Quote from optioncoach:
The next time you think you should have more patience is the time when the market will move right through your short strike and cause a major loss. Do not second guess your trading plan and do not look for ways to get around it.
I made an adjustment that today looks quite unnecessary but I have no regrets because I followed my risk management plan based on the market conditions and I did not hesitate. I am quite happy with my decision and I cannot control the market. I do not mind taking a small loss and sometimes it is good to do so since I had about 6 or 7 winning months in a row and it is good to not tempt the trading gods.
My June positions were successful because I followed my plan. Regardless if I ended up with a small loss.
I echo the coach's comments on this. I also closed out my June put spread for a loss, because it triggered my stop at 1,230 and my trading plan required that it be closed. You have to look at it as a successful implementation of a trading plan. If you are trading a sound plan, it will be profitable over time.
If you start looking at each individual trade, second guessing whether you could have, or should have, stayed in it longer, you have tossed the plan out the window. A sound trading plan recognizes that the market will make these adverse moves and that the positions can and will be unprofitable from time to time. Recognizing the probability of an occasional loss, the trading plan acts to mitigate the loss to prevent catastrophe. Second guessing whether to implement those risk management rules puts you in the position of no longer trading a soundly reasoned plan, but simply "gambling" on whether you can out guess the market.
I am still net positive on the SPX for the year to date, having booked net +20% including this recent loss. I would not be surprised if several here have done better, which is entirely possible if they managed to avoid a loss this month. Nonetheless, considering that the S&P is now negative for the same time period and even though I did give some back this month, I am quite pleased to be profitable following what was a truly awful month for most investors.
By executing your trading plan, if you have had similar results as mine earlier in the year, you are in a position to continue increasing your profits for the year. Others are now hoping they can recoup from their losses.
-Chris
