Getting Out of a Bad Spread Trade

S

Satan's Helper

I hate to even ask here but I really screwed up and need some input.

I have been trading spreads for a while and whenever I get hit hard I just double down. What typically happens is sooner or later the spread tightening and my position breaks even or I walk away with a profit. I have been doing this for a long time and it works for me.

This time I am about to get a margin call if things don’t go in my favor. If I get hit I am out of business and I have no clue how I am going to pay for my mortgage, car lease and all of my memberships.

I know I post here a lot as a wise ass but I need some input. Right now I am slamming a lot of booze trying not to face tomorrow (Hopefully I will be so hung over I sleep through what ever happens).

What the hell do I do? My options are basicly:
  • I get a margin call if the spread widens and I am done.
  • The market opens and I man up to take a huge hit to my account but I can still pay my bills for a few months with that money that is left over. It gives me time to figure out what is next.
  • I can sit back and either get a margin call or the spread tightens and I might be able to keep trading.
 
Quote from Satan's Helper:

I hate to even ask here but I really screwed up and need some input.

I have been trading spreads for a while and whenever I get hit hard I just double down. What typically happens is sooner or later the spread tightening and my position breaks even or I walk away with a profit. I have been doing this for a long time and it works for me.

This time I am about to get a margin call if things don’t go in my favor. If I get hit I am out of business and I have no clue how I am going to pay for my mortgage, car lease and all of my memberships.

I know I post here a lot as a wise ass but I need some input. Right now I am slamming a lot of booze trying not to face tomorrow (Hopefully I will be so hung over I sleep through what ever happens).

What the hell do I do? My options are basicly:
  • I get a margin call if the spread widens and I am done.
  • The market opens and I man up to take a huge hit to my account but I can still pay my bills for a few months with that money that is left over. It gives me time to figure out what is next.
  • I can sit back and either get a margin call or the spread tightens and I might be able to keep trading.
More...

What is the spread?
 
Doubling down is always long-term blow out strategy even if you can get lucky sometimes.
Whenever you have a bad trade, you should get out and re-evaluate.
 
Quote from Maverick74:

What is the spread?
More...

Lol. That's cold, man. I don't know this poster but it's probably better he keeps it quiet. Don't wanna see this guy turn into bill ackman.

Anyway, my simple answer to you is easy and you already know it: get out of the position asap. I'm going to assume you don't have a really big position relative to your market. The nasty thing about getting out of a big spread is seeing both legs crush you as you start taking it off. That always feels psychologically more crushing than just getting out of an illiquid directional bet.

But, you gotta get out. Live to fight another day and all that good stuff.
 
Quote from Satan's Helper:

I hate to even ask here but I really screwed up and need some input.

I have been trading spreads for a while and whenever I get hit hard I just double down. What typically happens is sooner or later the spread tightening and my position breaks even or I walk away with a profit. I have been doing this for a long time and it works for me.

This time I am about to get a margin call if things don’t go in my favor. If I get hit I am out of business and I have no clue how I am going to pay for my mortgage, car lease and all of my memberships.

I know I post here a lot as a wise ass but I need some input. Right now I am slamming a lot of booze trying not to face tomorrow (Hopefully I will be so hung over I sleep through what ever happens).

What the hell do I do? My options are basicly:
  • I get a margin call if the spread widens and I am done.

  • The market opens and I man up to take a huge hit to my account but I can still pay my bills for a few months with that money that is left over. It gives me time to figure out what is next.
  • I can sit back and either get a margin call or the spread tightens and I might be able to keep trading.
More...


" The market opens and I man up to take a huge hit to my account but I can still pay my bills for a few months with that money that is left over. It gives me time to figure out what is next... "

looks like you know what is best option : man up , take the loss..., spend
a LOT of time in a park near trees and rivers... and restart trading! :)
And welcome to honesty section - aka psychology. :)
Feel free to update on how you felt before manning up, if you manned up or not, ...
just keep the thoughts, feelings, emotions here. :)
we understand.
 
Quote from Satan's Helper:
----need some input.
----been trading spreads....
----whenever I get hit hard I just double down.
----position breaks even or I walk away with a profit.
----been doing this for a long time and it works for me.
----about to get a margin call if things don’t go in my favor.
----slamming a lot of booze....
----What the hell do I do?
----options.....
More...
1) It's "different" this time. :eek:
2) Liquidate the position to the point where you can sleep. :cool:
3) Drink Hennessy instead of Boone's Farm. :D
 
Quote from nazzdack:

1) It's "different" this time. :eek:
2) Liquidate the position to the point where you can sleep. :cool:
3) Drink Hennessy instead of Boone's Farm. :D
More...

My suggestion would be to liquidate the position COMPLETELY. I don't think it's good advice to take some off in this case. It's actually an interesting point to debate, but since we're in psychology forum maybe it's a good place.

I would argue that he's crossed a certain psychological line where the position has threatened his whole business - he doesn't want death by a thousand cuts. He's probably lost all objectivity at this point, and can't trade the rest of the position rationally. Better to just get out completely, wipe the slate clean, and restart trading after a break where he's feeling more confident.

The line is different for all traders based on emotional/psychological makeup. It seems obvious from his tone and financial circumstances that he's crossed his with regards to this position.
 
Quote from Satan's Helper:

What the hell do I do? My options are basicly:
  • I get a margin call if the spread widens and I am done.
  • The market opens and I man up to take a huge hit to my account but I can still pay my bills for a few months with that money that is left over. It gives me time to figure out what is next.
  • I can sit back and either get a margin call or the spread tightens and I might be able to keep trading.
More...

Get flat

The emotional capital you’re expending is irreplaceable..., you’re completely helpless / powerless

Exit and regain control

====================

Btw;

Imo if you stick this out and by some outside chance it goes in your favor – in the long run that’ll screw you up more (experience talking)

Yeah – there is always a chance… but then there’s always a chance – till it is absolutely too damn late

It’s a shit sandwich

RN
 
Quote from Redneck:
Imo if you stick this out and by some outside chance it goes in your favor – in the long run that’ll screw you up more (experience talking)
RN
More...
I think so too. Doubling down on a losing trade is usually the wrong thing to do.
Best thing to do is to get flat, then reassess the situation from a more objective viewpoint.
 
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