Weekly results May 04, 2018

S&P 500  2,663.42 +33.69 (+1.28%)  Dow 30  24,262.51 +332.36 (+1.39%)  Nasdaq  7,209.62 +121.47 (+1.71%)
 

Market fearI am trying to get back on track posting regularly our trading and investing results.

Why are we posting our results and financials when we are not a publicly traded company? Can it hurt our business and me personally? Does it make sense and can our readers be interested in these posts which some people consider boasting? And if it is a boasting, should we continue?

What do you think the stock market is going to do next? My outlook is mixed though. I can see bullish pressures but I also see bearishness in the market. Who will win this battle? Bulls or bears?

And at the end review our investing and trading results for the last week.

 

 

Lately, I was busy (and also lazy) to be posting on regular basis. That period is gone (hopefully) and I plan on posting my market views and trading results on regular basis again.

What do you think the market is going to do next? are you also afraid of this market turning into a bear market?

I keep saying that we are still bullish. I still think this market is still a good bull and it has legs although there is a lot of bearishness out there and many “I told you so” are happy seeing the market tumbling. But it seems all pundits are missing the point and seeing a tornado in a glass of water rather than in an Ocean.

Yes, this market is difficult. Yes it is a whipsaw trading and it is hard to trade safely. But there are ways to stay safe. before I get to the steps we are taking to keep our trading safe, please, watch this video which we agree with and it supports our view on the further market development (“evidence bias” so take it as such):

 

 

In the view of the recent market behavior what steps we took to trade and stay safe?

It is important to know that every trader and investor must have a plan. If you are a novice trader or investor, you must have a written plan!

Once you get experienced and your plan gets ingrained into your brain you can have a mental plans only (if you wish). However, I consider myself experienced, somewhat, and yet I have a written plan myself. Why? Because it pays to time to time go back and re-read what you wanted to do at the beginning, what changed and if it was a worthy change to keep or unwanted deviation which is in fact hurting your trading.

From some members of our trading group I have heard a complaint that I have deviated from my plan of trading equities and now trade index more than equities.

In fact I haven’t deviated form my strategy. I still trade the same principles I laid out on my strategy page. I still trade naked puts (if the account buying power allows), put spreads, or call spreads. What has changed recently was underlying equity.

The reason I started trading SPX more than equity was the market behavior. Many of my equity trades got in the money. I had to roll them far away to give them a plenty of time to recover. Many trades are now >100 days to expiration. With this whipsaw market SPX provided me with more flexibility to keep trading, take shorter DTE trades and collect premiums. In a non-trending market it was the only solution I could see.

Even with that, I am still muting my trading because it is difficult to trade in this market.
 

But there was a small adjustment which I want to point out:
 

I said in my trading strategy that I like to trade 0 – 15 DTE SPX spreads, having trades at 0 to 5 DTE at most or zero DTE at best.

Well, in this zig-zag market I saw it difficult to manage. So I shifted my attention to trade longer DTE as of now; trading around 15 DTE trades rather than shorter. This allows me to get away from the current mess at the floor. I can choose my strikes to be really far away and not to worry about what’s happening on a day to day basis.

If you are a visual person, here is a chart indicating my preferred area where I would choose my put and call strikes:

 
S&P trend
 

However, since I am bullish and consider this market bull not over; and I think we will calm down and finally go up again; as we will be approaching one level or the other, I will be legging into one side or the other accordingly. For example, until we break a support, I will be selling puts into the market weakness or until we break resistance, I will be selling calls into the market strength.

Once we break one or the other side, I will roll the touched side (or more likely convert into an opposite spread; for example call spreads into put spreads) and ride the new trend.
 

I had a discussion with a few people some time ago who told me that by posting my results I was boasting about my trading, discouraging others, or providing them with false expectations. Moreover, that I was not a publicly traded company so I am not obliged to be posting our financials.

It is true. I am not a publicly traded company. I am a private business in equity trading; and I have partners (some silent). But there are a few flaws in the presumption that by posting our results I give people who follow me false expectations.

First, I would like to note, that I post all my results. I post my bad trades, my losing trades, disasters, as well as my good results.

You will find many traders who post their good results only; showing off their 1000% + profits. But they will disappear as soon as the market crashes or they wipe out their accounts. And 95% of them will. If they read these words, they will disagree or cal me a fool. Something which will never happen to them. But it will.

I know that. I know because I was there myself. I too was full of pride and invincibility myself. When I started this blog in 2008 I felt like a king of the world. I made money in 2006 market! Not everyone could tell that. But, I started trading that year, and I was trading bearish trades all the way down. In some sort, it was an easy market, because it was a trending market. And it is extremely easy to trade in a trending market.

What followed was the sobering years. I lost everything. Then started again, and lost it again.
 

It was a painful learning path.
 

So if you had guts staying with me all the time, reading this boring messages about my trading failures, you may also see my successes. And what else can I provide to anyone willing to read and learn than an encouragement by my own example.

 
I am still looking for some easy way to log my trades without spending endless hours recording my trades. In 2018 I made an astonishing 1710 trades! Most of them were trade rolls. But I made over $30,000 dollars in February and March alone! It was physically impossible to record those trades manually in a spreadsheet.
 

There is a lesson in this trading: I must slow down.

Yes, I must slow down no matter how tempting it was to take those trades and make that money. It was also very dangerous. I severely over-traded my accounts by taking those trades.

Starting my manual trade log could be a way to slow myself down.
 

I started my spreadsheet again which I have abandoned doing in 2017. Tracking my own strategy and writing about it is a good thing. It can help you bring yourself back on track. Here you can review my new spreadsheet with open and closed trades:

 
Trade Log
 

I hope that this spreadsheet will help me to trade less and wait for the old trades to go away first before I open new trades – my old bad habit I want to get rid off.
Let’s see how that works in the future. And, I hope, you will learn too seeing my trades. And believe me, it is not boasting!

 

 · Weekly Results May 04, 2018

 

0504trading
 

I didn’t expect the beginning of May to be as successful as it was! I was pretty much dormant with a few trades only and I haven’t planned any trades whatsoever. So i was quite surprised to see what results came in.

In the first week of May we made over $765 dollars in income! Not bad for only a few trades! I am however more satisfied with our net-liq going up again. It started being a bit weary and tiring seeing the accounts depressed by falling markets.

I am not very concerned about a draw-down of the net liquidation value of our accounts as it is just a temporary event. many of our open trades are now consuming the net-liq but our cash went up significantly, our cash flow is positive, so when these trades close, we will be up again.

 

 · Dividend stocks to buy

 

Out of our watch list of 37 dividend stocks the following ones are a good buy at today’s prices (05/04/2018):

Here is a list of dividend stocks currently worth buying. One stock appeared in the list for a short period of time – Apple (AAPL). I decided to wait for earnings as I expected the stock to get slammed more and I could buy in. I missed the opportunity.

When Berkshire Hathaway (BRK.A) announced that they were buying Apple all the way down and added some 75 billion shares more (if I remember it correctly), the stock skyrocketed. And I missed it. I knew that all the hype from the media and pundits freaking about AAPL a few weeks before was all a big bullshit. I just thought, they would slam the stock lower so I can buy at a lot better price.

Well, it didn’t happen.

Now, I have to wait for another opportunity.

 
S&P500
 


Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 





5 responses to “Weekly results May 04, 2018”

  1. Tony says:

    Thanks for posting your thoughts. I also appreciate your honesty. As you might have experienced, one big “Aw Shit” wipes out a lot of little “at a boys.” Being unconcerned with draw downs is fine in a bull market if you are trading the market, no so much if the bear market returns or if you are trading in a sector that is in a bear market. Perhaps it is possible to recognize when the market has turned and take the necessary action to adjust your strategy.

    • Martin says:

      Tony,

      That’s what I am doing – monitoring the market and if it turns down into a bear market or prolonged selling my intentions would be to convert the bullish trades into bearish. As of now my drawdowns are not caused by taking losses but open trades. I have a few ITM trades but most are safely OTM and I keep managing them in that way to keep them OTM as much as possible. In that way, I am not concerned about the draw downs.

  2. John Pandayotis says:

    i like your honesty. I am now a retired hedge fund manager with 30 yrs behind me.

    Yes…most money and good fortunes will be lost by overtrading and lack of humility.
    I shall eagerly follow your progress over time…pls keep posting

  3. John Pandayotis says:

    i like your honesty. I am now a retired hedge fund manager with 30 yrs behind me.

    Yes…most money and good fortunes will be lost by overtrading and lack of humility.

    I shall eagerly follow your progress over time…pls keep posting

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