My draw down continues this month with many grain positions realized but took before Nov. At realized -$28K it's the biggest monthly losses so far. In trading the biggest loss is in the future. Risk management is the key. I wiped out my entire gains of last 1.5 yr plus $10K more. The biggest lesson is in risk management.
1. Position sizing. I kept increasing my sizes as I roll over my losing positions in 1:2 ratio in order to maintain the same dollar amount in new positions. A more sensible way to rollover would be to minus the collected premiums in order to get a further OTM location, a trade off for safety. Another approach would be take 1:1 ratio taking partial loss and make up the difference from the opposite direction. It will keep the position size and margin about the same.
2. Hard stop loss. This is still my weakest link. I review it almost every week and pointing it out as my deadliest weakness and career block. I still failed to take appropriate stop in two of my ES bear calls this month. The final damage was 6X 18X out of $100 gain.
Improvements of the month:
1. Had more patience waiting for the market to develop, then pick my place of trading in indices.
2. Learned more about offsetting cost using spread and risk reversal in grains.
Plan for Dec.
1. Take hard stops.
2. Reduce my positions in grains and stay with seasonal bias.
3. Spend more time in indices trading
4. Step aside instead of fighting the trend, especially in grain market.
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