Limited Ability To Adjust Positions 8-24-24

 The major indices close another week in green. SPX and NQ booked three consecutive weekly gains. Both are near ATHs. Will they break out to new highs or just retest the breakdown areas for double tops? The MACD daily for SPX and NQ is showing divergence and crossing down. RSI is above 80 for overbought conditions. Thursday's bearish engulfing candle may take a few days to play out. Keep in mind the uptrend is still strong. 

IBQ Netliq stayed below the 100K mark. It fell 11% from 92.7K to 82.1 K. The realized P/L is 4537. I started to roll out 8-30 DITM SCs. They are hopelessly ITM. The cash collected is $2531 for the week. Thanks to Infra's long calls. I continued to buy hedges to keep the account afloat. The options' value increased by another 3% from -504.6K to -521.7K. The delta went to deeper red from -175 to -370. The leverage is up another 15% from 715 to 841. It's highly elevated. VIX is up slightly from 14.8 to 15.9. Is it a meaningful divergent? The total positions are C8 +0 and P7 -1.  There were 41 trades for the week. Many of the trades were short-term hedges. The commission cost is $124. The 1-1-2 positions got slapped on the SC side like the SPX SCs. The XSP 4 SCs are ITM. I plan to take stop losses if the market doesn't pull back next week.        

IBP got lopsided further with the crash and continued rally. The IB margin increase didn't have a meaningful impact on the account netliq.  The realized P/L is $1667 for the week. The cash collected is $-147. The total positions are C5 +0 and P3 -1. There is no SC exit insight. I can only gradually bring the strikes up. 

Lessons and Plan:

1. It has become clear during my meditations that the underlying cause of my failure is the fear of losing. I fear of stop-losses. I fear losing before entering a directional trade. It's a subconscious behavior. I have to consciously correct such behavior and be brave. 

2. I have been reflecting on what had gone wrong in my trading for the last 10 months. The things I could control are the position sizes and stop losses. I couldn't be successful without either of them. 

3. Place a stop-loss order right after a position is filled. 

4. Follow the rule of -1+1 strictly. 

5. Recognize my emotions. Fear and overconfidence are both dangers. Let the urges flow through. 

6. Be objective. Watch the S/R levels hourly and daily.       

Things Can Get Worse Than One Expected 8-16-24

 The major indices made a full recovery from the August 2nd selloff. SPX was up every day of the week. It gained 3.9%, the best weekly gain in 2024. It cut through Fib 50, 61.8% resistant levels, and back in the 5480 to 5670 balance area. SPX is above the 50, 20 DMA, and 2% from the ATH of 5669 made in mid-July. It was an incredible, face-rip rally. I thought about the possibility of a V-shaped bottom but wasn't fully prepared for it. I had to adjust my positions hour by hour because of the limited B/P.  SPX has fully recovered from the August 1st selloff.      

IBQ Netliq was back above 100K during the early rally. Delta got pushed into a negative reading after the gap up by the better jobless report on Thursday. The Netliq is down 11K, -11% from 104K to 92K. The 41K margin call on August 8 had a significant negative impact on my netliq recovery. The realized P/L is -42.3K. These SCs got squeezed deep in the red. I made a mistake in adding one SC during the early pop last week. The cash collected is -$172 for the week. I continued to buy hedges to keep the account afloat. The options' value increased by 4% from 486.6K to -504.6K. The delta went to deep red from -15 to -175. The leverage is up 11% from 619 to 715. It's highly elevated. VIX is down from down from 24 to 14.8. The total positions are C8 +0 and P8 -0. There were 44 trades for this OPEX week. The commission cost is $174. The 1-1-2 positions got slapped on the SC side like the SPX SCs. The LC hedge I bought earlier helped to roll the two 547 SCs. The XSP SCs are ITM. I plan to take stop losses if the market doesn't pull back next week. 

IBP got lopsided further with the crash and pop. I added 25K more from my IRA after IB announced the margin increase after 8-16. The realized P/L is -$419 for the week. The cash collected is $-3349. I had to spend money to roll all positions one week away before IB increased the margin over the weekend. It was a chaotic and costly week. 

Lessons and Plan:

1. I kept thinking about what had gone wrong in my trading for the last 10 months. The things I could control are the position sizes and stop losses. I couldn't be successful without either of them. 

2. Place a stop-loss order right after a position is filled. 

3. Follow the rule of -1+1 strictly. 

3. Recognize my emotions. Fear and overconfidence are both dangers. Let the urges flow through. 

4. Be objective. I should not assume the market will go my way until the criteria are met.     

                

The Earthquake Of Japanese Carry Trade 8-9-24

In the Japanese stock market, a black swan event happened on Sunday (8/4/24) night (US time). It started crashing after opening as the Japanese 0 interest policy started changing. Many financial institutions had to unwind their Japanese Yen 0% interest rate carry trades. The NIKKEI index was down 12% and SPX was -3% by midnight here. It was like an earthquake in the market. I have never seen a developed market down 12% in one day. 

IBQ Netliq took another blow with the Japanese Yen crash. I started to buy SPX puts to defend my portfolio on Sunday night. The netliq went down to 50K. The account was restricted to hedge or close positions only. VX shot off the roof. I placed a $40K wire transfer order from ETQ to IBQ for Monday morning. The pressure was very intense that night. I stayed up until 3AM. The red liquidation warning was eliminated for the time being. SPX opened down 3% the next morning. The 5120 level was defended and buyers showed up. By the end of the week, SPX was flat as nothing happened but some real damage was done. The netliq was down 20.4K, -28%. The realized P/L is -8512. The cash collected is -$42,606 including the forced 5630SP closing for $41470 on August 8. I spent over $ 1.2K to buy hedges. The options' value decreased by 7% from 524.3K to -486.6K. The forced closed 5630SP affected the value change. The delta is flat at -15. The leverage is down from 992 to 619. The paid hedges helped temporarily.  The total positions are C8 -1 and P8 -2. The netliq is barely above 100K and faces a liquidation warning over the weekend. There were 38 trades for the week. The commission cost is $110. I only had time to deal with the 3 August 1-1-2 positions until this Wednesday. I lowered the SPs and added SCs. The 3 bear traps are ITM now. 

IBP got lopsided further with the crash and pop. I added 10K to make the rolling easier. The failed stop loss SP dragged the netliq down further. I did a risk reversal to the SC at the lowest point Tuesday night. It was a trade of fear. The market popped the next morning. I broke the rule of -1+1 on the SC side again. The realized P/L is $8442 for the week. The cash collected is $-3915. I had to spend money to roll these 5 DITM SPs. It's more than 1000 small cuts. I will be in more trouble if the bottom is in. 

Lessons and Plan:

1. Anything is possible in the financial market. The only thing I can control is my emotions and discipline. 

2. I will reserve an account for emergency expenses when and if I am out of this situation.

3. Place a stop-loss order right after a position is filled. 

4. Recognize the emotions. Fear and overconfidence are both dangers. Let the urges flow through.    

 

              

A Disaster Week and Month in July

 SPX closed its third down week. The selling accelerated after the FOMC head-fake popped to 20 DMA. The July NFP on Friday was +114K v.s. 176K expected. The 62K fewer jobs surprised the market. The broad market sold off. SPX was down 100 pts, -1.85%. NQ fell 2.4% into the correction territory. SPX ended down three consecutive weeks. It's -6.5% from the ATH of 5670 on July 16. It closed right above the 100 DMA and 20 WMA. These were the support levels for previous pullbacks. It also touched the Fib 50% P/B level from April to July. 

IBQ Netliq suffered the biggest loss in the last 2 years. It's down from 119.8K to 70.8K, -49K, -41% in one week. The last week of July included two days in August. I totally mishandled the volatile week and ignored the seasonality. I forgot the lesson of the major event rule. The realized P/L is -$77,306. I failed to set up the stop loss at 3X for the RR-adjusted positions. The cash collected is -$2370 as I spent over $4.8 K to buy hedges in the last 3 days. I remember this is the first time with negative cash flow for this account. The options' value is almost up 10%,+40K from -484K to -524.3K. The delta doubled from 107 to 217 with this -4% week. The leverage is up 45% from 548 to 992, the highest of the year again.  The total positions are C9 +2 and P10 +2. The number of the SP is the major cause of the drawdown. The account is in deep red and faces a liquidation warning over the weekend. There were 109 trades for the week. The commission cost is $394. I traded AMD options back and forth to void any possible assignment. There are only 2 positions left for next week. It's not worth the risk and effort to trade these single stocks. I didn't add a 1-1-2 for the week because the August ones are underwater now.       

The IBP account suffered a big loss from my overconfidence and breaking rules.  The SCs had some recovers while the SPs deep ITM during the selloff. I split an SP 1:2 the day after FOMC. I was confident the rally would continue. It was faded at 20 DMA. I failed to place a stop-loss order and I  ended up holding the losing bag. I broke the rule of position -1+1. The realized P/L is -$24168 for the week. It washed the gains from last week. The cash collected is -$713. The 6 SPs are deep ITM as the 5 SCs. I will close the 5370SC to release some b/p on Monday.  

Lessons and Plan:

1. Be objective. I tend to guess or wish the market to act in certain ways. Have different market scenarios and plans accordingly. Be aware that the market may be up, down, or flat.  

2. Place a stop-loss order right after a position is filled. 

3. 3. Recognize the emotions. Fear and overconfidence are both dangers. Let the urges flow through.