Revenge Trade & Decision

Yesterday I discussed my TSLA entry and how I set a trailing stop – meaning, I moved my stop loss from $1.76 to $3.50 – I did this after seeing a value of $4.50 in my contract from my original $2.23 bought in price.

Let's take a look at TSLA's chart and then discuss what happened.

In the chart, we can see that the price dropped from yesterday's closing to this morning's opening. TSLA reached the lowest price of $372.56 by 9:35AM this completely triggered my $3.50 stop loss and sold at $2.78 so while it was a tiny profit, the return from yesterday's high was wiped out.

I broke two rules today and I'm not proud about it:

• I decided to go for the same trade around 9:45AM
• I revenge traded

I did it because I still believed in my approach, and the wipe out stung a little, it didn't feel fair. It almost felt as if it was stolen from me. So I jumped in and didn't set a stop loss for this new one. As the day progressed, there was a slight recovery but it wasn't a solid one, it only lasted seconds. I caught myself being annoyed by it, and eventually decided to just let it go and watch it unfold.

So, it is nighttime now, and I still didn't sell my TSLA contract today. I've seen the price go down and close lower than the prior day. I detached from it, and now I'm just waiting for it to unfold and see what happens. At the same time, I made a decision.

I've decided that while my approach works, holding overnight is a bit too risky. I saw this with PLTR and I'm seeing it again with TSLA. What solidifies this for me is knowing that yesterday I had a 91% return in my TSLA contract and then blew it off. While I don't feel hurt about it, it is what made me decide that I will be opening and closing trades within the same day, which means that I need to switch to cash account.

I definitely plan on exiting tomorrow, regardless of what the contract looks like. As I said, I'm detached from the loss I've taken today and understanding that I can't get too greedy, I can't revenge trade, and can't trade the first 30-45 mins.

Tomorrow's prospect post TSLA exit

I've looked at SATS in the past, and once again we see the two day uptrend, which means tomorrow could be a somewhat explosive wave. Depending on what it looks like past the first 30-60 mins I will enter the contract and exit once I start seeing the momentum losing its strength.

I discovered today that I'm essentially doing Intraday Trading: involves buying and selling financial instruments (stocks, ETFs, options) within the same trading day to profit from short-term price movements, with all positions closed before the market closes. - Source: investopedia.com

Final Takeaway

Even though today was a loss day for me, it did help me make a decision on how to approach my day to day. Yesterday I could've banked on ~$220 per contract, today I lost all of it. Overnight anxiety is not worth the potential extra profit, a 91% profit was definitely more than enough. Big lesson, and I am looking forward for proper implementation.

Let's see what tomorrow holds for us traders!