Funky Psychology

I traded HES on the short side yesterday and came in with an overnight short expecting a crack through the $54 level. It was looking pretty good in premarket as some small dopey prints went off around $52.57 and $53.01. I was hoping for a pop near the 54.60 dream short level where I wanted to lay into the position. I wasn’t expecting the stock to trade much higher than 65-70 cents at all so I offered heavy. I was okay risking $350 on that position and in fact I managed to close it out (near the highs of the day) for that $350 loss. Shortly after covering I realized what had just happened and got back in the trade and chopped up that short from 54.40s to 52.80. Chipper!

Later in the day I realized that the volume was light, volatility low and there was an abundance of algorithms ripping up the undisciplined and inpatient trader. Just the standard summer shenanigans. So I cut my tier size in half and was extra patient with my entries and somewhat tight with my stops. Yet I managed to get stopped out of about 10-15 really good positions for a total loss of $350-400 in all the trades combined. I was so tired of getting abused that by 3:58pm I had had enough. I left with 2 minutes of the market closing to go work off the frustration at the gym.

So here is where the funky psychology kicks in. Why wouldn’t a $350 loss in one trade affect me at all and why would a similar monetary loss on 10-15 trades aggravate me that much. At the end of the day aren’t the results the same whether I lose x amount on one trade or in 50 trades? Does this happen to you?

I know that I have never been the type of trader that puts heavy emphasis on the results of one day. In fact today wasn’t ready a bad day as I just managed to end up barely net positive. To me what is important is the process that yields those results. As I review my work I realize that my process today wasn’t faulty. I thought the trades were all perfectly sound and were mid to high probability trades. So is there a reason to get all worked up? You tell me.

I guess it is just human nature to be flustered with the constant abuse we experience as active traders by the dopey algorithms. Tomorrow should be a good day. Watch that DVN for follow through on the short side and HES to fail around $54.

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