The Beerish Bull's Great Chronicle of Alcohol and Poor Decisions

[beerntrading]

The absolute hardest part of trading, at least for me is managing those losing days and actually stepping away and doing something else instead of subjecting your account to additional risk on a day when you're not "on" anyway. I've found that when the losses start mounting, the day usually gets worse not better. Every once in awhile I can salvage a losing day but most of the time when I try, I end up just pissing more money down the drain. This is my biggest downfall and always has been. To be a successful trader you have to know when to call it and move along for the day in my opinion. I just looked at my numbers for the past month. 6 losing days and 13 winning days but I'm net down on my account, % wise fairly sizable. 4 of those losing days were minor, 1 more than I'd like and 1 extreme. I need to get this part of my game in check and it sounds like you do as well, best of luck, following your journal.

Thanks.

I do a lot of options, and spreads, so my max gain and max loss are limited and tend to be approximately equal. So the best days and worst days are about the same in magnitude. The strategy is to get out opportunistically from the winners, strategically from the losers, and make money as it grinds in your favor either through decay or price bias. My problem is sticking to the risk limitation when I know better...

I find that writing this stuff down publicly helps, because it plants that seed in the back of my mind, "how stupid will you look if this one goes south?"

 

[beerntrading]

It may work for the first year, but it won't work for the following, and they will be on you like white-on-rice.

Seriously, do you really think you have found something that nobody else has ever thought of, to try to cheat the IRS? It ain't happening. Welcome to USA Taxation.

You got be thinking about this, and I did come up with one flaw in the LEAPs strategy. You can't use straddles, and you can't trade the underlying during December (or January if taking losses). The reason is wash sales. Also, don't do this on ETFs for the same reason. You could, however, do this with similar stocks...i.e. puts on VZ, calls on T; or PEP / KO; BAT / MO + PM...

 

[Overnight]

You got be thinking about this, and I did come up with one flaw in the LEAPs strategy. You can't use straddles, and you can't trade the underlying during December (or January if taking losses). The reason is wash sales. Also, don't do this on ETFs for the same reason. You could, however, do this with similar stocks...i.e. puts on VZ, calls on T; or PEP / KO; BAT / MO + PM...

Ahh, k, I recall this now (as you refreshed my memory from that other thread). I think what I was on about was the following...

...Also, one of the key tests for disallowed positions is if there's risk or not, zero risk positions are not legal tax devices (I.e. Going long a stock in one account and short in another to lock profits)

I believe, when I read that initially a few days ago, I started thinking to myself...

"Look at all the finagling we're doing to try to get the lowest tax penalty, and look at how far we will go to try to squeeze the "tax system"". All this to avoid paying a bit more than we would like, to Mr.TaxMan.

So I then started thinking about how it is just like having an open position. We try to "avoid the tax man" in a sense by cutting our losses short. Let the runners run.

I have said this over and over again in my head, and have mentioned it on forums like this...I WILL GLADLY PAY $3000 GROSS TO MAKE $1000 NET PROFIT. This means that I made $3000 profit, but lost $2000 during the run. So I net $1000.

I give a flying fish about how much I spent in gross to make my $1000 net after expenses and taxes. I just don't CARE! The final net per day is the important bit. The rest is just ego, and footies in the sandbox kicking grains of grit into the eyes of the other kids..

 

[beerntrading]

Ahh, k, I recall this now (as you refreshed my memory from that other thread). I think what I was on about was the following...



I believe, when I read that initially a few days ago, I started thinking to myself...

"Look at all the finagling we're doing to try to get the lowest tax penalty, and look at how far we will go to try to squeeze the "tax system"". All this to avoid paying a bit more than we would like, to Mr.TaxMan.

So I then started thinking about how it is just like having an open position. We try to "avoid the tax man" in a sense by cutting our losses short. Let the runners run.

I have said this over and over again in my head, and have mentioned it on forums like this...I WILL GLADLY PAY $3000 GROSS TO MAKE $1000 NET PROFIT. This means that I made $3000 profit, but lost $2000 during the run. So I net $1000.

I give a flying fish about how much I spent in gross to make my $1000 net after expenses and taxes. I just don't CARE! The final net per day is the important bit. The rest is just ego, and footies in the sandbox kicking grains of grit into the eyes of the other kids..

Oh, yeah, I'm talking about gains over the course of 12 months minus a few days, or gains over 12 months plus a few. Not about day trading gains.

I'm actually worried because I could certainly see a specific rule against this being a real thing...but I also think that a LT/ST threshold of 11 months or 13 would render the strategy irrelevant, thus it's by design. I mean the whole concept of LEAPs (vs any other option) is that you benefit from the LT tax regime...it's not a LEAP if you dump a loser early.

 

[Overnight]

Oh, yeah, I'm talking about gains over the course of 12 months minus a few days, or gains over 12 months plus a few. Not about day trading gains.

I'm actually worried because I could certainly see a specific rule against this being a real thing...but I also think that a LT/ST threshold of 11 months or 13 would render the strategy irrelevant, thus it's by design. I mean the whole concept of LEAPs (vs any other option) is that you benefit from the LT tax regime...it's not a LEAP if you dump a loser early.

When all is said and done, after fees and taxes are taken out, you're at, say, $50,000 in your pocket. To mull over how one COULD have been $150,000 in the pocket is the serious detriment to all traders, everywhere.

Be happy with what you HAVE done, not sad about what you COULD have done.

Plug that into the formula. Like today. I could have made just over $1,000 in trading, if only I had just done this or that. But I did not do "this or that", and so I made about $400. THAT is what I must be content with. To do otherwise is mental implosion.

 

[johnnyrock]

I dumped the short side of MSFT today for a .07 debit. Just long the $75 October calls now with an effective entry of 1.30. Hoping for one hell of a bull tomorrow. (Also dumping the short side of a debit spread on AAPL calls I've been holding).

And I also made a live call on DAL in another thread here. Long the 8/4 $50 call, and debit spread for 8/18 on 50-52. Entries were .23 and .45 respectively.

This was a musing I posted in a PM--thought it might be an interesting read for some. Regarding how robust the bull market is:

I don't think this is historically high valuations. On an exponential chart, we're right on target for the long term trend, while clear bubbles can be seen preceding each prior crash. The historic P/E ratio of the S&P might look high at the moment, but not in consideration of forward P/E. As long as the earnings party continues, the valuations will continue upwards. I don't think F and GM carry the weight they once did on the market. They're getting hit from all sides (disruptive competition, ride share, fewer shopping trips to be made, demographics, longer lasting cars, lessening air fares...). On the other side, it's disruptive companies that are propping up the high P/E ratios--think that AMZN alone makes up 2.5% of the S&P and contributes no earnings.

The last time humans saw this kind of change of habit over a single generation was after the civil war through 1929 (when railroads, automobiles, radios, refrigeration / A/C, telegraph, electric lights...). The run that ended that was a 16-year bull market, with two 12-year bulls immediately preceding it. Today's AMZN and NFLX naysayers sound quite similar to the railroad naysayers of the 19th century. And they were right in the early days when everyone with a hat to hold out to beg could find financing for a railroad (or a tech start-up). It wasn't until they consolidated that they really took off and ran. You notice how people complain about the decreasing number of IPOs today?

To my mind, we're in a mature bull market, and this is just the beginning. When the bubble forms on this one, it's going to look even less sane, and even more frantic. It's going to burst in spectacular fashion, but anything left on the table until then is just that much less cushion for the fall.

You know this, but for the naysayers, AMZN puts everything into dominating new markets (pantry, now auto parts) then they raise prices once we are hooked on the convenience (prime). Wall St. has always paid up for growth in bull markets.

Mature for sure, but not exhausted. I think 16 or 17 years is the average.

 

[beerntrading]

When all is said and done, after fees and taxes are taken out, you're at, say, $50,000 in your pocket. To mull over how one COULD have been $150,000 in the pocket is the serious detriment to all traders, everywhere.

Be happy with what you HAVE done, not sad about what you COULD have done.

I'm with you 100% on that. Opportunity cost is not a thing. I have enough existential doubt in my trading without adding in imaginary "costs".

(Although, I do fret about missed trades on my stupid days--see the post from earlier today)

 

[beerntrading]

You know this, but for the naysayers, AMZN puts everything into dominating new markets (pantry, now auto parts) then they raise prices once we are hooked on the convenience (prime). Wall St. has always paid up for growth in bull markets.

Bingo...just like the railroads.

 

[beerntrading]

Went long Dec $33 calls on CSCO for a .71 debit. Another diagonal play when it turns back to bearish.

I'm would guess this is going to approach $33 before Oct earnings. Let's say +/- 0.15.

 

[beerntrading]

Just went short JPM 8/11 $94 call for .78.

Edit:

I closed out the short side of that spread today for .37 debit. So I effectively hold just the long side of that for a 1.35 debit. This was based on the short term bullishness showing in JPM--I'll open another short as it makes sense to do so.

Now the whole position is .57 debit. The spread on this is down to $1, making absolute risk .43.

And just for some perspective, I'm getting slaughtered on MSFT (but holding tight there)