Two days– Three Trades– All Wrong — Nifty Up 220 points.
We get jittery.
We start having doubts.
We start thinking about changing our method and going for strategies.
We start losing the belief.
We forget that doubters never achieve anything worthwhile. We forget that the same method has worked for us for last 6 months. We forget that ups and downs are essential part of trading.
This 220 point gain is causing the concerns.
In the last two months we have seen one big up move almost every weak which fizzled out subsequently.
Did the business environment change so drastically over Saturday and Sunday that we start thinking of a turn around?
Did our banks suddenly become epitomes of good business over the weekend that people are buying the shares at 10% higher prices?
Markets can be irrational far longer than we can stay solvent.
Option Buyer has the advantage in such markets.
We can not lose more than the premium paid. We can make big money if the market obliges.
If the loss of premium is making us nervous , we are not fit to be option buyers.
Those who can’t stand the heat have no business in the kitchen.
We do not initiate new trades today and just watch as the day unfolds.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.