Ok, here are last week’s results. Overall we did marginal coming in at a +2.52% for the week. But the larger thing that happened this week – this was a textbook week for being disciplined and following your trading rules. By following my personal trading rules (which I will be putting up this week after condensing them from many past posts on other blog sites) and staying disciplined (using the sports cliché – I stayed within myself) I turned a negative week into a positive week. 7 of 8 trades were successful, 87.5% winning percentage. I will take that any day. This game is all about managing risk. As a finance guy I like to get as close to a sure thing as I can get, and 87.5% is close to that. For the month we are at a 18 for 19 pace on winning trades = 94.7% success rate.
All was looking good until the Greek news last week hit. The lack of confidence the Greeks introduced into the system by just shuffling ministers instead of letting a few heads roll gave a late week shock to all indices. I was ok in all trades except the GLD 147-149 Credit Spread. By the time my alert got to me I was seriously in the red. By the time I was able to get a trade together my entire positive position for the week was wiped out. I will be honest – this is the first time I have been off by this bad an amount. I have had losing trades before, but not to this degree. But I had a reserve of cash I keep on hand all the time for just this type of emergency. I noticed that the SPX on both the Call and Put side were giving great premium all Friday. I placed my trade just at the end of the trading day Friday and was able to take advantage of the good premium to bring me back into a positive cash flow for the week. A secondary point here, early Friday if I had placed a trade I was looking at early in the day Friday I would have made a KILLING!!! BUT that is not my Friday Trading rule. The situation could have easily turned on me. My Friday Trading Rule = place any trades late in the trading day to minimize risk. I have this rule in place for a reason – learned the hard way. Looong story short = Followed my rules and all came away ok for the week.
Trades for Week of June 24
Call Spreads
Stock Strikes Call/Put %Profit $Amt / Contract
NDX 2275-2300 Call 4.20% $105.00
SPX 1310-1320 Call 5.83% $ 58.33
GLD 147-149 Put 6.00% $ 12.00
SPX 1315-1310 Call 4.60% $ 23.00
GLD 147-149 Put -51.00% $102.00-
SPX 1280-1275 Call 16.60% $ 83.00
SPX 1275-1270 Call 7.67% $ 76.67
Weekly Net Profit% = 2.52%
Weekly Target% = 3.00%
June Profit % = 10.28%
Takeaways from this past week:
1. Have Trading Rules
a. I know indices and the ETF/Ns used on them. That is what I used here
b. Diversify along product and strike
c. Put on trades in manageable lots
d. Keep a reserve in case things go wrong
e. Do your homework, but be prepared for unforeseen things ie GREECE!!
2. Follow Them
3. Stay Disciplined
a. The market will tempt you to make quick, rash decisions…DON’T DO IT!!!!!
b. Be confident in your decision making. If you have a good system you will be ok until
you hit your stops.
4. When Things Go Wrong, use Your Trading Rules to Look for Opportunities to Get Back on
Track
Look for my complete trading rules soon.
TTFN
Ash
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