Many missed the meat of this rally or were even caught on the wrong side of it.
The normal irrational reaction is to want to chase here and there were a ton who finally got long into yesterday’s monster move or who covered.
I use the phrase normal irrational reaction because its just that.
With psychopathology, the irrational thinking associated with a mental illness is abnormal as only a small percentage of the population exhibit the associated cognitive profile.
But in trading, its just the opposite as irrational thinking is actually normal as a majority in a specific provoking situation (including missing a rally) exhibit the associated irrational cognitive profile. Crazy but true…
So what do you do now?
First, go back and read this post called The Tao of Missing a Trade. Its a must read for you. Next…
If you have a good plan, you stick to it. Behind the scenes you might want to adjust for new market conditions but that needs to be a deliberate process. I would recommend this weekend as the market is closed and you might be less distracted.
If you don’t have a good plan, then what the hell are you doing?
The market is inhabited by sharks who eat people with no plans or who abandon their plans under anxiety.
Only one out of ten reading this who were wrong footed and got caught up in yesterday and this morning’s euphoria will heed this post, take a deep breathe and adjust their risk profile rationally.
While nine of ten chasers reading will ignore the advice.
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