Nifty Trading - Sticking to a Plan and Missing a Rally

Today, 15 July, I had planned to trade long as I thought yesterday's breakout rally would continue. The only problem was that the price had gone ahead so much that I could not afford the stop loss. I mean I believed that theoretically at least it could retest the highs of yesterday. So I wanted to wait for a dip. I use slow stochastic to detect dips or pullbacks, so I decided to wait for that to happen.

In the meanwhile, around 10.30 am I noticed that slow stochastic was beginning to decline. So, I thought let me use this opportunity to go short before going long at the end of the dip.

The problem was the dip was a puny one. It came and went. I shorted future at 4130 and my first target was 4115. The Nifty Future reached only 4118 and then never looked back.

Fortunately, I realized quickly that the edge in my shorting was gone. And I exited around 4132.

Rest of the day, I waited in vain looking for a dip that never came. I was both worried and hopeful that there could be a quick sell off that will allow me to enter but that never came.

Looking back, I realized I could have gone long at 4155 with SL at 4118 - but the SL was still on the large side and I believed a dip would happen. It didn't.

One way I am sad that I missed a great rally.

Another way I am really really glad that I did not second guess my plan nor did I go short after the first time, as I would have done many times in the past. Even around 4200, there was a sense that profit booking was imminent but I avoided the deadly temptation which has resulted on large losses in similar previous trading situations ( you can read about the deadly temptation here and here).

Also, I use a system that is ok in detecting a new trend beginning but not so great at reentry which is what happened today. I am hopeful however that if I tread with the same discipline, on other days I would be able to spot good reentry points.

To summarise: trade with discipline and simple rules - not to worry if that makes you miss one rally, there will be other days.

If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com

Like this post? You can receive it free by subscribing. Just click on this link

Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that trading and in particular day trading is not for the novice and there is significant risk of loss of capital in trading.