When you have no plan, you’re gambling. Entering a trade in the market without looking at:
- The daily chart
- The market trend
- The sector trend
- Any relevant hypotheses around the direction of the trade
Then YOU ARE GAMBLING. It’s akin to testing the rapid, raging waters of the river with your foot and then getting swept in and spit out and wondering why it happened, only to continue doing it again (revenge trading).
That happened to me today on December 7, 2023. I knew I wasn’t planning on trading today, because I wanted to wrap up writing my book so I can focus on trading 100%. But, I allowed myself to get lured into the market like a siren.
Once the market had me in its grasp, I took random trades, which ended up with losses and rather than leaving with a modest loss and learning my less, I decided to enter the SOXS trades with 40x the volume I normally trade, thinking I can make that money back. Bad idea, it took me from a small loss to a big loss.
My reasoning: the market will probably trend lower. That’s fine, but I didn’t have my monitors on me so with a small screen and using Fidelity’s web UI rather than ActiveTraderPro, I was left with an environment I was uncomfortable with, viewing one chart at a time rather than my normal setup.
There is no excuse for gambling — as traders we must always be technical, lead with a hypothesis, and always practice restraint. It’s better to not trade and take no loss when there is no strong conviction rather than having FOMO, gambling, and wondering why you’ve taken on a huge loss.