6th Jan, 2025 Nifty trade day
An analysis of what went wrong.
It's been a long time since I lost in trading, and felt an urge to sit down and document what went wrong. The loss was not that big, but what bugged me was that I was right first and wrong afterwards. When I go wrong in trading, I usually don't bother because it is part of the game. But yesterday, I lost when I should not. I initially took a put and sold it off as I thought I was losing money, I can live with that but not the blunders which were done afterwards.
Nifty daily chart
It's a downtrend, more importantly, Nifty is on time correction.
Nifty 5 min chart
It was a clear-cut down move, I failed to read the trend and let my emotions creep in due to a wrong trade which *ucked up everything(sorry for the language but can't find a better word to describe).
Nifty 1 min chart
It's pure noise. But it does tell short-term trends if u keep on staring in the window which at times is not helpful.
The question is when charts in all timeframes said sell, how come I got a buy signal, and how come I ended up buying and losing money. The approach was to buy 24400 call options in bulk and sell those at a profit of 1rs. It was a neat trade design. Buy at 16.20, sell at 18. The sell signal was at 23840 nifty future. But at 23840, the call option price was not 18; it was 17.95, and somehow, I missed selling. Chart of Nifty futures and call 24400, telling the same story that happened yesterday.
Nifty fut and 24400 call chart
Analysis of what went wrong
The sell target was 18. Because the trade was a contra trade, which means we bought call options in down markets, what should have been done, on a 5% deviation from the sell target on the downside, the sell signal should have been executed. Which I missed or waited to go more up and realized later because it's quite an unsettling situation. It was a good trade; I bought large volumes for a small price target, but I failed to execute. A better entry point would have been 13 to 15, though I entered too early. The entry is pretty hard to design more kind of guesswork, but the exit can be done on the point. Need to make better systems for exit. The cardinal rule, plan exit before entry, failed yesterday.
