Discussion in 'Journals' started by Sweet Bobby, May 18, 2016.
Go against the herd. Take profits early and let your losers run. Where do they teach that?
In the car, on the way to the poor house.
Okay, ladies. Here's the weekly update for my itty bitty account.
The project is down 1.87% since it began on January 19, 2017.
The account is up 1.29% for this week.
I opened 3 new trades for the week.
I am attaching my risk profile and a snapshot of my greeks.
Everything is going according to plan and the portfolio has a 53% probability of profit.
How is it possible? - we had the perfect environment for this kind of strategy
The project is significantly smaller than the original paper experiment. Thus, I am primarily selling spreads. I bought a SPX calendar spread and I failed to manage it. My rules are to close it at either a 10% profit or close it at a 20% loss. At the time, I had completely abandoned my spreadsheet and was just winging it. I regained control on March 6. Let's attribute my poor performance to pilot error. The account was down as much as 6.53%. I am in full recovery mode.
"My rules are to close it at either a 10% profit or close it at a 20% loss."
That doesn't seem to indicate a decent P:L ratio to me....
Those numbers are for calendar spreads only. This worked out just fine I. The paper experiment and would have worked fine in the project had I adhered to the rules.
The key is to take profits early and give a little more room to let your losers run. The herd cuts losses quickly and let's their winners run. I run against the herd.
The herd claims to let profits run and cut losses early but I think the opposite actually occurs.
The reality of execution will never allow for 20% cut loss to happen. You attribute it to pilot error but I would call it market slippage or market stop loss order in illiquid option markets. People dont understand that market makers profit from fast markets cause liquidity dries up when you need it most. Your not getting filled at a fair price and will get killed. I'm sure your broker will encourage you to keep trying. You need a strategy that limits losses without unwinding for a loss. Where could we find that? An option??
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