What Goes Up, Must Come Down

After my oversight on how Vega effects options pricing, I was slightly disappointed but still up 68% in 3 months, I couldn't complain. Afterall, I was a noob.

This was nearing the end of July, and the market had just hit 14,000 and market sentiment was shifting as credit concerns surfaced. I decided it would be a good idea to attempt day trading, heck I could make up that $12,000 in a couple days trading, or so I thought. I knew Apple was destined to go higher. I watched Apple in the morning and it looked like it was going to move up some more and possibly rally again past it's old high it made the day after earnings. It broke its old high in the morning and I decided to buy, my full position during the most volatile time in the market. Right after i bought, it moved higher I had 150 contracts I believe and I was up 3,000 in short order but it appeared to be stalling, I was somewhat worried but figured it was just pausing on its way up. It then promptly reversed and started a downfall as people seemed to be taking profits in the stock. By the end of the day , I was down I think another 12,000 instead of up like I wanted to be. So now, I was only up slightly over 30%. If I was smart I would have cut my losses and exited and waited to see what happened.

I wasn't smart then.

I figured it would reverse, however I chose possibly the worst time because the decent in the major indicies had now begun and people were fleeing equities for safer returns in bonds. By the end of the week I had lost all profit plus another 30%. I had managed to lose $50,000, someone's very good salary for a year, in a week.

Why did this happen? First, I broke all three of my rules. I traded in the morning, I bought all at once and I didn't cut my loss after the 1st day when I was clearly wrong and proceeded to hope it would come back. Had I even just follwed one rule of not buying all at once I could have likely managed to at least stay above even after that week.

So there I was, feeling so confident and flush with cash the week before, now I was defeated and much poorer in my account.

It was time for change....