Another Volatile Week To End January 1-28-22

 The volatility continued for this week to end January. SPX and RUT ranged over 120, and 60 points daily respectively. SPX touched a 10% decline and bounced so far. It held its 50 week MA and closed above it. RUT hit the 20% bear mark and bounced a little. It's hanging in the mid of the big valley of VP on weekly. It held FB 50% pullback after 4 consecutive losing weeks. The sentiment is negative for sure. Last Friday's relief rally of 2.4 -1.9% was in line with the seasonality. We are not out of the wood yet if the seasonal pattern continues to play out. 

The IB Netliq closed at 120.9K,  +3K. It actually is down 2K excluding the 5K from ET. The leverage is 4.4 from last week's 4.7. The realized P/L is -$26.45K. The cash collection is -$4.9K due to my stop loss in RUT puts of $8K during the highs of the selloff. It was another blood bath week for me. 

The personal accounts had a nice recovery. The P/L is + $7064, mainly from the recovery of last week's roll and split. The actual cash collection is about $530 since I only traded the 0 DTE last Friday. The rest of the P/L was from closing out last week's positions. Overall, the 0 DTE has been working as long as I avoid trading it when the VIX is above 28. 

I have paid a hefty price from my poor risk management. It will take 3-6 months to make the IB account back to a healthy level. I must enforce my stop-loss rules otherwise I won't be able to become a consistent, successful trader. 

How did I do with my plan for last week? 

1. Take Stops. I did two in RUT put hedges, but not in all of my trades. 

2. Deleveraging. Sold some bear calls to reduce 5-10 points of my bull puts. Not sufficient and aggressive enough.

3. Reversing long positions. Didn't do it due to a lack of deep looking and thinking. 

4. Trading with the downtrend. I entered some hedging put spreads in both SPX and RUT with some success. 

My plan for next week is:

1. Reduce 1-2 bull put positions to reduce my risk exposures. We may have a short period of consolidation which will provide me the opportunity to deleverage. Don't screw up this time! 

2. Put stops in every new order I place. 

3. Reverse or split my bull positions to make my delta flat. 

4. Hedge my positions with spreads and leveraged ETFs. 

Haven't I Learned Anything About Risk Management?

 It was a volatile, intensified selling week. The four majors booked 4 consecutive losing days after MLK Monday. All of them closed below their 200 SMA. QQQ and RUT  performed the worst, down 20% and 14% respectively. SPX is down 9% so far with the last Oct's breakout gap between 4386 to 4367. It's less than 1% below its current price of 4398 and likely to get filled soon. RUT broke the year-long range and closed below the 2000 mark. 

My IB account took a big hit for the week. The IB Netliq went down to 119K from last week's 137.6K. It would have been only 61K left if I didn't transfer 50K from ET to shore up the margins. The balance is at risk of margin call again. The leverage is up to 4.7, the highest since last May. I increased one SPX long put and didn't take the stop loss as planned. The realized P/L is -$48K, the largest weekly loss since last May as well.  It's likely that I will have to book more losses since there are more ITM long calls in the near term. 

The personal accounts booked a loss of -$138. It was my mistake again. I entered a 1 DTE instead of waiting for the end-of-day selling to settle. The pattern of last week has been hard-selling to make new lows at the EOD. I had to roll the threatened 4430LP to 4360 next Monday. I plan to buy long puts to defend the positions. I can use the $1500 (3x$500) long PS I earned from Friday's hedging. 

The cause of the losses is my old bad habit of poor risk management. I haven't improved much in avoiding psychological pain and taking losses. The mindset of thinking of the drawdown tolerance instead of risk management hasn't changed. Taking a 5K loss is better than rolling a 10K loss. I was simply kicking the can down the road and increasing my margin leverages. The same mistake happened over and over. I was holding and hoping for a bounce which hasn't happened. Hope is not a trading strategy. I didn't think and plan for if something happened against my hope. 

My plan for next week is to actively change my old bad habit.

1. Take stops,

2. Trading with the trends instead of passively defending my positions. 

3. Deleverag my holdings. 

4. Reversing part of my long puts to short calls if and when possible. 

A Volatile Week 1-14-22

 It's another volatile week following the sharp downturn of last week. SPX closed slightly positive after testing the 20 wk SMA. But it parked below last week's open. RUT closed in the negative territory for the 2nd week. It's in the lower portion of the year-long range and below all of the daily and weekly major MAs. The tech-heavy Qs are also below its 20, 50 daily, and 20 weekly MAs. Overall, the market is under pressure on Fed's rate increase expectations. 

The IB Netliq is up 5K, about 3% for the week. The leverage is down 10 points at 252. But the realized P/L is down 8K due to the sudden reversal and caught me off guard. I had to roll all of my bull puts out to survive for the week. I collected $1500 cash for the week but most of it was from the sale of the TZA hedge. There are two SPX put hedges that are fully ITM today for $1500 minus the cost of $330. 

The ET  acct realized $1700 p/l for this week. It wasn't easy. I had to make adjustments and hedges almost every day during this volatile week. Luckily I came out ahead though the impatience caused me some headache. 

I made two stock directional trades in TSLA and AMD but none of them worked out. They cost me about $-300. My trade selection and management need a lot more work. 

I had a slightly bearish bias but was fooled by the head fake rally at the beginning of the week. Then, I let my guard down and started to chase the rally. I need to be more cautious and keep the big pictures in mind next week. The volatile condition may not be over with the earnings season starting and the monthly options expiration next week. I am still working on my stop loss pain killer. I placed the orders in IFs but didn't execute them. My rolled orders are not implemented yet. I will start to place stop orders for my rolling positions next week. Otherwise, I couldn't place stop orders when the market suddenly changes.  

The First Week Of The Year 1-7-22

The majors closed down for the first week of the year due to the FED turning into a hawkish tone. That appears to be a warning sign. Santa rally was faded like getting infected with Omicron. SPX and RUT closed down 2.2%, 4% respectively. NQ performed the worst by shedding 5.7%. Growth is being replaced by value and defensive stocks. This change of the scheme may continue for a while.  

My IB Netliq ended at 162.6K from 179.4K, -9.4%. That's a shocking drawdown. I still have the old habit of rolling instead of stopping. The realized P/L is -$9250. The leverage is up to 256 from 234. The account collected a $2,088 premium including the scale-out of 50 TZA. My small accounts performed better for the week. ETP booked $1,130 cash profit in 0 DTE trading. My directional options trading ended with a mixed result. I didn't stop losses soon enough and closed profitable positions too soon. The overall for this week was -$230. 

I was a bit overconfident that the majors would rally a little more until FOMC minutes release on Wednesday. My trading plan calls for a quick change bias as the market changes. Taking stops on the rolled positions hasn't been implemented. I will take action to confront my fear of psychological pain. 

I will edit my trading plan for 2022 over the weekend. Avoiding big drawdowns should be planed in more detail. 

Is The Santa Rally Over? 1-1-22

 It's the End of the Week, Month, and Year. I will write a separate summary for 2021. The Santa rally started right after Christmas for SPX and Dow which made new ATHs within a couple of days. NQ is knocked down on a double top pattern of daily and weekly.  RUT is the weakest one which is stuck in its 10-month range between the 20/50 D SMA. After the initial breakout, the majors didn't make follow-through advancing. They traded in sideways for the rest of the week with the selloff in the last 30 min of the last two days. It's not clear what the market's intention is right now. The time of the year is tricky for either direction. 

For the last week of 2021, IB's net liq closed  177K excluding the 20K paid back to ET Q. Therefore it's up about 8K from last week. The leverage is at 230, similar to last week. The collected premium is $849 with the realized P/L of $60,710. The P/L is somewhat distorted due to the rollings of LPs earlier this month. For the month of December, the IB had a netliq increase of 30K and a premium collection of 5.6K. For the personal accounts, I only traded my ET which closed with 1K P/L and the monthly of $4130. I may start to trade TOS when the vol is stable. There are just too many accounts to manage for 0 DTE with the vol jumping around. My plan was to use TOS for swing and ETF trading. 

The 1 DTE IF and 0 DTE SPX worked this week. I did put stop losses for my IFs but luckily didn't have to use them. I still have the psychological fear of taking stop-loss which will hurt me when the vol is high. I will do a 1-2X stop loss for my swing and rolling positions.