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Trader’s Remorse

November 5, 2008

Trader’s Remorse is often identified as when, a trader buys[or sells] strength after seeing a strong resistance [or support] level breached only to see price whipsaw back, trapping the trader. When it occurs on upside, its called bull trap, and on downside its called bear trap.

For the past three trading sessions, I had all types of remorse, regrets, frustrations and emotions. I have seen my trades hit repeated stop losses,often turning losses. No profits to show, but only losses. Period.Its frustrating beyond comprehension to see yourself making right decisions and take appropriate action when you see prices forming patterns, yet whipsaw a few more times, before it starts the rally, throwing me out of the trade and proceeding on its way.

Frustration is one word. Not because of the potential asset appreciation. But because of the ‘wastage’ of opportunity. It would have a personally satisfying and extremely gratifying trade, had I taken cues of the price action and made my decisions, only to end with an actual way to account for the reward.

Let me give you an example,today I observed around noon, that NIFTY is trading in a thin range, the highs at the same level, the lows at the same level, which chartist would call ‘price to be ranging in a rectangle’

NSE on 05th Nov

NSE on 05th Nov

Usually in such a case, the previous trend is continued, which in this case was a downtrend. Well, I cant complain much, I sold and did get a downside, but it cant be stressed enough that the duration of the pattern has a huge correlation with the duration of the imminent change it points to. What indeed, I did catch was a HEAD and SHOULDER formation, small and anything but cute. I rode on it. Only to see, my profit erode a bit and my stop loss[which I moved to lock in profit] get hit.NIFTY soares to 3113 levels leaving me dumbfounded.

I wonder hard, what this market is upto? What I really dont realise is that, a much bigger game is in play. Its going to be the daddy of all downsides, and the prices just formed a double top. I was outplayed. I get in, I get hit out, market is too choppy.Frustration!

I stand in the ringside, watching the game unfold. Ohh the sweet-bitter frustration, market makes a grand whammy of downside. Leaving me tearing my hair. Why? Becuase of stop loss, no it was a brilliant fu^&*( oportunity, and arghh.. I wasted it.

Did I tell you, I am a guy whose Mom always taught him “Dont let anything go waste sonny!”.

Sorry mom.

P.S: Wonder why blogging your mistakes and frustrates away, is so therapeutic. I feel good.

P.P.S: Lessons:Be patient. Be alert. Be a Lateral Thinker

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