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Stocks

The reverse FOMO on Tesla

So today I have to admit I fell victim to FOMO at the start of the trading day. In my mind I knew that it is very highly unlikely that Tesla would fall 8% two days in a row without a significant pullback yet when pre-market was down 8%, I felt like if I do not sell now, then Tesla would be falling and falling, and maybe it would not recover to anywhere close to $700 thus ruining my plan. […]

For context, I had planned to sell additional shares short at prices $700 and then $600 prior.

So today I have to admit I fell victim to FOMO at the start of the trading day. In my mind I knew that it is very highly unlikely that Tesla would fall 8% two days in a row without a significant pullback yet when pre-market was down 8%, I felt like if I do not sell now, then Tesla would be falling and falling, and maybe it would not recover to anywhere close to $700 thus ruining my plan.

So I jumped in changed my stop order to a market order right before the day started and got filled at $657.90 at the start of the day. I was very close to triggering the final sell order already at $640 also today to offset the previous order’s difference from the plan. Thankfully the thought crossed my mind that it would be significantly more painful to hold this position should Tesla jump back above $700 which it basically did.

For quite a few hours after Tesla climbed back to $700 already an hour later I felt the sting quite bad as in my mind I felt like I had lost the difference between my planned price and the actual price. The feeling was amplified by seeing my other positions in deep red as well which probably would not have swayed me much without the Tesla short.

Thankfully after a few more hours the sting started to dissipate as I calculated how much money I “theoretically” lost, and I had to admit to myself that in the grand scheme of things it is not that much. Also, I managed to avoid triggering the second order which would have put me in a lot worse situation.

The biggest mistake I made in my mind was actually yesterday when at the end of the day Tesla was trading near $715 which I should have considered close enough to $700, especially considering the kind of moves stocks were making that day, and I should have sold yesterday. Today would have been a breeze in that case.

My final plan which should not change much is the following.
At the moment I have my stop loss at $870.
Should the price fall to $620, then I will sell the last patch of Tesla stock short, and I will change the stop loss to $800.
The profit taking target is $400 where I believe I will buy back half and set a trailing 20% limit for the rest which should lock in the gains if that is what the future brings.