When You are Wrong, You are Wrong

About 25 minutes ago I tweeted that I thought the S&P futures would rotate or be range bound for the day. I did mention that the longer the rotation (otherwise known as chop and slop) goes on, the sooner and bigger the breakout would be - at least I was right for the second half of that post. We are up 15 handles from where we were then - in less than 30 minutes.

I don't know if there was news or what. I do know a couple of things - 1) most traders love to be short and this drives upward pushes out of ranges as dull rotating markets induce many to get short and put their stops right above. All the market needs is a little shove in that direction and voila' short squeeze mania. Now, if that is all there is, then we hang out for a bit and retrace. In this afternoon's case, we are going going and maybe gone as I type these words.

Was it the kiss of the 13 EMA on a daily? Did our illustrious new President promise that the stock market will only go up from here?

I do not know... but I do know that my initial trade idea was wrong with a capital W. I would have been stopped out for about a 8 handle loss based on my strategy. What I would not have had happen to me is a stubborn re-trade of the short because "it has to stop here." In fact, after a few minutes to breathe and a check of $TICK and the breadth/advance-decline line or what used to be known as issues, I would have gotten in on a retrace if I had been trading. Generally I stay away from Mondays and had just returned to the office to find what was that symmetrical market development profile which led me to be wrongly believe we would rotate back down through the day's price range.  

There was a time when being wrong would have upset me. It might have meant that I had lost money but usually that wasn't the real problem. It was more about the implications of being wrong - would I ever make it as a trader, what if I couldn't get it right more often and the more pernicious interpretations of "someday I will run out of money and be  ...."... you name it, destitute, old, a failure.

Over the years, I have coached enough traders to know what a big deal being right is. Oddly it is rarely about the money and mostly about either confidence in the future or proving to someone in your past how smart you are. The trick of the psychology of the game is to be able to tell the difference in emotional motivation - in the same way that one can tell the difference in a market ready to break versus one ready to roll some more. And just like reading the tape, it takes practice.