My Trading Journal

#11
18th May will be a day to remember. Lots of lessons learnt. I am staring at a loss of 120k in my options positons. Though long stock holdings have gone up.

Lessons Learnt: I will read this post every time I trade.
1) Before any critical event (Elections, Budget etc) never write options no matter how far out of the money they are.
2) Theta, Gamma, Delta and other theories go out of the window on days like this.
3) Never try predict the future.
4) Never try to beat the markets. You can beat it once,twice,thrice..but over the long haul you will get beaten.
There is a basic difference between trading and gambling.

The problem with your positions is that they were all naked positions. You were just not prepared for the worst case scenario. IMHO, writing options without buying protection in case of an individual trader is like gambling and not trading. There is nothing wrong with trading before the big events like budget, that is if one is trading and not gambling.

You should have bought 4100 calls or 4200 calls to limit the loss on your short calls. Those calls were available at dirt cheap prices on last Friday and could have protected you from the massive loss.
 
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#12
There is a basic difference between trading and gambling.

The problem with your positions is that they were all naked positions. You were just not prepared for the worst case scenario. IMHO, writing options without buying protection in case of an individual trader is like gambling and not trading. There is nothing wrong with trading before the big events like budget, that is if one is trading and not gambling.

You should have bought 4100 calls or 4200 calls to limit the loss on your short calls. Those calls were available at dirt cheap prices on last Friday and could have protected you from the massive loss.
Thanks.I should have done that. Now I will have to sell my stocks to offset some percentage of the loss.
 
#13
Never worry friend. Always markets will give chances. We need to just utilise. Never go for naked options or futures open positions. It will just squeeze you out of the path.

All the best. And wait for the next opportunity.
 
#14
Nifty=4211
Closed 1 lot 3800 Call at 474

Total Premium Earned = 28301
Premium Value Today = 112825
Unrealized P&L = -84524
Realized P&L May = -6100
P&L LTD = -595193
P&L YTD = -12314
 
#16
A question : What sort of analysis do u use if any. Cold u post the rationale behind your entering /exiting positions.
I am not a day trader but more of a short term/positional trader. The main focus of my trading is to maximize returns by use of options in my portfolio. So as far as anaysis is concerned, I dont try to over analyze the charts, try to keep it simple using S+R levels, and candle stick patterns on the weekly charts.
 
#18
5/28/2009 - Nifty=4337.1
Closed 2 lots 3800 calls at 480
Rest all assigned.

U P&L May Derivatives= 0
R P&L May Derivatives = -143967

U P&L Stocks = +25404
R P&L Stocks = +127394

P&L LTD = -599451
P&L YTD = -16572

Had to sell stocks bought in nov 08 to offset derivatives loss.
 
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#19
Have u backtested your appraoch ? And does it make money during your test on historic data ?
You P&L is showing many REDs that indicates that there is some area of improvement.

Happy Trading.
Yes..I have long way to improve. My main weakness is that I book profits very early and accumulate losses. Really haven't been able to implement stop losses.
As far as back testing is concerned, I dont have a system that I can back test. It's a method that is a combination of SR levels and candle stick patterns. Would love to know is such methods could be back-tested.

Thanks!

Safe Trading
 

AW10

Well-Known Member
#20
I dont have a system that I can back test. It's a method that is a combination of SR levels and candle stick patterns.
Contradicting statements. Maybe you have partial system but not a complete system. A trading system should have rules for
1)Setup
2) Entry

3) Exit rules - a) Inital Stop
b) Trailing stop
c) Profit exit
4) Position size i.e how much qty to buy
5) Risk management - Risk taken on the trade (at the time of opening the trade as well as when it is open)

If you drill down the method u use with SR level and Candlestick pattern, you can write down your setup and entry rules.
Your actual trade log and result so far will tell u whether your currently defined partial system is working on not.

If you don't have Exit rules or Risk mgmt rules, then it is time to define them (any rule is better then NO RULE). You can look at improving them later but until there is any consistency in your trade exits, how will u analyse and improve them. In trading, EXITs are more important then Entry. But most of us start with fascination of finding best entry.. and place too much of importance to it. In reality entry is just
10 to 15% of trading.

Seems, you have difficult task to work on i.e. your mindset and change the mental setup from "Letting losses run" to "Let profit run".. and from "Book profit now (instant gratification, ego satisfaction etc)" to
"Book losses now (painful, accepting our mistake etc)"

All the best.
Happy Trading.
 

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