Middle of February

If you read my blog post last month, I told the tale of the January and it’s uncooperativeness. I had a pretty bad month and I stole just about broke even. That shows to me that I’m on the right track. If it’s one thing that I’ve learned, it’s how to limit losses.

The next challenge is how to manage winners. I believe this is the skill that transitions intermediates and novices into professionals.

Gold is an old friend of mine. For some reason, I’ve made easily made more money in gold than any other security. I don’t know for sure the exact number, but I know I’ve made at least a thousand dollars in gold in the past year. John Carter talks about how certain personalities do well in certain markets. I wonder if gold is my buddy. I hope so, it’s pretty cool.

The reason I’m talking about gold is because I want to demonstrate the trade that really made me realize that I need to do a much better job of managing winners if I’m to do this for a living.

Gold was in a nice uptrend, it was plugging along, and it was looking intriguing. Is gold going to see a big move soon? That’s what I was thinking. In my head.

I will refrain from too much detail, but I used one of my favorite setups based on volatility contraction and I made about 300 bucks on it. But the problem was that I didn’t have a plan in place to take advantage of the move in case it kept going.

Some options are more sensitive to the movement of the underlying stock than others. From now on I want to make sure I buy options with lower sensitivity along with my main position, and when the price hits my target, I will dump the bigger options and keep the smaller ones. That way if the move terminates I will have taken off the majority of my position (and therefore risk) but I can still take advantage of any moves higher. 

I’m happy to report that this month so far has gone pretty darn well, despite the problems I mentioned. My account is up about 900 dollars, not counting business expenses(commissions) and educational costs. This has been a great month to make up for my not-so-great January. I'm hitting my weekly goals, and everything is great. For now. 

I’m bound to do something stupid before long, but that’s ok.