Back to the Drawing Board

Well, apparently a lot can happen in two days, especially when those two days are the largest drop in the market since february. I have already highlighted my concern about my over bias to the bullish side and apparently I should have acted with more concern because after partially weathering those down days oddly enough on this supposed up day I lost the most. From the opening to the close I gave up my gains for the entire month(what was left) and went into the red.

Am I upset? Hell yes. Should this have happened? No, absolutely not. Is it my fault? Yes.

Like I said before where money is lost there is a lesson to be learned(same can be said with money gained). Pretty much there is something to be learned from each trade.

This problem stemmed from a few things:
1. Giving losses too much room(hoping).
2. Too bullish(not balanced out with puts)
3. Large swings in one day.

I honestly have no idea how the market was supposedly up because none of my positions were, in fact they were all down significantly. AAPL, DRYS, GS, V, were all down huge, if not overall but had a huge range throughout the day.

DRYS was the biggest swing. Going from a +1700 yesterday to -1400. It was down 10% today alone, generally I would not expect such a massive break of trend with no recovery. Waiting till the end of the day (or anything besides the open) just meant further loss.

AAPL fell off a table part way through the day and also had a 10 dollar range. I waited the sell off out though and got out on the rebound, however it had to rebound significantly to even get close to my sell limit. In these scenarios the call options shed value a lot faster than they gain it back so even if say an option was 5.00 when apple is at 178, it sells off then gets back to 178 it could be worth much less than that.

I attempted to sell out of GS yesterday on the break of 180, I only got 1 of the 4 contracts sold. Bad luck because today its continued sell off was helped by a downgrade to "Sell" by an analyst.

My new positions went from sitting at less than my allowed loss to much larger than my allowed loss. However I can't say that for all.

Let's look at why risk management and sell rules MUST BE FOLLOWED. Visa, had I only allowed it my 2% risk, thats 2600 I could have saved. Stupid. FSLR, another big move down, should have signaled an exit a couple days ago, I held, could be another 1100 in my account. ACH, again going by risk alone would be another 1000 back approximately.

AAPL and DRYS, are harder situations because the swings came in a day and originally were not violating rules/trends. However, they don't even matter, I can't plan for those, but the above issues I can. Even with the unexpected moves in DRYS and AAPL, by following rules in the other 3 positions would have meant I was still up 14% after this move down. Since I did not I am now down 4%.

These changes have to be made, if I need to come up with a mechanical solution I will. Ideally I dont' want purely mechanical stops but if I can't do it myself it will be necessary otherwise we can see the result. The problems were being masked by initial gains, which sounds much like my original demise.

Lessons to take away, CUT LOSSES SHORTER. I also need a little more patience for cleaner entries. GS and DRYS are ideal entries, unfortunately those moved large against me to show the break of trend, but generally that is what I want to see to take a trade.

I am almost entirely in cash, taking a break till tuesday and I will reallocate my positions with diversification and precise entries/exits and proper loss management.

Overall, the market is still arguably in an uptrend, 1390 is not violated however I think it could come. If oil keeps going up and inflation rises and jobs decrease, there is no reason for the market to rally at all.

The gains I lost can be made up it will require dedication and application of lessons learned. Possibly a shift to the bearish side, but only once we see that in the charts.