How I lost all my profits in 7 mins – Let’s know here;
Traded Instrument ( Today I made 2 trades )
Weekly Index option, as we can see the below Screenshot from my Zerodha A/c ie;
- Index – Nifty Call Option
- Expiry – 19th March
- Strike Price – 10500 ( 1st Trade ) & 11000 ( 2nd Trade )
- Traded Quantity – 150 ( 1st Trade ) & 900 ( 2nd Trade )
Strategy to Initiate Trade
Today ( Mar 13, 2020) is very dramatic day, Nifty hit the lower circuit and markets are closed for 45 Mins because market was down by 10.17%. Markets resumed and Nifty is at 9650 and all the Call Options were up by 150% – 250% and I thought I can make a quick 10-15 point move.
So, I placed a order for Nifty 10500 19th Mar CE and in next 5 mins, I am with a loss of more than 40% but I’m confident enough to hold that loss and eventually in next 2 mins, I reached my target and closed the trade with 15% Profit.
This is a last hour trade ie; after 2:30 PM, here the idea is very simple, just to get 5% – 7% profit on capital and close the trade.
Nifty is at 9800 and I placed a order for Nifty 11000 19th Mar CE and in next 2 mins, I’m with a profit of 5.7% and accordingly to plan I have to close the trade and book the profit but I gone greedy and want another 5% only to get trapped. Eventually I lost 10% ie; the profit I made in my 1st trade, you can see the both trades in the below screenshot. That’s how I lost all my profits in 7 mins.
How I got trapped
Look at the Chart below;
I brought at 14:22 at the 2nd line, you can see the screenshot and the moment I brought it gone to Rs. 24.5 at 14:23 ie; above 2nd line and the plan is close the trade at that price but I didn’t and it started coming down and eventually I closed at Rs. 20 at 14:32 ie; below 2nd line. To be frank, I sold out of panic and this is not at all good because I never get panic for anything for that matter but I closed it here.
Reasons Behind Panic
I analysed after this trade about my behavior because this is something strange for me and I found the reasons for the same as follows;
- I’m doing my office work and talking to customer,
- I’m getting a continues messages from my home by saying pick up the call &
- My manager is also trying to call me,
- There comes the another customer through Mail
I think Reason No. 2 played a big part because the other three reasons were common for me and it happens on a daily basis. I spent last 10 days in my hometown and solved crucial problem – this triggered my mind and this pushed me to close the trade with loss.
Well, this is a great scenario to know more about myself and probably will stick to Plan from next time despite anything gonna happen.
Because, from Rs. 20 it touched the low of Rs. 15 and bounced back to Rs. 30 in next half an hour.
Looking forward to not repeat these pitfalls and making sure everything goes according to Plan, if it doesn’t work then go for Plan – B. I’ll discuss what is my Plan – B in another trade blog.
Until then, this is Rushi. Happy Trading!