Dr. Andrew Menaker, noted trading psychologist, and I spoke briefly on the phone today about a lecture he will give to SMB. He asked for topics. I gave one and then another which I am pretty sure gets undercovered.
We talk and write often about trading on tilt. That state of mind where your judgement is impaired, literally, and you turn a bad few trades into a bad month in a few hours. But I see something else not quite trading on tilt that causes traders to throw away thousands per month. I will call it the trading of past trading.
Today sitting behind a Newb I watched as he prepared to buy support in an MOS pullback. Nice idea. He sat patiently. MOS came to his price, he bought, he got shook, and MOS raced higher. The trader, Miami Momo, threw up his hands as MOS raced higher and muttered under his breath, “the same thing happened to me on Friday.” He was now doing some trading of past trading.
Why is this such a bad thing? Because MOS did not really race higher. It ticked higher. And then it came right back to that very same support level. Miami Momo was still consumed with his last losing MOS trade to contemplate a reentry that offered an excellent risk/reward opportunity. All that muttering and rehashing of the past caused a next trade to take a number. So Miami Momo was not trading on tilt. But he was living in the past which was potentially affecting his present and future.
I witness this all to often on a trading desk. And you are all throwing away potentially great months overvaluing some mediocre trade gone negative. Stay in the moment. You never know what precedes that next great trading opportunity.
You can be better tomorrow than you are today!
Mike Bellafiore
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4 Comments on “The Trading of Past Trading”
Great post, Mike, one of my favorites!
Cheers,
Markus
thanks mike
Will the lecture be open to the public?
Sorry no.