September Monthly Recap,
Firstly, let me just note that the first 3 weeks of September was based on an avg of 1 contract/trade. The stats for the first 3 weeks are wildly different than the very last week of the month. Let me show you:
-(below) Total Month Stats
-First 3 Weeks of September:
-Last Week of September
-This is extremely unsettling information when posted in this format. Firstly, you notice that my monthly income was -$54 after having the first 3 weeks of the month be over a $320 profit from ONLY an avg of 1.28 contracts/trade. If you look at the first 3 weeks you will notice that my average position cost was 4.07 which is multiplied by 100 because its an options value so in the first 3 weeks of the month I had an average position sizing of $407 and my return was $320. If you factor out the fees my return was $400. That is about a 100% return in 3 weeks on the $SPY trading ALONE. My best trading month ever was I think about %150 back when I traded small caps but to think that I made %100 on the fucking $SPY in 3 weeks is just mind bogglingly awesome. This makes me feel so good about that trading but immediately you can dismiss all of this information the moment you look at only my last week of trading.
-Firstly, it is important to note that my average size on the 3rd week was 1.61 contracts but in general I was using about 2x my size on almost every single trade. So, if you factor out the fact that I used 2x my size then I probably wouldve only lost half of what I did lose so take about $170 out of this number when it is weighted correctly. If you take $170 out of this and add that back into my monthly profit AND take out fees then that is +$400 in first 3 weeks then -$150 in the last week (weighted by divided in half). That would put my monthly profits at around $250 which is about a 62% return which is still quite good. The only thing that skews this data in the complete wrong direction is the fact that I used 2x size in the last week of trading AND I did not include fees into that number which is $150. When putting all of the information correctly together I ended the month in the NEGATIVE.
Why Did I Size in the Last Week?
-I was doing very good trading in the first 3 weeks and the previous week in the last week of august. My numbers seemed very very good, the best they have ever been in my career in terms of consistency. This made me realize that I was ready to go. If I can show massive consistency like this then there is really no reason to not start pushing my size. My goal for the last 2 months was to find the highest EV plays in the market which made me realize that every single trade that I ever took was only a Trend Continuation or a Trend Reversal Trade. If I was able to identify that earlier on in the trading sessions and I knew which trade I was going to take then it allowed me to enter in a very systematic manner and it also allowed me to know exactly where my exits should be. This worked amazingly well in the first 3 weeks then I basically ruined the entire thing the moment I sized up. Some of the problems of that is the fact that in options I pretty much have to use 2x my previous size to increase my position sizing and have the same strategy because I was using 1 contract and I cant just use 1.25 contracts on the size up scenario. I have to go to 2 contracts from 1 and I cant really go deeper into the deltas by buying a cheaper delta becuase that changes liquidity and would alter my strategy too much. I have to stay at the 1-2 out of the money contracts and not go deeper into the options chain. Perhaps I was wrong to think that becuase I have not yet tried to just take 2 (.30) delta contracts instead of going from 1 (0.45) delta contract directly to 2 (0.45) delta contracts. I probably shouldve tried that though because it wouldve saved me some psychological "noise" and it also wouldve allowed me to not lose my entire months profit in 1 week of really bad trading.
What Happened in the Last Week of Trading?
1. Sized up
2. Lost psychological edge from sizing
3. Looked for more setups rather than just sticking to what was working
4. Chased losses and Chased profits
5. Traded 2x as much/day compared to the first 3 weeks
How Do I Avoid This Moving Forward?
-Firstly, I need to not size down from this point. I have been trading long enough to realize the importance of not being scared money. If I size down I am only teaching myself to stay scared and when traders are scared they will NEVER perform optimally. Sizing back down will teach me nothing but to run away when things get difficult. If I can have a month where I am making even %75 of my position sizing with 2 contracts instead of just 1 then my next month could be about a $600 to $700 month, which is not that much really but just being conservative I could be pulling in numbers like that. If It was %100 like I did in the first 3 weeks of trading then my month should be over a 1k month which would be massive for me personally. Slow and steady.
What went Right in the First 3 Weeks?
- I averaged about 15 Trades per week and about 3 trades per day. This is very very good for me. I know from review that there are hardly EVER more than 3 super clean easy money setups on any ticker throughout the day. This means that I am giving myself only 3 chances to nail that or to leave. Once I start going over 3 trades per day then I am risking way more in Fees and also in Overtrading losses. In the last week of September when I lost my entire monthly profits I traded 36 times in just that week and had an average of about 7.2 trades per day. This is over 2x my average from when I was trading consistenly in the first 3 weeks. I also had a win rate of only 33% compared to the first 3 weeks which my win rate was 61%. This means I was trading 2x as much as the first 3 weeks while also trading 2x as worse. That is so terrible in so many ways. The stats speak for themselves.
Did the Market get more Difficult in the Last Week?
-I do think that in general the market was a lot harder to trade in the last week of September. I am not the only person who thought this though. I saw many top traders say that they were risk off on multiple days in the last week of September because we were sitting at lows and bouncing, failing, bouncing, failling, bouncing, failing. It got very difficult and I shouldve been taking my 1-2 scalps per day and just leaving the market alone.
What Will I Do to Avoid these Problems Moving Forward?/Goals for October
1. Maximum of 4 trades per day
2. ONLY Trade my setups and never anything else
3. When the day seems difficult just leave it alone. Making nothing is way better than losing.
Notes:
I asked TD to lower my options trading fees by half and I think they are actually going to lower them. They told me they are lowering my fees in 1-2 biz days but I am unsure how much they will lower them. I asked for half off since I am an options trader so I think that is probably what they will do BUT god damnit did I lowball them? I wonder if I asked for like $0.10/contract if they would've listened to me. I currently am paying $0.65/contract and I asked for $0.32/contact so if they fulfill that then that would be awesome but then again if they wouldve done $0.10/contract then that is another 66% off. Fuck
