This all started in 2020.
Two of my accounts were reaching 7 digits and I wanted to go all cash once they crossed that benchmark but I was 3-5% shy of it and the misery started!
The way the market is going these days, it is pretty easy to make money. If one trades with the trend, it is not that difficult to make money. A friend who does payroll for my S Corp told me she bought BIGC on her birthday, probably in the 60s 3 days ago. Today, it is at $127!!! The stock showed all the signed of rebound but I ignored to trade it. Why? I don't know. Maybe I was afraid. Maybe it is my conviction that the market is risky, it is not sustainable, it needs to crash!!! Stupid of me and my stupid beliefs. I say the trend is a friend but ...the fear and emotions have captivated me and made a fool of me.
I saw NIO two days ago making a new high. It was at $16.75. One voice inside me kept saying- go buy it. It has got back in the flow, but the other voice told me it is stupid to buy NIO, at this price! The market may crash anytime!!! I had lots of NIO stocks when the uptrend started. (I actually traded NIO for a purpose- to see if NIO profit can help buy another Tesla, this time for my wife! See my NIO trading here. I had made enough profit and I told myself then that..I am done with NIO. No more trading in NIO stock!). I sold all of my NIO below $7.5-$8!! If I had kept all my NIO stocks...LOL who cares with coulda, woulda, shoulda. The fact is I didn't trade NIO at $16.75 and right now, it is trading above $20 right at this moment!!!
This morning, I see TSLA gapping up. That was a sign that the stock is likely to continue its uptrend. I kept watching it around $2045 but the other me has gotten too strong. Couldn't let me act and I did nothing. Tesla is right now $2120!! Could have a quick profit of $7k!!
My brother-in-law keeps asking me to buy $GEVO. I am probably not buying it. The reason? The other me says that don't buy it because you can get stuck! Or, if I buy, it will go down and I don't want him to lose! It is at $1.27! Should I buy it? Maybe I should shut myself and buy it...(Update: [AUGUST 27, 2020: I actually listened to his advice and bought some GEVO at $1.28. I would be surprised if I make money in this. It is just my bad luck, or the wrong mind-frame I am in.)
I have failed to balance me and the other me. As per Hindu philosophy, there are three forces in action at any time- creative, destructive, and the balancing force. There are actually 3 gods- Bhrama (the God of creations), Shiv or Mahesh (the god of destruction), and Vishnu (the God of balancing). There is me and the other me- not sure which is creative and which one of them is destructive but the fact is there is no powerful balancing force in me who can help me make the right decisions.
Do you want to know how bad my decisions are these days?
Just before the crash started in Feb-20, I was long in TVIX and UVXY. They went up by like 10-15 times. I sold them too quickly. I had many shorts too in the market but I was out of all short positions by the end of the first week of the downtrend! Then I bought some on margin and the market kept going down. I was stupid to go long too soon (in hindsight, it looks all clear but the fact is I was on the wrong side of the market at that time.) When the market started going up, I was loaded with stocks, on margin, and I started liquidating my positions soon ...because I thought the markets can't go up. THEY HAVE TO FALL AGAIN, THEY HAVE TO CRASH. I sold my long positions in NVDA, APPL, SPY, TSLA too soon. With very small profits. Then in a few days, with my stupid (of course in hindsight) conviction, I started shorting. Then I miserably failed to see the strong uptrend. I was bleeding but I kept saying, this is it. The market has to drop. It is going to drop from tomorrow. I carried my short positions too long and lost a good deal of money.
[September 3, 2020]
Yesterday only, I saw the stock of NVDA up by $25-30! I was short 250 stocks and I was stupidly watching it go up over the last few months. The line of least resistance was UP and I was hoping it to go down. Anyway, yesterday, I saw it up in the pre-market and couldn't sleep then. Before yesterday, Tesla was ruining my sleep. Life was miserable and only the previous day, the Tesla tired me out and I called it a quit! Surprisingly, yesterday, Tesla went down but the short I had, NVDA, started sky-rocketing. Pure coincidence? Or, just my bad luck? Or the loser's mind-frame I am stuck into? I covered TSLA short and it started going down. I held short NVDA and it started going up.
This is for sure. If you enter a position wrong, you are likely to exit wrong too. So the sooner you quit, it is better. Once you are glued too long, you lose your senses. The emotions play you out, mostly, pure hope generally doesn't do any good.
When the market opened, the NVDA stock was trading lower than the opening high or $588. It touched a low of $565. This is a bad signal as per PFP. I wanted to double up my short but I had no more room to lose emotionally or economically. Still, I sold 3 Calls at $585 at $7 premium. I told myself, I would take the short. The weakness was there.
Today comes the sell off in the market. NVDA dropped. It came to $450 so I sold some put options at $442.5 that expired tomorrow. Guess what? NVDA is trading $390 right now in the aftermarket!
Ok, yesterday, I guess I was right about the trend reversal possibility.
Today, the signal was: the stock and also SPY, and the whole market had opened down with a gap. Purely, technically, that is a bad sign for a chart that just made a new high the previous day. This is a change in sentiment. I should have short more but I guess the law of averages, statistically speaking, feeling the lower risk in buying than selling at these lower levels, or maybe just recent scare of the strong bull market, told me that the markets may not drop too much!
What is my take at this time? I think... LOL, I shouldn't think. I just need to watch the prices. The prices are showing a sell-off today. Plus the market squeezed me. It must have squeezed other bears. Watch for the prices tomorrow and decide...
[September 4, 2020]
The market opened a bit positive and went up and then started going down. I was on the sideline, but I was wrong. I think I should have checked intra-day charts to see the rebounds, or when it started breaking yesterday's lows, it could be an indication of the market going down today too. The up move in the morning was probably a rebound to digest the fall of yesterday or that was due to sentimental purchases that the prices were too low after the fall of the previous day.
Well, what am I writing here? What am I doing? This is not me!!! This is a different person!!!
I am not a day trader who is trying to trade in and out! That is not my skill. I am an intermediate-term trader. I like to take positions from 3 days to 3 weeks. That is where I am more successful.
I think I know what had gone wrong with me.
1) I am not a day trader. I shouldn't try to find some trend reversal or a trading opportunity on a daily basis. I NEED TO FOCUS ON TRADES FROM 3 DAYS TO 3 WEEKS.
2) My second mistake is: I started trading options.
2a) I have always found option prices to be expensive and hence I have naturally moved to Selling options. If anyone asked me, I would say that selling options is risky but deep down, I have started believing that selling options is like getting free money!1 Most of the time I am right but many times, I get into a position that is too risky, or I get in too early.
2b) Another problem in my trading due to options is that I have started taking positions too soon. On Fridays or some days near expiry, I make a statistical bet that the stock is not likely to cross so and so level, so I sell the stock. MANY TIMES I SELL FOR A DAY OR TWO EVEN WHEN I SEE THE STRONG TREND AGAINST MY POSITION. I get stuck in the wrong position.
SELLING OPTIONS has caused me to take too many positions too soon.
3) I stopped watching prices and instead started trading with emotions.
I trade with a conviction that something is cheap or expensive. Who do I listen to to decide if something is cheap or expensive? Hmmm. I don't know but I know that I need to listen to the prices and the trend.
Is market too high? Is TSLA too expensive??? Who cares? I don't want to be in the ideal or perfect world. I need to make money and it is easier to make money with the trend.
4) I have to be right!! I have a need to be right!!! Hence, when a stock is not moving in my direction, I jump on the Hope bandwagon and keep hoping that its prices will reverse and I will be right one day.
On paper, I know that if you have entered from a wrong door or at a wrong time, you have to exit wrong too. It is better to exit sooner than keep wandering like a fool. I try to avoid being wrong but in the end, I come out as the biggest loser.
I NEED TO ACCEPT WHEN I AM WRONG. I NEED TO PRACTICE STOPLOSS AS WELL AS STOP TIME!
5)
(Need to get back to work. Will continue later. Let me check the market. Is it going down???)
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