painful but learned my lesson

I started my trading this summer inspired by someone's 5000% YTD return statement on some forum.

Read tons of books, built my own EOD database for 6000 symbols, barely beat the market. Switch to options trading exclusively one month later and opened my account in IB with 10K.

dropped to 7K in a first week and reached 17K in the following two weeks. Track volume/IV spike and successfully caught some M&A. After polishing my skills by another 30 options book and quite some backtesting, I decided to try DT options. At that time, I already built my own 1min, 5min database for underlying stocks and their complete options chains. I tracked 100 most liquid underlying. Meanwhile I started to read a lot more books on stock TA cause DT options is barely trading stock with variable leverage(I know you might think that as a sign of beginner cause pro doing vol trading mostly, I agree, but with small capital, you won't build enough capital quickly for that with delta hedge or other fancy combo)

After deposit anther 10K, I started DT options. It went smoothly for two weeks during work time when I don't have the chance to gamble and overtrade. I made 40K from 27K easily and my boss started to notice, I stopped DT for a while and switch to credit spread on weekly options. I traded these spreads for two weeks and brought another 7K as those money was always in my pocket.

I become over confident and take two weeks' vacation, One week to DT weekly options, another thanksgiving week in florida. Then came my lesson, I bet too much on AAPL/BIDU put. did not close/cut my loss before market close, cut loss next day with 10% left just before it tripled(AAPL gap down). Meanwhile, my credit spread(blinded opened) on GOOG started to lose a lot when GOOG dropped down from 610 to 580 in a short time. In short, my capital dropped from 47K to 18K in three days. It was really painful. I started to read some trading psychology books.

I did not take break cause I still have quite some open position. I legged out GOOG credit spread for that profit leg when I saw a reverse approaching, I knew it was not a good choice but luckily it did reverse and I reduced my loss on this spread. Next two days, I DT BIDU with a huge % of my capital and didn't take profit when I get 10%. I held it overnight, and made 12K next morning.

I got all my loss back in three days after losing 60% in three days. I can hardly describe how it felt but I did have a good time in Florida. After coming back, I stick to DT options, and traded ES during night. Tried four time, all with satisfactory profit. I reached 50K with very few but efficient trades. But two days ago, when my manager was out of office. I opened a lot position, bet/gambling again on BIDU. and some of you might know what happened to BIDU these two days. Once again, I made some terrible trades in one days and loss 16K.

This time it was less painful, as I knew what happened and what should be done to survive. To list my mistakes:
1. Over confident, I heard quite some story(which I don't doubt) of making Mil from 20-30K in the first year. I am aggressive person, after I have seen enough fools in the market, I naively believed I can reach such target like a magician. In turn, I felt myself another fool in the market now, psychologically.

2. Options is speculative in nature, even you can play someway even less aggressive than stock trading. DT options is even more speculative if you don't do combination. It needs full attention, so it really not a good idea for me to do it with a full time job. I do develop my automatic trading system. But stopped for a while as I was complacent with my "fragile trading skills".

3. Spreading is good enough to meet the profit target of 99.99% ppl here. The guy who posted 5000% year return told me he did vertical credit spread exclusively. I never found an approach which fit me best. I tried DT, swing, stock, future, options, currency, pair trading, arbitrage, automatic, volume/IV spike watching (to catch inside trading activity), delta hedging, debt/credit vertical spread, condor, ER trading(I built a database), machine learning strategies, etc. I really should focus on one or two things, and it will be enough.

4. I don't have a money management plan even I knew how important it is. I used to believe it's secondary for a small account. Now my story tells itself how wrong I was. Any account need a plan, good discipline for the trader. I used to think trading is more about street smart. I read 100 books but I neglect one of the essentials which has been repeated over and over.

5. Take small profit as fast as you can. I would have made 100k from 10K by now if I took profit and exit my position quickly. My greedy made a lot of trades from small profit(3K in 10min sometime) to huge loss.

That's basically my painful story. I really appreciate if someone could offer some tips and advice which I still oversee. When I made huge loss the first time, I did analyze my mistake and thought I wouldn't do that again, and I did made the same mistake twice just. How hard it is to beat greedy by your experience? Is the best way to stick with automatic trading?


appreciated

 

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App;
Excellant points on #4

Market makers do real well on your point #5;
but you may want to ponder why there are many, many, many, many ,many
many, many ,many more profitable investors/longer term traders than daytraders.

Or put another way'' Market Makers Edge'' please NOTE;[that daytrading/trading/investing Book] is full of MULTI -MONTH charts.

And IBV-Investors Business Daily;
compares trading/investing to being a medical DR[4 yrs college time,THEN med school time, THEN intern time/low wages/long hours ................wisdom is profitable to direct.

Hope this helps, some TIMES it may take months or years to get a good answer...........................................

 

you can be an awesome trader...but market will get you one day.
freakin' zoned out and punched the wrong hot key...
then the market swallowed me whole instantly.

its great.