Today morning looks like the perfect setup:
Between 11.30am to 1.30am, market was falling in a sure manner. It could have been $350 of profits, $450 max.
However, the day ended up with a total loss of $278.
Not too bad, but what can be done better?
Here’s a recap of what went wrong:
1. Too greedy
The same old problem. Traded 100 bear puts at $413-$414 at $0.03, Why at $413?
- It was 1 standard deviation away.
- The potential profit looks high.
- Itching for a trade?
took some profit at 30x $0.02. The remainder 70 was open for the night, hoping to expire worthless. for a profit of $300?
Lesson learnt: Trade in smaller quantities. Take profit early.
2. Too much risk
Leaving positions open for the night is risk! Hoping the market not to touch strike price – not a fat chance!
Always be monitoring open positions.
Lesson learnt: Always manage risk, first. Ensure stop loss is in place.
3. Underestimating the market
The last 2 hours the market suddenly became bullish, making a move of $4 within the last 2 hours.
Previous day patterns showed the market to be sleeping.
Lesson learnt: Never underestimate what the market may do in the last few hours!