This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
“I missed that 10% rally; I’m so angry“. I hear this a lot. But rarely does it mean missed in the sense that the client was totally unaware. More often than not it means the client has been watching the share price bounce and rally, and regrets not having bought into the recovery.
But you can’t always buy at the bottom or during the early stages of the recovery. You don’t always know when or where that will be. As they say “nobody rings a bell at the top or the bottom“. If they did, the market wouldn’t offer half as many trading opportunities, rendering it far less lucrative. I’d be out of a job.
Think about it. That house you bought 25 years ago may well have tripled in value. But you chose to sell up and move 15 years ago because you wanted a better house or area, or you had no choice. It’s not dissimilar with shares. If you didn’t buy near the bottom it’s because you weren’t convinced it was the bottom. If you sold too early, it’s because you were either happy enough with your profits or unconvinced in the shares rallying much further.
My point is to be at peace with your trading decisions. You can make a bad decision, be lucky, and bank a profit. Likewise, you can make a good decision, be unlucky, and book a loss. What’s more important is your decision-making process – your plan for getting into and out of the trade – and your reasoning for placing (nor not) the trade in the first place.
If you trust your decisions, you can’t really grumble about the outcome, be it profit or loss, or missed opportunity. The financial markets can and will move against you at some point. You will miss stuff. Trading requires pragmatism. You won’t win every trade. Nobody does. It’s about ensuring any losing trades don’t eclipse your winners. Should your decisions consistently result in losses (or missing things) perhaps your decision-making process simply needs re-evaluating.
If anything, grumbling about what could have been may mean you are actually wasting time. Time which could be better spent looking for potentially profitable ideas. If you miss any of those (genuinely unaware), it’d be fair to say that you’d only really have yourself to blame.
That’s not to say rush out looking for something (e.g. support or resistance for a bounce or a sell-off). This can be dangerous in itself. Nor that you need to be fully invested, which can be equally dangerous. However, once you have closed a trade, move on. No regrets. If you missed a trade, by all means monitor it for another opportunity (e.g. breakout/breakdown?), but don’t beat yourself up about a missed 10%. Because it will happen again.
There are hundreds, if not thousands, of things we can and will all miss out on each day. That’s the nature of the financial markets. What’s important is having confidence in what you do do. Because it is your money, your decision.
Whatever you do trade, get access to our research Gold Pass so we can furnish you twice-daily with hand-picked Ranges, Breakouts, Bounces or Momentum. Furthermore let our traders help you monitor your favourite stocks, letting you know when they get to particular levels (to Buy or Sell) or when news moves the share price.
Hindsight can be a trader’s worst enemy. Mathematicians have regression analysis. Traders can have “regret-ion paralysis”. Don’t let one missed opportunity distract you from making profitable decisions elsewhere.
Mike van Dulken, Head of Research, 6 June 2019
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research