After analyzing my past trades alongside the S&P and their
corresponding ETFs I have come to conclusion that from here on out I will be
trading the ETFs.Although AAPL has the
highest return I could have made a comparable return by trading the highly
liquid ETFs that have similar or higher premium.
I can also use other contrarian ETFs to hedge my trade and
make my overall portfolio delta neutral.
I just figured out why my Facebook trade is not working out
as quickly as I wanted it to. I got into a put spread with the wrong expiration
date.
I have a bull put spread with the 72 strike and 67 strike
expiring the last week of January.Facebook is announcing earnings at the end of that week.
I wanted to take advantage of volatility during
earningsbut I did the wrong thing.I should have sold my put spread a week
before earnings and not the week of earnings.This would allow the volatility and time decay of earnings week to eat
up the premiumfaster.
By selling the put spread during the week of expirationI exposed myself to the volatility of
expiration week.As it looks now I may
have to wait till the week of expiration to exit my trade for a profit.
I’ve been seeing these Tasty Trade guys for a while now and
never really got into them because in many of the shows I watched they never really outlined any specific trades.When I
look for new strategies I mostly want to hear people give a detailed analysis
of their trades, so I can see the mechanics and know how to test it out myself.I am a very process oriented person and need
to have things spelled out.Most of the
Tasty Trade shows I had seen talked about different types of trades but they didn’t go into
depth as much on how to execute.
After going through their site a bit more I did find some more in-depth analysis of trades along with some invaluable information and now I have
started watching their show regularly.What I find very helpful is that they provide statistics that will
give you the confidence in placing your trade and since a large part of trading
is managing emotion, this is immensely helpful.Plus it helps to hear other people talk about their trading experiences
and you don’t feel like you are alone in your fears or even your
successes.
Tom Sosnoff is one of the creators of the Think or Swim
platform that mostly everyone uses to research and/or place trades.I use it to research and paper trade ideas
and then I go to my other account on Trade King to actually place my trade (low cost
commissions are essential for me right now).He has a wealth of knowledge on trading and more important for me … a wealth of knowledge in options
trading.
I watch and listen to many of the financial shows you can find online and on TV and I
have learned more from watching a few episodes of Tasty Trade than from a year
of watching those other shows.
I highly recommend checking them out and listening/watching some
of the interviews in their archive section.One of the more touching aspects of the site are the segments where
Sosnoff coaches his daughter on how to be a trader and after several episodes
she is practically a Jedi.
After some more study about how to better time my trades, I
had an epiphany today.If I could use
the Fibonacci series on time cycles I can plan the best moment to place a
trade.Of course there is no crystal
ball but nature’s own math can help you come close to being in harmony with the
“organized” chaos of the market.
I was introduced to the Fibonacci Queen Carolyn Boroden
through watching Jim Cramer.Her
analysis turned on my light bulb about using the Fibonacci series over time and
not just over price action.I started
using the Fibonacci time tool in Think or Swim this morning on my Facebook
trade and realized that I could have made a better decision about timing my
entry point than I did.I entered in on
Monday when I could have waited till Tuesday before I entered the trade.
If you look at the chart you can see where I placed the Fibonacci
tool at the beginning of the trend and it traces the moment where I could have
placed the trade.I placed my trade on
Monday (yellow circle) but I should have placed my trade on Tuesday (blue
circle).The line drawn in black shows
the Fibonacci measurement at where I should have been focused.
I used the tool on the 5 minute and 1 minute chart too and
it works just as well.This is
groundbreaking for me because I learned from trial and error that it is always
best to wait for a pullback before entering a trade but the key is timing the end
of the pullback.This Fibonacci tool
will help me plan my entry a lot more efficiently.
I wasn't able to post as frequently over the holidays so I am putting my trading notes for December in one collective post.
Trading Notes 12-11-14
After pulling out of this Facebook trade I learned some valuable lessons . One key lesson is to always take profits when you can even if you think the stock is going higher if you set a stock price target stick to your game plan
Looking forward for the next couple weeks I want to see what the historical data is on certain stocks, are they usually up or down going into the new year.
Trading Notes 12-17-14
I felt good about my trade and I had done all the necessary research in Facebook I looked at the technical analysis as well as the fundamental analysis and there were great news stories that supported the stock going higher.
I held off on making a Monday trade because I remembered what had happened in the previous weeks.
So I placed my trade on Tuesday as I had planned I waited for the stock to go down after it had bounced and it was heading back to an area of support.
What I hadn't planned on were the global market conditions. With the declining price of oil along with the Russian currency collapse in the upcoming Federal Reserve meeting the market was very fearful. This caused Facebook stock to plummet despite all of the positive signs of growth and stability in the company. Even with the announcement of China allowing Facebook into the country the stock went down.
This made me nervous about staying in the trade but I wanted to see what the Federal Reserve was going to say. My management strategy was to roll over my credit spread into the next week's options. That would have given me some extra time for my trade to play out.
When the Federal Reserve at their conference call said that they were not going to raise rates, this caused the market to shoot up higher making my trade a profitable one.
Some of my takeaways from this experience are to always believe in yourself. I had done the research and new at what levels to enter and exit my trade.
I also knew that the probability of me winning was 78% and this was what I needed to believe in. Yes I could have made more money but I stuck to my plan and made what I wanted to make on this trade.
