So here I’m in the car on my way back to NYC from OBX stuck on some silly traffic. Apparently there was some serious accident near Hampton,VA and that’s causing a 9 mile backup. Rip! We are leaving a day early trying to avoid the tropical storm but seems this drive back is just gonna be messy…
OBX was a lot of fun. Yet, there was one experience involving a round a golf that lead me to writing this post. If you play golf you would agree that anytime you pay north of $50-70 for a round, there are certain things you expect: someone who greets you and grabs your clubs as you pull in, the place has a driving range, potable water every couple holes, a nice course with beautiful well kept greens, a young lady driving a refreshment cart, someone who cleans your clubs when you are done, just to mention a few. Well let me tell you, Bella and I happened to find the one course in the Outer Banks that apparently didn’t get that memo. Seriously what a rip!
The point of this post is that as human beings it is in our nature to create expectations for everything. When your parents pay for college they expect you to graduate in 4 years; when you pay $70+ for a round of golf you expect a nice course with all the amenities that come with it; when you stay at at four+ star hotel you expect to sleep in a heavenly bed; when you go on a trip you expect some delays, etc. Well, in trading when you start a position you should have a reasonable expectation of what the stock ought to do. These expectations come from experience.But even as a new trader you need to get in the habit of creating expectations for your trade, evaluate your expectation after closing the position and finally adjusting your expectation for similar trades in the future.
Most importantly, your trading plan should also include what you would do IF the stock doesn’t do what is expected to within your expected time frame. Not having this part in your trading plan is disastrous. Adjusting your plan on the fly doesn’t always lead to rational decisions and most time leads us to ignore the tape = taking a larger loss than necessary.
Can’t wait to be back on the desk on Monday. From what I’ve heard from our traders it has been a good week. I’m ready to chop it up!