Lessons from Today’s Market 26th August 2024

Today, I took a short position on the Nifty 24,950 PUT, and I'd like to break down the trade to highlight both the strategy I used and the lessons learned. When the market opened, it initially kept rising, leaving me in a position where I was waiting for a clear signal to enter the trade. Although it was tempting to jump in, I’m glad that I adhered to my trading discipline and waited for the right signal. This patience cost me the chance to capture the major initial move, but I’m satisfied that I managed to capture the second biggest move of the day.

 

As the market continued to rise, I was closely monitoring the charts. When the price crossed the 77 mark, I was on high alert, ready to place a sell order if it went further. The market, however, surged up to 89. Despite this increase, I remained confident in the signal the market was providing and refrained from second-guessing myself. When the price fell back to 84, I confirmed my sell signal by closely observing the 5-minute and 1-minute charts. The patterns aligned with my analysis, and at 84.1, I entered the market by taking a short position.

Holding onto this position was challenging, especially as there were multiple bounce-back signals on the 1-minute chart, and the market tested previous support levels. These signals could have easily led to a premature exit, but based on the overall pattern and my analysis, I was confident that the market would not hold up. I held onto the position until the market reached its bottom, which required both patience and conviction in my trading strategy.

Second Trade: Shorting Nifty 25,000 CALL

The second trade of the day involved shorting the Nifty 25,000 CALL. This trade provided a valuable learning experience. After observing both the 1-minute and 5-minute charts, I issued a sell order at 110. However, the market surprised me by bouncing back to reach the high of the day. Despite this, I didn’t immediately place a sell order, even though my analysis and the charts were signaling a sell.

The market then retraced back to 110, only to bounce again. At this point, it became clear that my initial position was incorrect. Instead of holding onto the short position on the call, which could have resulted in significant losses, I decided to close the position. I then pivoted by taking a short position on the Nifty 24,950 PUT, which was more in line with the signals I was observing.

This trade underscored an important lesson in adaptability and learning from mistakes. By closing the short position on the call and shifting to a more favorable trade, I was able to minimize potential losses and capitalize on a better opportunity. This experience reinforced the importance of not letting emotions or initial biases cloud judgment and the value of being flexible in trading decisions.

Conclusion

Today's trading session highlighted several key principles that I aim to carry forward:

1. Patience Pays Off: Waiting for a clear signal before entering a trade, even at the cost of missing an initial move, can lead to better trading opportunities.

2. Confidence in Analysis: Trusting the signals from the market and the analysis, even when faced with conflicting short-term indicators, is crucial.

3. Adaptability: Recognizing when a trade isn’t going as planned and being willing to close the position and shift strategies can prevent losses and open up better opportunities.

4. Learning from Mistakes: Each trade, whether successful or not, is a learning experience that contributes to overall growth as a trader. The ability to learn and adapt is what separates successful traders from the rest.

By applying these lessons and maintaining discipline, I believe I can continue to improve my trading performance and make more informed decisions in the future.

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