2 Types of FOMO - Trading Long Mitsubishi Heavy
An example of my trading psychology and approach via π―π΅7011 Mitsubishi Heavy
Today:
NKY nearly +2% at the close, recovering ~Β½ of yesterdayβs losses with 77% of stocks on Tokyo Prime index positive vs 20% declining, 2% unchanged.
Leading the charge:
π―π΅7011 MITSUBISHI HEAVY INDUSTRIES: +8% on the day to new record highs, and pulling TOPIX Machinery as the top performing sector on the day.
π―π΅7011 MHI is now +177% for β24 YTD, and +15% just in the last 5 trading days (including the broad π―π΅equity sell off)
π―π΅7011 MHI shares were also the most heavily traded among Japan equities with notional turnover volume > 2x every other single stock, and even outpacing π―π΅1570 NKY Levered ETF trading activity - so there is buying conviction behind the move beyond just the algo flows
Iβm now out of the long position from yesterdayβs market on open entry upon anticipated indiscriminate sharp downside (as discussed w/ Michael Gayed live stream yesterday).
2 points regarding 2 types of FOMO in trading: 1) FOMO to open a position, and 2) FOMO to close an existing profitable position.
1) If you have FOMO (on anything), but are not actually acting upon it, thatβs generally speaking a good thing- not buying/chasing at runaway highs and not caving in at some arbitrary point of your own βcanβt just watch it rise any longer without owning it.β But then- if there is some market technical / mechanical broad indiscriminate sell off which presents a rare entry point - you have to be psychologically ready to act, if not HAPPY to do so, as this is the moment youβve been so painfully but patiently waiting for (and this is obviously subject to the broader prevailing trading/market conditions).
In other words, your Fear Of Missing Out shouldnβt exceed your fear of going against broad market fear.
2) The other FOMO that doesnβt get any attention but is equally important: Fear Of Missing Out on FURTHER gains by not closing an existing profitable trade. Unfortunately I actually donβt have much to add here from myself because I personally donβt ever get that sentiment (thankfully) - this is not some βflexβ brag or whatever, what Iβm saying is that because I donβt truly know what that fear of selling too soon, or feelings of βlossβ after a profitable trade is closed and the market keeps going (i.e. βexited too soon/left money on the tableβ etc), I canβt genuinely relate, and therefore have no βauthorityβ in discussing what otherβs genuinely do feel. All I can say is what I feel, which is - why care about what something does if I no longer have exposure to it - (which is my point- many people DO care, and so for me to say βjust stop caring after the tradeβ is just useless commentary).
What I will say is that when it comes to a highly volatile or fast-moving trade that can lose -100% and/or return in multiples (including options trading), my core philosophy and approach going into those trades is not to βmake __%β or what have you, my objective is to get to a level of gains where I can take my entire principal amount off the table, and still have exposure, but now with just house money on the line (i.e. now completely insulated from any losses). In other words, Iβm trying to βown XYZ for freeβ - and since its house money, I care FAR less about what happens, and therefore can withstand a lot more portfolio volatility (which is not the same as general βmarket volatilityβ).
But for non-hyper volatile trading, such as the long π―π΅7011 Mitsubishi Heavy in/out trade-
For FOMO type 1) You can see in my market commentary + video with Michael Gayed on the day of - I clearly state that I am looking at the NKY futures plunge as an opportunity to take advantage of babies thrown out with bath water. So Iβm ready willing and happy to buy into anticipated volatility - my βfearβ was that the market would stabilize immediately, or not drop far enough.
For FOMO type 2) Why close the trade so soon - even for short term trading, MHI shares can go even higher following newly elected π―π΅PM Ishiba press conference and potential hawkish China / pro-π―π΅ defense spending commentary coming, canβt they? Yes obviously they can, in fact, I expect they would. Do I care? No, I absolutely do not care - and not itβs not (just) because I donβt care what anything does after Iβm out of it.
Itβs because the purpose of my trade wasnβt based on fundamentals of bullish Japan defense sector - it was to just play what I saw as a temporary market aberration of a NKY-standalone technical sell off, and to identify / own that which will outperform when it reverses. And when that came to fruition, my reason for opening the trade was realized, and so I no longer have a reason to own MHI under this approach, and so Iβm out.
What happens afterwards has nothing to do with my original intent- and so I truly do not care. IF I held onto it, and it went further upwards (which, again, is what I expect), then that wouldnβt make me feel good- quite the opposite, because whatever __% up could just as easily be the same sized move but DOWNWARDS, and those swings are not related to my original trade intent.
I have fear of buying when green and selling when red- I have to trade against market direction.
If you watch even my prior live streamed video with
which was during the AM trading session of π―π΅Black Monday (Aug 5) when NKY was -11% and getting halted, youβll see me say that I was scrambling to BUY/EXIT my existing shorts that morning.In case you missed it- here is our live stream from yesterday:
https://www.youtube.com/live/uO6H95q2oAA?si=lGjHcplZ9sv74upQ
From π―π΅Black Monday:
https://www.youtube.com/live/IT_pP8VHTZs?si=JKNbnK1hIusyy6C4
Thank you as always,
Weston
"I have fear of buying when green and selling when red- I have to trade against market direction."
I don't have a fear but some kind of blockade and therefore it is very tough for me go in the same direction as the market.
Weston, could you please be so kind to provide some link to a list of all listed military stocks in Japan - interested in companies where defense represents majority of revenues