Chopfest!!! Feel like you've been on a rollercoaster?

You have! This picture says it all!!

Day 2

Made it through Day 2. Respected my stop on VECO and got taken out. Took it like a man. This was very puzzling, VECO was up in the after hours but opened mediocre and then got taken down with the market. Oh well. I didn't lose sleep over it. 

I am also still holding my options from this past week in my other account trying to get out of them without losing too much money. I refused to sell today in this chopfest although there was a point at which both positions were less than $30 away from break even, and in retrospect I should have closed them out then. Oh well. At least I didn't put in a liberal stop that then got taken out.

Down to One Single Rule, and I made it through Day 1

 I've decided that my list of rules is too long (see somewhere below). I've decided that I have only 1 rule. Whatever trade I put on, I can risk no more than 2% of the liquidation value of that account. So if I have an 8k account, I can risk $80 x 2 = $160 per trade. If I have a 2k account, I can risk only $40 per trade. Not sure how I will trade a 2k account, perhaps scalping only. In any case, this is my 1 rule.

I can still risk this money in different ways. For example I could go long stock, and set the stop so that I lose max $160 on whatever position I take. For example buying 100 shares of a  $30 stock with a $28.5 stop would lose $150 max and even provide a few bucks for commissions. Or I could buy an option worth $320 and set a stop on it to sell automatically if it touches $160. Or I could spend the whole money on one option for $160, or hopefully very rarely, buy 4 "lottery ticket" OTM options for $40 each.

If I need to lower/loosen the stop, well then I need to reduce the position size accordingly. No matter what I do, the risk can absolutely not exceed that amount of max loss. 2% is ok. It is sad when it occassionally hits that stop -but I can sleep at night. The past 48 hours have been horrible. I am still holding some options in the "hope" they recover, right as we go into "sell in may" and as Goldman Sachs gets investigated criminally tonight... I hate hope. Hope is not a strategy. Prayer is not a strategy. You can't control what the market is going to do, so all you can do is control how much risk you are going to expose to it.

Also here is a good article from a guy on stock twits on trading rules:

Joe Fahmy's trading rules

Back to Day 1

Well tommorow will be day 1. The day started off fine. The problem started when I failed to take a $50 profit in a RIMM that I quickly made, shortly after the opening bell. The profit dropped and I could have still made $20, but I did the dear-in-the-headlights thing, and soon it turned into a $50 and then $100 loss.
Then the rest of the day during the sell off and again near the close I did the unthinkable: lowered my stops, several times. The first big bounce seemed like it was going to end OK, but then we bounced again and ended up closing on or near the LOD.

During the late-day bounce I even added a long position in this account because I figured it was a Stewie alert, but I had already played the Stewie alert in another account and didn't need to add more risk to this one. The problem with this account is that it is only 2k and I am down $300 from where I started and constantly fighting to get back. I've got several (option) positions going, also XRTX and LVS from the other day. I figured this week was going to be a blow-off top, super-strong, etc, and THEN crashing next week, but hey what I think doesn't matter.

So now I am in a position where I am "hoping" for a rally (dang) going into the morning. I do think it is possible, somehow I think this whole thing is related to Goldman Sachs and NOT Greece, and is their way of punishing America while their CEO is being interrogated on television. Isn't it funny how the one good trade today would have been to be long Goldman Sachs! In any case, I broke all sorts of rules, from alllowing more than 2% risk on each trade (technically in this smaller account I should only be risking $40 per trade, and if I can't do that...don't trade).. and I am even afraid to look at my rules to see what else I broke. Human emotions are a powerful thing, and I am still being affected. Wouldn't it be nice to be able to sleep pretty knowing that in the absolute worst case, I'd only lose MAX 2% on each trade.. it works nice in theory but in such a small account, again, you need to try to use options and do miracles with them (maybe trade the qqq's a low priced option)-- or maybe trade penny stocks with a tight stop.. or just not trade. Fortunately more money (about 3k) is coming into that account sson so it will be a 5k account.. if I can just preserve the money in there now....

Was having a good run of trading and BLEW IT TODAY

Well, I had carefully avoided the market for a number of days or traded very lightly and prudently, and then today had a bad day. It started off by having a lot of work stress Thursday night, staying up late, and having a late shower. I got to my computer as the market opened. I tried to sell my SPG 80 call for $5 and no one would even take it, no big surprise. A few days ago the REIT's looked good but this option expired worthless today - no big deal, I risked $45 on  purpose. Then my fellow comrades in the Stewie service sell VMW for a profit, and I get upset because I was being conservative, didn't want to risk holding the option, so I sold it yesterday for a $30 loss when I could have made a $100 profit if I had kept it until today. Well I didn't know that, so I probably did the right thing, in fact I still believe I did the right thing. Then today, I kept getting drawn to the idea of taking something and buying a cheap option and wacking the market with some major profit. All of the sudden AAPL was headed to 250. I hesitated, the 250 strike option was only $75 and if I grabbed it I could make a lot of money if AAPL later headed to 260. This was all after the market had its usual early pullback, and AAPL was leading the way up. Well there was all this excitement, and I saw this option get more and more expensive and bought it at $140. OK fine, if AAPL was still going to head up to the moon (260) at least I got in, right? Well all of the sudden AAPL fell back to $250, then $249, then someone in the chat room said "Something Happened!!" and I should have sold there. In fact I was putting in an order to sell at $79, and hesitated, thinking we'd get a bounce (as we often have in the last few weeks). Well that was GS getting sued by FC and it was only downhill from there. Talk about losing time premium fast, I didn't want to take a $60 loss, then a $40 loss, then a $20 loss, well I finally sold the option for $13 and at least I didn't hold it until the end of the day letting it get to $0.00. Because this was a very small account ($2.5k) it was a 6% hit, violating my rules of having only a 2% loss. I had called my sponsor and asked him for an exception today to make this one trade even though I knew in my gut it was the wrong thing to do, but my emotions overtook me. We'll see what he says, whether we ignore this given that I had gotten an exception or what. In the meantime I am writing this down so I remember these days. 

Reached 60 days of not overtrading!

I am not just past 60 days of not overtrading according to my rules. It has been a little hairy and there have been some grey areas as well as honest mistakes but my sponsor has congratulated me on the success. In all of my financial accounts I am better off now than I was 60 days ago. Credit to Stewie who has acted as trading coach and advisor. On a sad note, my grandmother of 95 years of aged who survived World War II and raising 7 kids as a single parent starting in War time, passed away on Sunday, and I am taking some time off and going to the funeral.

Momo.