More and more traders are starting to mention the concept of “FOMO” – It is the “Fear Of Missing Out” and it is basically fear/greed wrapped up into one slang word that keeps us in and out of trades… but mostly in them.
Days like today are more than tough, they are potentially game/life changing for many Trader’s careers — BUT, ideally, to “live to trade another day” through these types of markets, is an award and privilege in itself.
Today is one of those days when we look back at the chart, we will be able to point and say “Oh that was “Melting Monday” or whatever we will end up calling it. I, for a long time, would constantly use the lows/levels as reference points from the infamous “Flash Crash” from 2010. The event created more opportunities than just the moment itself.
On Friday, I was long the Spooz ES mini contract, it was already down about 30some points, and I figured after last Thursdays drop, “we could dead cat bounce into weekend at least”). Well I was wrong, (as were many), but I did not blow out, nor did I push against it more. I was using the weekly expiring ES options to leverage up and not only let me get more long deltas in ES, but also protect how much I could lose and how much I needed to hold the position. Overall, with trading, usually you are betting 50/50 in your mind as to “up or down”, so in this case clearly we didn’t go up, so I lost, I was wrong, but I lost what I was willing to lose, didn’t add into the loser, and at the end of the session Friday—- I TOOK THE LOSS.
So sure, that moment sucked and was unfortunate to “lose”–, and the entire weekend, I had more than a little bit of FOMO as I was very worried I would miss out on the “sure to come back rally in stocks”, but clearly it is better to be safe here than sorry, and I get to keep my Money. Which means, “I lived to trade another day.”
Lesson- The market isn’t going anywhere. Don’t sacrifice what you want most, for what you want now. It is better to have fear of missing out (be willing to miss a trade) — than to lose your ability (money) to trade. *Again, simply, “live to trade another day.”
Let’s try again tomorrow. – Happy Trading.
-Bret Rosenthal