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Breaking trading rules can be costly

I just lost my whole year gains.

Everything, I was slowly building up over the course of 2014 year went down the toilet.


Because I broke my own rule which I try to tell everybody interested in options trading – stay small, do not overtrade.

I didn’t do it, pushed my luck forward and today a few trades went against me and I wasn’t able to deal with it and roll it, because I didn’t have enough cash in my account.

So I had to close with a loss which wiped out all my gains.

Will this lesson teach me something? I hope so.

What happened?

I had my strangle against TASR which today breached my call leg the way that my account got into a margin call (I told you (myself) stay small) and because I was over-extended on this trade, I was forced to close the trade. When the position was making me almost 4,000 dollars last week, I was greedy and wanted more. Today, the position turned against me and wiped out everything.

Time to start over and this time, stay small idiot (note: that idiot was to myself dear readers as you can imagine I am pretty much pissed off).


5 responses to “Breaking trading rules can be costly”

  1. Mark says:

    Been there my brother. Earlier this year on some stupid HLF and FB puts. It’s the worst feeling ever. Took me a long time to recover but recover I did and now after months of safer but still lucrative trades I’m back on top. You’ll be back on top soon too!

    • Martin says:

      Mark, I hear you. I am still mad at myself on over trading and taking unnecessary loss if I stayed small as I preach it to other traders and don’t do it myself, that’s what makes me really angry. I know I will recover, I have seen what put and strangles can do and how profitable these trades can be. I just need to learn to trade only what I can handle. I am actually already recovering. I am still set to end this year profitable.
      Thanks for stopping by!

  2. Scott says:

    Man, sorry to hear that! I had a bunch of great naked puts that I was able to close each in 3-10 days (sold with ~45 DTE). I only had two puts going at the same time, which meant I had enough cash to cover in worst case scenario. It got me thinking just how much I would have made if I had used all my available margin! Probably would have been close to $3000 on account just worth $7000 (of which only 6k is available to trade). But, it is for reasons like your strangle that I decide to keep things small. I’m still slightly down for the year as it is.

    Best of luck in recovering from the loss!

    • Martin says:

      I still have circa $5,000 in open premiums, so it will not be that bad at the end of the year, but the damage has been done.

    • Martin says:

      Yea, learned my lesson – don’t be greedy, stay small. Gosh how many times I said that and I didn’t follow it myself. I made roughly $7,000 trading options. All wiped out in one day by being greedy. Hope this is also a lesson for other who read this post :)

      But I am optimist and I will go back up slowly again.

      Thanks for kind words.

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