7/23/10 Needle And The Damage Done

I caught you knockin'
at my cellar door
I love you, baby,
can I have some more
Ooh, ooh, the damage done.

I hit the city and
I lost my band
I watched the needle
take another man
Gone, gone, the damage done.

The mental game is what does us all in.

Today it worked like this:

(a) Opened a small position in TZA on an unexpected gap up.
(b) It moved against me.
(c) Opened a second allotment.
(d) Continued to move against me, and I briefly considered closing both positions for a minor loss. Instead of doing so, the thought that I might see a profit kept me in the game.
(e) Then it gapped down against me. I reflexively added a third allotment. That was my biggest mistake. I should have closed out immediately with the gap down.
(f) TZA then gapped down further multiple times in quick succession. I added two more allotments for what constituted a 'full' position.
(g) Then the sucker gapped down some more. WTF. Various English versions of the term 'Stunad!' crossed my mind.
(h) At that point, I got myself together. I ceased adding. In addition, I braced myself against the impulse to sell into the height of a short squeeze. Instead, I turned away from the tape and put my faith in human nature. Twenty minutes later, I glanced at the ticks and TZA had 'bounced' to 35.49. I could tell it was a 'dead cat' simply b/c I suddenly had the 'hope' it would bounce all the way back to break-even. That was the signal to sell.

Debriefing session during the drive home. I should have taken a -$300 loss immediately, which would then have allowed me to sit silently in sniper mode, waiting patiently for the opportunity to make several times that later in the day. Instead, I let 'emotions' get in the way, and ended up with a -$1600 loss (even that turned out to be only half as bad as holding till EOD).

To paraphase Todd Harrison- I don't always get it right, but I'll always be straight.