Noregrets' "Double or Nothing" Volatility Trading Journal

Being slightly short delta will compensate for the increased in IV when the market goes down against my long positions. Conversely when the market goes up iv usually contracts so its a lot easier to manage the short delta positions.

 

When I first started trading full-time last fall, I thought that becoming consistently profitable would be the equivalent of a one-mile nature walk. Instead it seems more akin to a 50-mile forced march through a mangrove swamp with a hundred pound pack.

Looking back I can’t believe how clueless I was. The worst thing that ever happened to my trading was making a 50% return within six weeks after I started, taking what was in retrospect an utterly obscene amount of risk. I knew that I had cracked the secret of the trading game, and wasn’t sure what everyone found so hard about it. Needless to say within another six weeks I had not only lost all my winnings but was down nearly 50% from where I started. Thankfully it was an extremely small account, and I was able to start over a little wiser.

I feel now like the boy in Isaac Newton’s story: playing along the seashore, occasionally finding a pebble smoother or rounder than another, while the great ocean of trading “truth” lies undiscovered before me.

To say the least, I have a lot to learn. And I don’t know whether I’m at mile 5, or mile 49, of the march. The only thing I can do is focus on the prize and keep putting one foot in front of the other.

Forgive the late night musings before NFP. It feels good to share with folks who can relate to the journey.

 

Nice post.

 

LOL. Been there, done that. Problem was, it actually was a nature walk in the beginning and making money was easy. I was too ignorant to know what risks I was taking and it was a wild west market at the time. Try taking 7K to better than 200K in the first 6 months of your trading, then give 60% it back in the next 6 months, and see what that does to your head. That was 99/2000 for me, and I've been fucked up ever since.
The nature walk is over, and now it's hand to hand combat with an enemy that takes no prisoners, and gets stronger every day. For some idiotic reason I still think I can win. I'm hard headed that way. My advice, get one thing that makes some sense to you, and stick with it. Just try to learn and improve upon that method. Jumping from one thing to another has cost me much money over the years.

 

7K to 200K in six months...what a story. I can imagine how hard it must be after starting that way. Thanks for the advice also. I'm focusing on options, particularly the strategies in this journal, and working every day to improve my analytical tools, feel for the market, and trade management. One day at a time...

 

Closed half at 4.75. Short ES from 47, target 35 stop 51.

 

Timing is everything. My SPY puts were quite profitable on the sharp drop after the open, but I did not interpret the sharp, and very visible, reversal at the bottom as I should have. I closed both the SPY puts on the way back up at quite a bit less than I could have at the bottom (avg 4.60), as I was not willing to let them make it all the way back to break-even. I was also stopped out on my attempt to fade the reversal in ES. In retrospect I think the fade attempt was pretty questionable. I should have stuck to my profitable SPY trade. However, I had a downside bias going in so did not let my mind accept the strong possibility of a complete retrace of the drop (which is exactly what occurred), and I paid the price for that. You've got to be nimble in this game and check your preconceptions at the door. A painful lesson today.

ES losses exceeded gains from the SPY puts, so net p/l on those trades ~ -200. Am likely done for the day at this point.

 

You will have many more days like this in your trading career. Just work out how much of paper profits you will give back before closing out a position, and then use that as a rule. After that, track MAE/MFE and fine tune as you go along.

You'll win some and lose some, but the idea is to maximise your profits in an uncertain environment.

 

Thanks for the great advice, justrading. I have not been formally tracking MAE/MFE but will start doing that. I anticipate that it may be especially useful for my short vol trades in which spot moves around quite a bit during the period I am holding.

 

Long the SPX Sep13/19 1655 put calendar from 5.55. Looking for a small downward move next week. Hat tip to atticus for the trade idea. The third time should be the charm on my short SPX theme here.



“Most people have the will to win, few have the will to prepare to win." Vince Lombardi