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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!