Weekly Review 10-31-14

It was a small profitable week ($1.4K) on weekly expiration only. Had near $8K recover in Oct.

Indices completed a V shape recovery in weekly chart the past week. ES/SPX closed near all time high set in mid Sept and ready to break new high. I will watch to see if we get a repeat of selling on new high or This is the beginning of year end rally.

Grains held up well on strong demand, especially in soy meal and delayed harvesting pace in corn and soybean. I studied grains charts of 2009 which was a big harvesting year similar to this year. Most lows on the 2nd push down were set in Dec and Jan. I need to update my seasonal charts to compare 5 and 15 yr historical tendencies. I continued to take losses on near by contracts since I missed my chance to take profits for my puts. I was able to lock in some profits for these far out dated contracts. I will wait for the next push down to reload them. I still have some far out dated bear calls underwater and I have been debating weather I should take my losses now or wait for the next down turn. According to my rules I must take stops and leg up or wait out. I will execute according to my trading plan next week. My delay of action has costed me more losses.

My actions of the week:

1. No key in errors. Avoided such simple mistakes by read through and double check my order entries.

2. Study and review Karen, the Super Trader's principles and setups. I entered a SPX  naked bear call for later Dec which violated her rule of 1STD, 2 weeks out for bear calls. This position had 2 STD and 60 days out which is underwater now although I had a bull put for the same expiration date. It made the trade to an Iron Condor. Her principles of trading far out of money and time is similar to the Options Selling book I read and makes more sense to me now.

3. No clear picture and strategy in grains. I was like a dear looking at headlights. I was confused between experts' comments and price actions. The plan I can think of now is to step back and let things become clear to me again.

4. Reduce trading in grains. Grains tend to have much longer trend. I shouldn't trade it on a daily bases. What I need to do is: A. identify the trend; B. compare the trend with seasonality; C. Form a plan of action; D. Wait for the price come to my level before take any trade.

Plan for next week:

1. Incorporate the lessons I have learned into my thinking process and trading, such as Karen's rules of engagement, Stop acting on impulse, like closing my eyes and jump.

2. Take stops of these rule broken positions on any pull back.

3. Try to think my trading is a pure number and strategy game. The first rule of the game is to reduce risk and big loss.

4. Continue to learn. Watch and read more trading related contents. Watch at least 3 webinars.