When
the wind picks up, there are white caps on the ocean. After last
month's big losses, I made profits. I am not all the way back, but
neither is the market. This cycle, I sold a lot of weekly options and
most came in safe. Unfortunately, some of the losers were whoppers,
and winners are all small to tiny. So even with above average win
rate (80% is average for this method) the grade is A minus.
I
got whipsawed in SPY and NFLX. I did a lot of trades in SPY and IBB.
Despite a couple of bad whipsaws where I got stopped out in SPY,
overall it was a big winner for me this cycle. Same with IBB.
One
trite saying: "if I knew better I'd do better," meaning
that if knew where prices were going, of course I'd make more money.
After getting burned a couple of times, I moved further out in price
and closer in on time, for higher probability and lower profit. This
helped the win percentage, and also brought in some decent profits.
Going
forward, my market predictions tend to be no
better than coin flips, so mostly I watch the market action and try
to listen to what it is saying. This tends to be better than me
trying to predict. I do use support and resistance on the chart, and
do trade off news events. The market reaction to the Fed news seems
rather bearish, but we have all seen the wide swings in mood and
price.
Will
the lows hold? If I had to guess, I'd guess no, that lower lows are
coming. If I get that first question correct, the next question becomes when. Some
are looking at experience of the 2010 flash crash.
Back in 2010, it took four
months for that market to find a bottom before a rally took hold. For
this 2015 action, we are only one month in, so it is still early in
the correction process. Time and price can be equally important for
options traders.
There
is a chance that this correction becomes a bear market. The
German and Chinese stock markets and many others around the world,
are already in bear market mode, defined as down over 20% from their
highs. I am still thinking the bear comes to the U.S., after the second Fed rate
hike (whenever that is), but that is only a guess, a working trading theory. Sometimes I am wrong.
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