances.

This was one of them.

My final trade was a day trade on Wednesday. The Dow was under pressure all morning and sold off heavy before enjoying a minor rebound mid-morning.

Thereafter, it settled into a tight trading range. My tactic was simple . . . buy on a break to the upside or sell on a break to the downside. The downside break came and the trade went my way initially before suddenly reversing on me. I got stopped out when it broke the upper reaches of the aforementioned range. I should really have gone long at this juncture . . . after all, that was the initial plan and the index went on to soar 150 points in the final 90 minutes of trading.

That would have more than made up for my earlier loss. I was too busy cursing and complaining, however.

So that's that. I've now lost 8,000 in the past three weeks. Obviously, I'm still well ahead of my original starting point of 25,000 and losing streaks are a fact of life in this business. I've gone through many lean periods over the past year and have consistently bounced back. To give a distressingly corny analogy, if I were a stock I'd still be an up-trending one. I'd probably be dipping down to my 50-day average or something like that.

That's not much consolation though.

There's been a lot of volatility in the past few months and that should suit the short-term trader. Not only have I not capitalised on it, I've endured a profits famine to boot. Clearly, I'm not doing things as well as I should be.

I'm strongly considering withdrawing my profits and starting afresh. I like the thought of banking those hard-earned spondulicks. It also makes a certain amount of sense to play with smaller sums when you're trading poorly. Maybe I'm overreacting, maybe a recovery is just around the corner. I know some traders increase size during a losing streak on the assumption that a winning streak is not far away. I have grave doubts about that though. So does Mrs Monkey . . . she hasn't been enjoying my recent columns for some reason.

Frequently, losses beget losses. If ithdrawing some winnings allows me to trade more fluently, so be it.

Weekly gain/loss: . . . 2,700
Overall balance: 42,800

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Market Monkey is a recreational trader trying to expand /25,000 to /100,000 so he can give up the day job and trade full-time.
Send your thoughts or questions to marketmonkey @ tribune. ie, with 'Monkey' in the subject line