Ever entered into a trade and wondered why you did it? I don't mean regret after you see the trade going against you. No. I mean regret it as soon as you click on that place order button.
Take my FAZ trade today for example. As soon as I placed the trade, I asked myself - Now, why the hell did I do that? Well, I didnt know then and I dont know even now. I cant show you any charts to back my entry. Cant say that it was through any news. Cant defend myself by saying that I was reading the tape. But the bottom line is I still entered the trade. All I can say is I thought the market was going down and I did it. Then, one might ask why FAZ? Why not an inverse S&P ETF? After all, my feeling was about the markets in general and not financials in particular. Why not go with my chart of the day from yesterday - CAGC - which actually went as low as down 7% today? Like I said before, I have nothing to say that could back my actions.
I will share with you why I do it though - Its the feeling of being in the game!! Its the thrill of it. Its the feeling of participating in the market. Are any of these the right reasons for entering a trade? Absolutely no! Added to the fact that I showed fair bit of patience yesterday made me feel impatient today.
What's the solution? Simple! Dont do it!! Haha!! If only it were that easy. But there is light at the end of the tunnel. Take my example. I know myself and I know I make such stupid moves. So, when I know that I am about to enter a trade that I cant really justify, I risk a very small position and keep a tight stop loss.
I will probably get stopped out of my FAZ position anytime now. But its not about making or losing money. Its about doing the right thing. I would be writing this post even if I made a profit on the trade.
I will be writing such posts about my mistakes and labeling them "mistake", so I can get back to them easily and hopefully learn from my mistakes. That's the whole point of keeping this trading journal. Hopefully, some of you readers too will benefit from my experiences. There are a lot of sites out there that give you stock picks and market advice but along with all that, I also plan to make this site about the dark side of trading- the mental side. Hopefully, we will all be able to grow as traders together.
Share your own similar experiences in the comments section if you feel like.
Good Luck trading!
P.S.: I just checked before posting this and I got stepped out of my FAZ position. Hopefully, a big lesson for a small price.