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If you watch any of the shows on stock market television with real traders then you have heard them say on more than one occasion something like "we bought at the low in the after hours yesterday" or "we sold at the high two days ago." Well this isn't one of those stories.

In past posts I've talked about one reason for selling being you are simply wrong. Maybe wrong about just one thing or maybe several but turning out to be wrong one way or another is one reason to sell. It is not possible to be correct on every position. Everyone will get some number of decisions wrong, this turned out to be wrong for us and we will be wrong on other things in the future.

A while back we bought the Market Vectors Coal ETF (NYSEARCA:KOL). The basic idea was an expected long term increase in global coal demand and to add some volatility to the portfolio. I was also favorably disposed to the country make up of the fund.

While demand is likely to increase over the long term that was never going to be a one way trade of course but I believe I underestimated the extent to which short term visibility for lower demand would pulverize the stocks in the group. In a similar vein I believe I also underestimated the extent to which the group would go down in the face of signs of an economic slowdown.

The general path of the fund since we bought it was that at first it went up nicely (that is good), then it backed off a little in line with the market last year (this is not necessarily bad) and then it mostly kept going down as the market went up earlier this year.

Recently I laid out an argument for 2013 being a down year based on how long GDP has been positive and how long the stock market has been going up. In the last few weeks the market has come back down some and so if my 2013 thesis turns out to be correct but is actually starting early and we go on to breach the 200 DMA then KOL would have been the first thing sold. Given what appears to be a murky short term outlook for coal I think that if a 200 DMA breach is coming then we'd just end up selling KOL five points lower than where we actually sold it yesterday. Of course in hindsight it would have been preferable to have drawn the same conclusion two weeks ago and for all we know maybe the next five points will be back up.

As I said above this one just turned out to be wrong and it won't be the last one in my career. Generally it should be easier manage holding that turn out to be bad holds when you realize ahead of time that this will happen now and then; it simply goes with the territory. This is also a reason to talk about position sizing. We can't know what we will be wrong about otherwise we would never buy. So if you know the occasional position will be wrong and you don't know which one it will be then you have to be very mindful of position size and the potential consequence of being wrong.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.