Thread by @SubhadipNandy16

Grab a cup of coffee and read on, I hope this will be a very interesting topic to discuss.

What do you do when you have a position over night and the market gaps significantly against you?
( you are looking at significant M2M loss)

I have faced this scenario quite a few times in my life, which is normal when you are in the markets for 20 years. 😃 When this happens, this is what I felt :
1. Heart starts racing ( your heart beat actually increases)
2. Body tenses up
3. You start breathing fast

There is a physiological explanation for this. Humans are genetically programmed to get into fight or flight mode when in danger.
More here :
health.harvard.edu/staying-health…

This fight or flight response hampers normal rational decision making which makes life tough for a trader. On initial days, I made the decision to
1. Double position
2. Go reverse
3. Cut and trade aggressively elsewhere to cover loss

All these lead to more losses

I later read a lot and spoke to a few psychology pros to tackle this scenario. They said that this is akin to a panic attack so relaxation techniques should help. The simplest is deep long breathing. Not much, just for 5 mins

I also learnt something called a 3-3-3 technique to tackle panic attacks.
Now I use a combo, that's what I used yesterday when I faced the m2m loss after the gap down.

Here is the technique :

1. Try breathing deeply and slowly
2. Look around for 3 things in the room and name them
3. Listen for 3 different sounds
4. Concentrate and move 3 parts of your body

The exercise outlined above should take around 2-3 mins. Continue the deliberate slow deep breathing if you can.

This helps me to take better decisions. I hope this helps you too. 🙏

Let's see responses and I might add some specific rules related to trading on what to do after you have cooled down.