Well - I did it. Every book I’ve ever read said I would and that it would cost me. I overtraded. It wasn’t terrible except that I am starting with a $3k account and when you put on 6 trades all in the same direction (and big mistake # 2 - contrary to the current trend) and they go against you - It hurts. I was profitable in all the trades and saw all of them turn against me but I could not get out. Why? Because the Federal Government was ‘protecting’ me. In order to keep traders with small accounts (the little guy they are always talking about in their speeches) ‘safe’ from ‘over-trading’ their accounts, anyone with an account of less than $25,000 can only make 3 round trip trades in any 5 day period. So, when I wanted to take my 6 trades and $600 profit off the table and go to cash, I couldn’t. In hind sight, I could and should have taken at least 1 -3 of the most profitable trades off - but I got greedy and fearful all at the same time. I broke a few of my own rules too which is easy when you do not have them written down and in front of you - which is my assignment for this weekend.
I then made it worse by taking a position in SPY, once again against the prevailing trend, trying to catch the proverbial knife, and deciding to test out something I read in a book about stops based on time - something I discovered I am not comfortable with since I have a real job and can’t spend my days in front of the computer watching the tape all day - another $250 mistake.
All this lead me back to instituting base positions of short verticals and iron condors.
On Monday I sold 2 113/115/101/99 iron condors for .95 cents. break-even on both ends is 99.54 and 11.48. This is the type of trade I believe more of my account should be devoted to because time works in my favor and it allows me to not have to or need to watch all day or check on when I am at work during the day.
I have 2 more positions open that I entered at a high risk/reward area on GDX. A July 49 call and an Aug 50 call. My entry was good but - once again - I got in with a profit target but not a stop-loss exit so I am still in it as it meanders back and forth. I am so spooked by the possibility of being labeled a day-trader and any penalties and tax changes that designation would cost me that I am afraid to get out of a position for a profit or a loss. I’ll have to delve into the why of that further and going forward I will set stops.
Here is the 30 min chart of GDX. I got in around the upward trend line at the bottom of an ascending channel but the first time it hit the bottom. It has now hit the bottom 3 times and looks to be forming an inverted head & shoulder pattern. My profit stops are 51.50 and 52.00. My stop loss is a 30 min candle close below the low on the head around 48.50.
