A Bit Hesitant and a Lost Opportunity!

  • Stock Market Analysis
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Usually, I prefer discussing my intraday trades unless they had some great learnings and or earnings! Friday, 01 Oct was a regular day and so I did not share my trades as I do not want to influence the readers with my way of trading and would rather share my learnings and experiences than my trades. It is better to help someone find a job than keep feeding the person. Self-dependency is the motive behind not giving “tips” or “trades”. Leave aside the fact that I cannot do such things since I am SEBI unregistered.

However, when there is great learning, I must share and so this post.

On 1-10-21, I went long in Nifty Futures at 17480. I picked up a Futures contract for the first time in 6 months as the enhanced margin requirements by SEBI have made it hard to trade in Futures as I do not deploy the entire capital to trading. The intention of the trade was to ride the price action as long as possible. I was pleased that I was able to catch the proverbial “Falling Knife”! 

Based on my reading Nifty had crucial support around 17400-420 so a 60-75 point risk for a larger gain was reasonable. Nifty then fell a bit and then bounced back and hit 17540+ Futures. I was happy but my happiness was short-lived as it fell from around that level and then came back below my cost price. I held on to the position as the view was swing or intraday depending upon where it would close. 

Nifty bounced back again and went to the level and then yet again it fell from there in the last 40 minutes. I sensed that Nifty is giving signs of weakness around 17550 so I should exit and take a fresh view just before close. I exited around 17540. Soon Nifty fell further and I was happy as my view was validated. I now had around 5 minutes to decide and I thought through and did a contextual reading that the British Index FTSE was in good green so Nifty may open positive. At the same time, I thought - it has fallen 35 points from the high showing weakness. I was in multiple minds not even double! I finally let it go with the logic that it is better to avoid Futures position over a weekend. 

It is 1115h now on 4 Oct and Nifty has made a high of 15745, +265 points from buy price. Since I had exited at 17540 and had an opportunity to buy it again at 17515, I should add 25 points more to it to work out the Opportunity Cost of “weekend hesitation”.

So the Opportunity Cost is as under:

17745 - 17480 + 25 = 290

I had 1 lot so 290*50 = 14,500

Funds required = 109,500

% Return Lost = 13.24 

LEARNINGS:

  1. It is better to stick to the original view and hold on to a position as long as it is above the cost even if it is on a weekend or ahead of a market holiday.
  2. Contextual reading is good, however, the process is more important than anything else.
  3. A switch in the view from Positional to Intraday is not a good approach unless something has really gone wrong with the trade basis or it has been severely invalidated. 
  4. There is no safe investment and the risk of losing the book gains is part of the trading process.
  5. Such hesitation is okay as it was after a long time the Futures contract was traded - so the best way to learn and move on is to acknowledge the lost opportunity and move on. 

I hope the above helps you plan your trades and better manage them as well. 

In case you have experienced similar incidences in the last, please do share for the benefit of all.

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  • Jai Hind @Jai Hind
    Is everything going to be ok ??!!
    Like 0
  • Shamsher Singh @Shamsher Singh
    % Return Lost = 13.24 : this calculation is not right ..% return should be calculated bases on trave value (1748*75=13,11,000) and which comes around 1.1%.
    Like 0
  • Dev Dutt @Dev Dutt
    I make good moves in options but panic sell mostly and that leads to frustration, thanks for sharing.
    Like 1
    • Umesh Rindani @Umesh Rindani
      @Dev Dutt This is the story of a retail trader. You will eventually get there as long as you focus on protecting capital.
      Like 0
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  • Kutty Pon @Kutty Pon
    I repeatedly doing the same mistake in cash market since a month as a 1 month old intraday trader. I took traders based on set-up, calculations and intution. But many times out of the trade at early. So that, lost many profitable trades in a month.I'm trying to control emotions over closing trades.
    Like 1
    • Umesh Rindani @Umesh Rindani
      @Kutty Pon It is okay to miss opportunities to make more money. The important thing is that we must learn fro the same and develop a process that suits our way of trading and personality. Once you do that, success will follow.
      Like 0
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  • Vishnu VV @Vishnu VV
    thumps up
    Like 1

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