Fear

I am currently short on the Nifty from 5022 levels as most of you would be aware. As I write this note, I have this sinking feeling in the stomach that the market is going to gap down and from there move up through the day. I get this kind of feeling whenever I am short and the market has moved down for a few days.

I know from past experience that there is no basis for this feeling other than fear. Fear of losing the MTM profits that I have in my current position. Currently the fear of losing the existing MTM profits is more than the fear of loss of any potential gains from a further fall in the market. That is why I keep worrying about a rally. At the same time I also know that the moment I decide to cut my short positions and book the profits, I will start to worry about the fact that I have cut my short positions too soon and the market will actually move down further. I know from the past that however much I try to remain unaffected by my current position, it is impossible not to let my position affect my thinking. Fear dominates everything else and despite my best efforts, fear still retains its ability to impact my thinking.

Which is why, I write this note. It helps me to deal with my worries much better. Now that I have done it, I can state that I will continue with my short position until the Nifty crosses 4944 at which point, I will cut the short positions and go long.