Getting ran over by the bull and eaten by the bear.

There were many times when I continued to sell into a ferocious rally and times when I bought breaks when the market was collapsing.  If I had the unfortunate circumstance of getting past my stuck short/long mentality and tried to buy a rally/sell a break I would undoubtedly buy the high/low or get stopped out on the low/high tick.  Losing on both sides is brutal but it was an important lesson for me.

What I “knew” back then:

I “knew” that the market could only travel a certain distance in a certain period of time.

I “knew” that buying rallies or selling breaks was risky.

I “knew” that prices matter.

What do I know to be true now:

I know if the market is open anything was possible.

I know that the profitability of the philosophy behind a trade is dependent on the type of market.

I know that prices do not matter when things have to get done.

So once I saw, learned, and 100% believed in those lessons (and gave back money in the process) the next step was to work on the psychological aspect.  I was invested in selling the rally after a few losses.  I invested capital and psychological capital.  I knew I was going to be right and the market owed it to me.  By the time I was forced to change I lost both ways.

Being committed to a direction is for deep pockets.  It does not matter if you are eventually right if you get a margin call. The risk of being right is almost never worth it over the long term.

Change before it changes you.

This post is based on my experience, if you have a different experience please share.  The turns are always difficult and that is why they are the most profitable. 

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  • rk

    great post. I used to be unaware of all the beliefs I had about trading (the things I “knew”) until I lost money and learned about them the hard way.

    • Hard to eliminate ourselves from the equation but necessary many times. 

2 Responses to Getting ran over by the bull and eaten by the bear.

  1. rk says:

    great post. I used to be unaware of all the beliefs I had about trading (the things I “knew”) until I lost money and learned about them the hard way.

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