I missed the recent Rally

Here is why that happened and what am I gonna do about it.

“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” ~ Peter Lynch

I missed the recent rally.

And therefore underperformed.

Why did I miss it?

How could I have not missed it?

What changes did I make to my system?

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Why did I miss it?

There was a huge fall.

As a swing trader, I believe in timing the market.

And therefore I got out when most of my breadth signals turned negative.

I saved >~6% drawdown by doing this.

The CNX500 index did fall >4%

But then, it put a 1-way rally of >6% and I have missed a large part of it.

But why?

The medium-term trend was in a confirmed downtrend.

And so I was in a hit-$-run mode.

And when I saw that the strength was indeed coming in.

I was looking for a pullback, a higher low that never came.

As the rally got stronger, it approached a possible strong resistance.

A confluence of the falling 50-sma and the Downtrend line.

I waited for this resistance to act up and then give me a higher low.

LOL.

The price pierced through it as if the resistance wasn’t there at all.

And now, the previous swing high is comfortably broken out.

The higher low I was waiting for might eventually come now.

But the fact remains.

“I missed the rally”.

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It’s all part of the Process

But hey, all is not lost.

I followed the system that I intended to.

And I realize that I am not being appreciative of it enough.

And now all I need to do is to improve it.

And that I have done.

But

It has also highlighted some of my mental frailties as a trader which needs improvement.

I don’t at all remember myself as being a risk-averse trader.

I have, to a great extent traded the sideways market in the last 2 years successfully.

But why was I so risk-averse this time?

“The fear of losing the gains I made in the Bull run”.

I was so caught up in NOT letting the gains slide that I forgot my strength.

“Fear” & “Greed”.

These are the only 2 things that show up time and time again in different forms.

Even during this time, I did trade some names.

I managed to spot the trend change correctly.

But the same fear of letting the gains slide led me to book my gains too quickly.

(MapmyIndia would have been a 5% PF mover today).

But the biggest mistake was to “sell on anticipation of an incoming bearishness”.

I should have reacted and reacted only.

But

“The fear of losing the gains”.

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What changes did I make to my system:

For starters, I have built my Trend and Momentum score (more on this later I guess) to react to the ebbs and flows of the market accordingly.

This should further refine my Market timing.

Taming the psychology of fear and greed remains an ongoing battle.

This game is an infinite one.

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Trading mastery is not a sprint but rather a marathon.

That too a never-ending one.

As much as there is a blueprint for trading success, there remains an element of adapting to changing conditions.

Sometimes we are too quick to change while sometimes we are slow to react.

It’s a balancing act.

What helps is to recognize who and what you are as a trader.

And remaining true to your style and system.

And refining that system every day.

If you are unsure about your style and system, Sakatas Homma helps you find it methodically.

I do that in 2 ways:

1. The Sakatas Homma TA masterclass for beginners:

   A monster course 8-10 hours. Hourly sessions on weekends. Twice a year.

   Please register for the next batch using the link below.

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   Watch my 1st session of the Autumn 2023 batch.

2. Homma Private Access membership:

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Yours

Sakatas “missed the rally” Homma.

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