Whipsawed.

Investopedia defines the term whipsaw:

A condition where a security's price heads in one direction, but then is followed quickly by a movement in the opposite direction. The origins of term is derived from the push and pull action used by lumberjacks to cut wood with a type of saw with the same name.

My IWM trade looked like this:



Entered the short @ 111.20, covered @ 112.45 for a loss of -$93.75. First, I should have (hindsight 20/20) covered @ 108.50 the next day for a quick profit... but decided that this time I was going to hang on to positions in order to avoid the GMCR mistake of exiting early. Instead, I held and when IWM gapped up above the 200MA and the market was making a new all time high, I quibbled and got shaken out. Then IWM immediately has 3 big down days and I could have been well in the profit, especially since I was considering adding to the short! -75 @ 111.20 + -25 @ 112.45 and covering at 107.89 would have netted $362.25. Argh!


Not only has IWM frustrated me, QQQ has even more! Look at this break out and subsequent failure:



Entered short -85 @ 87.54, covered @ 88, then followed by buying +2 JUN14 89.63 calls for 0.95. Two days later QQQ sells of and is back under 88 and the 50MA, previous resistance points. Monday showed a breakout, but apparently it was a false one. Sold the calls for 0.74, a loss of -$42, making QQQ total loss -$79.72. Unlike IWM, I did not consider adding to short, I thought this was a clean break. Oh well.

These aren't large losses. In fact, they're trivial. But it's frustrating as hell when you have winners that quickly become losers, and then on top of that, proceeding to get whipsawed.

The main methodology I use in my trading is support / resistance and overbought / oversold, in case nobody noticed. This method works very well in trending markets, and not so much in sideways markets. This is where my lack of experience shows... knowing how to read a true breakout versus a false one. Although I have made immense progress as a trader and investor, I have a long way to go!