June was my best month of the year so far. I shorted S&P and iron ore stocks. I actually lost money on my S&P short bets. Fortunately, my profits from my iron ore stock short bets were more than enough to cover them.
Iron Ore Trades
The price of iron ore took a dive from 140+ to 110+ in the earlier part of June. I caught probably about 2/3 of this move via shorting Rio Tinto and Fortescue in the Australia market (ASX). Sentiment turned very bad in the iron ore sector, primarily due to stimulus/demand expectations not being met.
I got caught by the rebound in the S&P in the later half of June. I was betting that the continual negative news flow would bring the S&P lower, but the reverse happened.
Loss aversion is defined as the cognitive bias that describes why the pain of losing is twice as powerful as the pleasure of gaining. It is very real for me. At the end of June, I actually did not feel happy. The pain I felt from my S&P losses was more than the pleasure I gained from my iron ore gains. This is despite my iron ore gains far outweighing my S&P losses.
Because of this cognitive bias, there is often more pain than pleasure in the field of trading/investing. It is therefore important to take care of our mental health, as we can only perform optimally with our minds in tip-top shape.
Take care everyone!