It is a good idea to stop and make a rule review. There has been so many good plays the last few days. Yesterday alone was a guaranteed to be a money maker on down stocks. OK, there’s no guarantees in the market so the previous statement is not accurate. It maybe just hindsight. However, in general there have been many opportunities the last few days that I couldn’t take advantage of because I made one stupid mistake: I went all in on my previous trade. That trade has lost me most of the account (95.43% at the time of this entry), and has kept me away from the market in the last couple of weeks. The market has been volatile and that is a great thing for option traders because it causes premiums to really rise.
With high volatility comes high risk or capital loss. So to ensure capital safety, one must exercise great caution in:
- Determining the correct side of the trade
- Not forcing a trade
- Adhering to the money management plan very carefully.
I hope that in the next trade, I will use better judgement and not use most of my emotions but rather most of my money management plan.