Trading Spreads for Consistent Profit in Small Accounts

Week of 6/2

It would appear that I have some positions in distress… But I’m not worried about it. Three of these positions are downside hedges, which are like insurance. You only get to collect on insurance if something bad happens. Well most of the time. Some of these hedges are paying in spite of good fortune. There is a new trade type on the board that I did not discuss last week. The Iron Condor is a neutral direction position that takes advantage of decaying theta and vega. Everything you need to know about Iron Condors . Needless to say, it’s working out well. I am not fretting over the looming draw down in my P/L. As a function of cash management I will begin pulling off certain losers against weeks where I have profit. I will exercise faith in the process on the not so certain losers.

A little philosophical tidbit. I can accept losing trades only if I recognize them as a necessary part of the larger plan. When that recognition takes place it is easier to deal appropriately with losses. I do not feel the need to go to extraordinary measures to salvage a lost proposition, because I know that, one it is unavoidable, but more importantly not the end of the world. The NBA finals are on right now, which reminds me of an applicable basketball analogy. When a person is having a hard time shooting from distance, the way they get out of trouble is not by quitting on the long shot. They need to keep trying from three to find the groove. Klay Thompson misses a jumper, gets his own rebound and immediately goes up for the same shot and drains it. Klay knows that misses happen, but he also knows that he is a great shooter. If you are confident in your system, there is no need to sweat it when you hit a bump in the road. Establish a functioning system and believe in it.

Enjoy the journals, and as always please comment or email me


Trade Journal – Open Trades (4)

Trade Journal – Summary (1)

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