June 2010 OPEX Results

The results this month are misleading so I backed out the two long-dated plays from the average win/loss calculations. These were MTM gains for many months and just happened to turn in to realized gains this month as I finally decided to close them out. I don't consider their gains having anything to do with this month's portfolio. I do however obviously have to consider them for the overall P/L. I'm now understanding more how a diversified options trader really needs to measure results based off of starting capital on a monthly, quarterly, and yearly basis. Trying to keep track of trades where you close out one leg at a different time frame than another gets tedious and can be misleading. Once I complete logging my past trade history, I think I'll smooth out the numbers and look to analyze things like average monthly and quarterly gain. I will also back out the largest positions as these are not indicative of my past or current style. They were kind of a one time big gamble.

But to that point, my style over the years keep changing so I don't know that any comparisons I do are really legitimate. That's why going forward I feel I'm narrowing the scope of what I need to try and keep track of. I want to concentrate on good initial trade set ups, good mgmt of those positions, and proper capital allocation given my risk/reward tolerance, capital levels, and investing goals. Then I'll just kind of let the numbers be whatever they are. I'm certainly not going to target a monthly dollar or percentage return. I think concentrating on the items mentioned above will simplify the portfolio mgmt process and results can speak for themselves later. Ideally, once I'm comfortable that all trades have a valid reason for entry, then I'm just looking to see that I'm consistently profitable. I'll make judgments about the quality of profitability as time goes on and I find my personal portfolio mgmt style.

Comments

WOW! I think that sums it up

Many of you have been reading this blog may have noticed that my blogging frequency has increased over the past few weeks as I got short the market. As you can imagine I am down money since getting short the market, this is the time when most people pull away from posting. But my goal is to stay active and involved and show you that trading is not always rainbows and butterflies. It is times like these that the things I have been sharing over the past couple of weeks are so important. You need to trade small relative to your account. I have a decent short position in the market and my portfolios are set up to make some awesome returns if we finally turn lower. But something I would like to point out is that my account is 70% Cash. I learned a long time ago how important it is to live by the rules you preach. Because of my discipline I am able to continue to hold my positions, I have time and capital on my side. I can't stress enough how important it is not to get to big....

Stay Small, Stay Out of Trouble

To expand on my post from yesterday about patience. I want to talk about a very important element that allows patience in a position, and that is staying small. If you trade too big RELATIVE to your personal account size, you are likely to be forced to exit the trade before the trade works in your favor. Many trades myself included have all experienced the pains of trading a position way too large given our account size. There is this predisposition out there that the only way you are going to make money in the financial markets is if you are trading 10 lots of options and 1000 shares of stock at the time. This is not the case, and if this is your mentality you will likely ensure yourself trouble. We have all read the stories of traders blowing up their account. I personally think a good rule of thumb is to not risk more than 5% of your account value on any one position. Good Luck Trading! In The Money Trades And 1 favor that we ask: If you like the hard work w...

more good news from FXStreet : Tom Fitzpatrick, senior technical analyst at Citibank in New York. Monday, July 15, 2002 "Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar." Julian Jessop, chief European economist at Standard Chartered Bank. Monday, July 15, 2002 "The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to wor...

Forex Is Crazy

Search This Blog