Knowing When You Are Dead Wrong
Well that escalated quickly! The markets have gone from euphoria to panic in the space of a month.
Themes everywhere have unravelled:
Critical minerals have gone from a strategic reshoring super-cycle to a crowded, busted trade
The AI revolution is now under scrutiny as capex surges and competition intensifies in a stalling easing environment
Crypto is doing Crypto things
If there ever was a clear signal of the market’s fragility, it was the price action after NVIDIA's results. The saviour of the market beat the street, sending the stock more than 5% higher in the after-hours. The ES ripped 80points. It all looked back on. However, as the cash market opened, the stock was sold sharply and all sectors collapsed with it.
That is not what the Bulls wanted to see. It is not how I was positioned.
I have no idea if this sell-off gathers more momentum or not. I believe the job of a trader is not to predict but to anticipate, gauge price action, and manage risk.
What I do know is that I came into Friday’s session in Australia with completely the wrong positions. I was totally wrong. I rushed and forced a discretionary trade onto the market to participate in a market bounce. It was another example of failing to adapt to current market conditions. You can read this setup here
There is no time for hindsight in this game. You can’t rewrite the past, but you do have to face the present moment.
The Short Bear couldn’t have put this better in a recent tweet when talking about navigating losses and setbacks:
The dramatic drawdown, the painful reversal of fortune, the failed strategies and idea, is not the exception. It is the natural, inevitable friction of any high-stakes venture.
Every one of us will face moments when the fundamentals we trust are questioned, and the bottom line is bleeding.
The vast majority of the world operates under the delusion that absolute, seamless success is the expected norm.
They are unprepared for the depth of the valley, only perceived by those who try something worthwhile.
Our true value, our competitive advantage, is not established during the bull run. It is revealed entirely by how we act in those dire moments.
It is the disciplined response to a crisis, not the reaction to a windfall, that defines us as leaders and shapes our enterprise.
Long-term, compounding success is never a stroke of luck. It is forged in Perseverance. It is built on the strength of our Adaptation and our Action through the most grueling part of the journey: the daily, painful requirement of showing up without capitulating.
This is the game we sign up for. It can only be felt as a market participant.
There are times when it is going to get hostile and smack you around. The only way through this is to maintain systems and trust the process over the long game.
For me, this process starts with facing reality and creating a new plan. It is about taking responsibility. I did that on the morning of Friday 21st November, before the open, when I knew it was going to hurt. This post is an insight into that action plan and how it carried through the day. At its core, it is about accepting when you are wrong as a trader. It doesn’t come naturally. It is a hit to the ego. It triggers our survival instincts.
But the reality is you can still make a lot of money with a 50% win rate.
“Pre-Open Plan 21/11/25:
Worst possible case outcome. NVDA got sold into on good news and risk off across the board. The ES reversed almost 200 points off its highs and the sector ETFs are down 3% or more. Australia SPI futures are -150. This is clear confirmation of a change in market character. If it wasn’t obvious already, it is now.
The US Daily structures are all at breakdown points. Real risk of a break into the weekend. Have to act now in case this unravels.
Weirdly, it is easy for me to accept when I am dead wrong. I know exactly what I have to do as my idea is completely invalidated.
The market hedge should help somewhat, and oversold Dailies should limit some of the damage - but no doubt this will be expensive. I have internalised the potential risk loss number and cross-reference realised loss with the planned 1-day VAR sheet.
It has taken me too long to fully adjust, but this is the slap in the face. None of my positions are big, but the sheer number of them is excessive. It is also discretionary chart trading vs meaningful edge. Go figure.
I have said it before, but I need to protect everything I have built over prior few months. Hacked back a lot, but re-buying again yesterday is another trap. The root underlying issue is my desire to always be involved. Address this later.
Action Plan:
Automate out of overnights quickly into algos. Don’t look. At the market and just move on. This is GMG, NXT, TNE, and SLX.
Keep the hedge on until the dust has settled. This includes market and EVN short.
Only longs to remain are FRS and VMM. I know why I own these, and I know the timeline of events. It will hurt today, but the thesis is not invalidated. The risk to stop is defined.
Can I structure a short? I will be at my intraday stop-out limits early of -$25k. Therefore, accept a de-risk day. The priority is limiting damage early. When I have created the space, I can take one trade at a time with focus. The max loss I can take on any Intra idea is $5k max with 2 stocks only.
Extended Lithiums are the choice expected value shorts. Confirmation with the reversal in ALB overnight. Potential trapped momentum longs. Plan what I want a CXO, PLS, LTR short to look like. Where is the vacuum and where are the longs trapped? Break of prior bar lows; key levels break early; RVOL; no move back above open.
Avoid shorting oversold techs. There is a low edge and low EV here. This will just compound things for me.
Think deeper about BBUS throughout the day and whether to get bigger if the sell-off continues.
Accept my losses. Get a clean slate again. Rising volatility means all bets are off, and refocus on what I can control with core intraday strategies. Back to being a one-trick point intraday catalyst trader.
Don’t overtrade. Focus on just one good trade.”
That was the plan.
And the Result?
“End of Day Report Card 21/11/25
-$25k to small green.
Really proud of the performance. I knew I was totally wrong pre-open and accepted it. Huge reversal overnight, and all positions were wrecked. Fortunately, I had some hedges to stem the damage. Early loss was in line with the planned 1-day VAR risk.
I was really calm. Writing out a plan pre-open helped to increase self-awareness. I must keep writing pre-open as part of my visualization routine. This lays out a roadmap that makes execution easier in real time.
From cutting losses early, I created the space to focus on 2 fresh shorts in liquid names e.g. PLS, LTR. The Lithiums had the best Expected Value given the Daily structure, extension, and turns lower. I was focused on the tape and not flicking around tickers. I watched with purpose and was right from the start in PLS, which made it easier to hold.
The saving grace was MYX breaking news on Bloomberg: “Chalmers to block Cosette bud (bid) for Mayne Pharma.” The stock was not halted! I heard the headline promptly and went to the market instantly. Unfortunately, a thin stock and lack of borrows meant I was not a great size, but it was a start. An arb fund had left an algo on and hadn't seen the headline. I assessed the EV and potential target down into the low 4s, which meant I was happy to hold a core. There was just no real big bid to hit, and I was waiting on further borrow approvals. At best, I could have done another 25k down to $4.80s if fully aggressive. I did cover some into 470s, which was a rule-break, but there was some confusion as to whether it was an error or a hack given the initial typo.
Ultimately, this was a very high edge trade and a huge EV. It needed to be assessed on its own merit vs the losses I was taking elsewhere. Having all the losses overnight negated the ability to fully capitalise on the fresh opportunity set and real edge, which is my sweetspot.
Coming into the close, perhaps I was too overconfident again and actually ended up net short with index hedges and Lithiums. However, markets are at a very precarious juncture and need to keep on a hedge. The data is overwhelming that the weakness of this magnitude on a Thursday could bleed over the weekend.
Next week is all about replicating what I did today. Specifically, this means being on the sidelines and focused on the best catalysts in front of me. It is executing one thing at a time and watching that tape.
I am at my worst with lots of positions, lots of exposure, and constantly flicking around trying to be involved or make something happen.
Important question- why have I put myself in this position in the first place? There is hindsight here given the sell-off post NVIDIA. Nonetheless, I was forcing a trade. It wasn’t a playbook. Sure, the EV was ok but I was forcing myself to be in the market rather than on the sidelines. The answer is to do more of what works and less of what doesn’t. Focus on structured playbooks. Increase self-awareness and checks into the close. I can only be putting these discretionary playbooks when I am out of drawdown and experimenting in small size. If it wasn’t already self-evident this market is heavy, this was it.
Always be hedged if taking overnights.
MYX:
Good speed and initial execution. The idealised was to keep offering stock into 530s and lower given the wide spread. An arb had left a buy algo on the market.
The only real error was early cover into the first dump at 470s. The target is all the way down into the low 4s, where the stock came from. Still so early in the piece and a Merger-Arb funds are trapped in size. I resorted to “see profit, take profit” given the buildup of prior losses.
Need to assess the new independent EV
PLS
Gap and go short from the start. $4 was the inflection point, and the bust of this level early created a quick algo volume dump. Tried to add in spots through the day, but no real aggressive seller or follow-through.
LTR
You can’t argue that the market is wrong
The job is to make the profit line go from the bottom left to the top right. It is as simple as that.
If the price action invalidates the thesis, and if losses deepen or persist, you were wrong.
You can’t argue with the market. No doubt the maths or fundamentals or trade idea may be proven right at some point in the future, but this is a moot point. Because the job is to trade what is in front of you and make the equity curve go higher.
Starting each trade with this mindset is actually totally liberating.
People who say trading should be emotionless talk bullsht. It is never easy to face losses and adversity. It is not easy to handle emotions when winning. However, there should be a repeatable process and strategy that operates as the overriding framework.