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Option Side: Could not get a trade off this morning. There was so little premium available that I just couldn't find a trade that made sense. Makes missing Wednesday's trade a little more disappointing. Closed Monday, so next Wednesday might be the next chance. With the equity spreads, not much happened. I am a believer that the only part of a trade that matters is the exit. Flip a coin on the entries and then manage it properly. But these trades might require more robustness on the entries. Nothing happening. I'm not getting killed, but it's not making me any money either. Down about 95 today.
Day Trade Side: Did one unit today. End of the week, end of the month. Trade didn't do much and I did a lousy job on the exit. Up about 270.
Thus concludes August. My most profitable month of the year so far. But also, by far, my most volatile. I track the volatility of my returns because I have noticed over the years that spikes in volatility often precede big drawdowns. So I am concerned that I may be getting a little reckless in my trading. Profits are important. Survival is much more so. I am going to study my August over the weekend and look for any worrying signs. For September I'd like to see fewer, narrower swings, even if the profit ends up being less.
If you want "reckless", you may want to look at August 23 when your PnL induced a bout of irrational directional trading. It worked out well, but could easily have gone the other way. JMHO.
Problem wasn't hard to find. It started on August 15, the day I turned a 2400 dollar winner into a $1967 loser. For 9 trading days, my account was spasmodic. I didn't even trade 2 of those days, yet that span of time is where I went off the rails. Remove those from the equation and my volatility, and commissions per day, are right in line with the rest of the year. In fact, better. I remember being distraught that day, not because I lost money (that happens all the time in this business), but because I felt that I did not trade like a professional (my daily mantra). I felt like I had moved on, but clearly I hadn't. Need to do a better job of that going forward. First step is being aware of the issue.
Second step is realizing that my knowledge, experience and skill is a net positive. For the month I outperformed the model by over $5000., meaning that overall my adjustments worked quite well. But there will be times I make the wrong call. It happens. Accept it and move on. My model, untouched, had 11 winning days, and 11 losing days in August. I had 15 winning days and 5 losing days. (2 no-trade days). I'm right more than I'm wrong. I can't let the competitive beast rage within when I turn a winner into a loser. It's part of the deal. Funny, I never get distraught when I turn a losing day into a winning day. Again, accept it and move on. Trade like a professional. Every day. Every single day.
Luck happens. For those 9 days cumulative I was positive $4069.76. But I know that can't and won't continue. In general the market will give you what you deserve. I deserved to lose money during that stretch. I didn't. I won't be so lucky next time.
Remember how fortunate I am to do this for a living. I have a friend who is a software engineer at Twitter. I was texting with him last night. He tells me how nice it must be to sit at home all day and make more money than he does while not having to deal with driving in San Francisco to work every day and deal with all the frustrations of corporate life. And in his mind, coding is tougher than trading, and no weekends. I was a bit miffed at first. I'm at my desk every day by 6:30. With rare exceptions I stay there until 5. I check the markets throughout the evening and sometimes through the night. I try to do some research on the weekends. He makes 2500 per week. I can make that in a single day. Heck a single hour. But guess what? I can lose too. He never has a losing day. His account never goes down after a bad day. I suppose he could get fired, but if he does he can go get another job in 5 minutes. If I get "fired" I have to go look for a homeless shelter to live in. He's part of a huge team. I am all alone with nobody to fix my mistakes but me. He gets health insurance and many perks paid for by his company. I pay for everything myself.
Those are all the things that I thought about saying. But I didn't. Because he's right. I am a lucky guy.
First, thanks Bob for the comments. Absolutely agree.
Option Side: No options today. Hopefully tomorrow. The equity spreads continue to do nothing for me. I'm about to write them off. Swapped out USB for GS in the financial sector. Stayed short BAC. Down about 200
Day Trade Side: A very disappointing day in the end. Trade worked beautifully in the beginning. I did 2 units and was up 1100 (550 per unit) when it came time to put on the 2nd leg. I briefly thought about taking the profit and calling it a day. But that seemed silly. I did the 2nd leg. The trade got down to +300. But it worked its way back up to, wait for it, +1100 when it was time to do the 3rd leg. Again, down to +300. But no come back this time and it just drifted away, first to even, back up a little, and then down and no more recovery. Finished down about 1210 for the day.
Wow, I have been so lazy about doing this journal. Need to get back on track. I abandoned my Equity Spreads on Wednesday. They lost every day I had them on. I challenge anybody reading this to match that. Try putting on a trade that loses money every day for 9 straight days, without any adjustments. It never lost much - I think altogether I only lost a little over a grand - but I lost a little every single day. That's pretty impressive. I'm tempted to just fade it, but I haven't done so yet.
I did do a couple option trades. Two covered calls, both worked. Wanted to do one today, but when I checked the price of an E2AU9 2995 Call at 7:30 this morning and it was 2.20 x 2.40, I knew it wasn't going to happen. The boys were expecting a down day. Turns out they were right. I thought about doing a covered Put but eventually did nothing.
Day trade Side: Did 2 units each day last week and again today. 1 bad day, 1 good day (today) and 3 nothing days. For this month:
-1207.68
-171.16
+109.88
-139.19
Today I had to leave early, so I closed the trade when I was up just over 1K. Finished plus 1018 for the day. The trade went on to make more than double that, but I bailed because I had to leave to help a friend with a few things. Probably a poor decision (and I don't say that just because it would have been more profitable, I say it because if the trade had been losing I probably would have let it run, thinking it'd come back). I had several days last week where I had a very nicely profitable trade and just sat and watched it go from nicely up to even or worse. I'm sure that influenced my behavior today. Need to be more robotic I suppose.
For the month I am down about 390 on the day trade side and down about 45 on the options/equities/whatever side. Multiple small losses on the equity spreads offset by a couple profitable covered calls.
Non Day-Trade Side: Put on a few equity spreads. Yesterday I said I should have faded the trades, so today I did. Best way to observe and learn. I placed the orders as limit orders around 9:50 after I had gotten my 2nd leg done of the day trades. I entered 8 orders as limit orders. 4 sells and 4 buys of course. All 4 sells got filled, but only 2 of the Buys. I never did move my bid. I will try again tomorrow. Even without what would have been the two most profitable legs, I was up about 80 bucks on the day. Maybe fading is the right way. Who knows? I'm just throwing junk against the wall to see what sticks. I won't risk much. These trades don't move fast. I'll give it a $1000. or so.
Day Trade Side: Exact same trade as yesterday. M2K/MNQ. In fact, the trade worked all day yesterday, all night, and again today. I could have just left it on from yesterday. But obviously I didn't. It started working right from the beginning and today I let it run all day. Didn't make any tweaks or close anything early. Yesterday the model was up 2190 and I captured 1016 of that for two units. Not very good, but I had to leave early and missed most of the day. Today the model was up 2472.70 per unit and I captured a big chunk of it, finishing +4861 for the day for 2 units. I got a LOT of slippage on the way out, so I could have done a better job there. But still, quite a good day.
