Well, I'm a fucking idiot.
I had a relapse today back into old risky ways. What happened is I tried to pick a bottom on CROX, expecting a snap back after such a severe sell off, and I was wrong, which would have been ok, but I was also not properly position sized.
At the open I saw the stock start to rally, which is what I was expecting so I hopped on board with 50 call contracts. The rally promptly stopped but not before I had paid up for the calls probably at the high of the day. I then sat around down about 1500, I wasn't too worried, I knew it would be volatile and had potential for a big pay off. I didn't have any defined risk, none, I didn't say "ok if I lose x amount I am out no matter what" or "if it breaks this level I am out". All of these were big mistakes, mistakes which currently have me still holding the calls over night into tomorrow and currently down 20% on my account. So, now I have set myself back again big time. The worst part is if I had entered my trades today a lot would have worked out. I am now over biased to the upside when my plan was to be equally balanced after today.
If there is a bad jobs report tomorrow the bull market could be over for a bit if we break below 1500 on the S&P and finish there.
So, what do I learn from this trade today? FOLLOW THE RULES! I had no defined risk, I didn't wait for a technical signal to determine if it even was a good time to get in, I was over position sized. In such a case I likely should have been emotional, but wasn't, it may have saved me some money this time. This was the anatomy of a very poor trade. Now, its back to the smart way of doing things and hopefully I can get back even by the end of the year, which may be a long shot.
Off to class, so I can stew in my failure.
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2 comments:
Ben, position sizing has gotten me TOO many times to count! Ugh! And I would always abandon position size when I assumed that I had a sure thing... NILE, GRMN, just to name a few. Gosh!
Now, when I enter a trade, I ASSUME that it will go against me, and I position size around that assumption. I try to stick with OTM options, too. They're cheap and if the trade goes my way, so does the delta. But if I'm wrong, the delta dries up, too, helping me to keep my loss to a minimum.
I look back on so many trades that I lost WAY too much money on and cringe. Alas, if only I had followed the rules...somebody pass me a kleenex please...
Yea, I hear you Krystal, it sucks though because I should have known better. Apparently CROX announced a stock by back after the close, so that may boost shares, if I can some how by luck get out with a smaller loss I'll definitely take it.
If we can get a combination good jobs report and that good news on the share buyback, hopefully I can recoup some of the loss.
But you know what they say, when I you are hoping, you should probably be fearing... :-( Oh well, tomorrow is another day.
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