Today I made another mistake, and it cost me 50% of my profits.

The mistake was that I forgot to check “quantity” when I created my sell order for my open options trade.

Luckily, the trade itself was green and I made a profit. I am annoyed that I made this mistake however. While I had set the quantity correctly previously, I ended up closing and re-opening my order window – in the process, the system defaulted back to “1”, so when I didn’t check at the last second, I ended up only selling “1” of my open positions. By the time I realized what had happened, my PUT options scalp had deteriorated. I quickly sold the remainder options for even. Nevertheless, the trade itself was good, so I’ll go into that below.

Stock: LCID
Catalyst: SEC probe into company.
Trade: SHORT via PUT Options

Option	Order	Price	Commission
DEC10 21 39 PUT	BTO	$2.660	$6.45
DEC10 21 39 PUT	STC	$3.350	$5.70
DEC10 21 39 PUT	STC	$2.640	$5.70

Today’s trade was interesting, a short play on ticker EH (Ehang Holdings). Everything went well, and I made money on the trade, but as always mistakes were made and my trading system could be tightened. Below I describe how the trade happened.

Today i just want to go over a short trade i made this morning. Overall I’m super happy with it, but as always there is room for improvement.

The stock was Ehang Holdings (Ticker: EH on NASDAQ).

So the night before, I was on Market Chameleon on the after hours trading page, and when I looked at the biggest decliners EH was at the top of the list, if not the top decliner. So i drilled down a little bit and I found a negative news catalyst which was basically poor quarterly results and poor forward guidance. Ehang makes drones, but are still not sure when they will be ready for market.

Then, when I woke up this morning, as I always do, I went to Market Chameleon again, however this time on the pre-market trading report. It was interesting to see that EH was no longer in the decliners list. This was a big lesson for me, as now I know that it is worthwhile the night before to check out the lists and take a snapshot of the decliners in case they drop off but are likely to still sell off. It appears that the stock recovered just enough to kind of falloff that declines list, but was still primed for a sell off.

A few minutes before market open, I was still interested in shorting EH, so checked out the option prices for PUT options. I bought a 17.5 strike that expired in 7 days.

Truth be told another mistake, as I didn’t really look at the spread closely and it was super wide – so again I paid quite a bit for the options and they started in the red.

However, lucky for me my thesis was right so on the chart, you can see the green entry point and the red exit indicator.

For better or worse, I was trading primarily the one minute chart and you can see i jumped in a little bit early so a bit of risk there that I assumed.

Perhaps in the future i should kind of waited to see what the 5m opening range candle told me, but anyway it worked out and it just tanked at the open and again.

I kind of learned my lesson from my yesterday’s BYSI trade yesterday and that was not to sell emotionally when i saw my P/L turn green but rather hold out as long as i could – waiting for the charts to signal an exit opportunity.

Perhaps another mistake i made is i kind of stuck on the one minute chart whereas if i’d switch to the two minute, maybe i would have held on a bit longer still. Perhaps I should have been on the the five minute chart which i have here:

So from the 5m, so you can see II left a little bit on the table again.

Something worth noting too was the NASDAQ was also dropping today.

The NASDAQ decline was encouraging too, as that gave me an extra layer of confidence to short.

Anyway, while to options had more profit after I sold, I seem to have captured most of the move, so I’m happy.

I held for a bit longer today and really looked at the chart, but should have checked longer time frames. This option might do even better over the next few days.

Stock: EH

Trade: Short via PUTS.

Gain: 18.2% on EH DEC17 21 17.5 PUT

Today I want to talk about a recent options trade I did. I made a few mistakes, which limited by returns. While the trade ended up being green, I consider it a failure because for emotional reasons, I left a lot of money on the table. I did not “let my winners run”.

Here’s what happened…

Mistake #1: I wasn’t patient, and paid too much for my PUT options. If I had been patient, I could have saved a lot of money on the options I paid for. I paid 65 cents, but saw them available for 35 cents just a few minutes later!

Mistake #2: After watching the charts for 1.5 days straight, as soon as my trade turned green – I sold. I didn’t look at the charts enough, but sold for emotional reasons. I was fearful of loss, greedy for gains and I was tired of watching the charts. I was happy to finally see green P/L, but I should have looked at (a) MACD – showing downward pressure, (b) selling volume increasing dramatically, (c) technical levels, (d) level 2 buys/sales, and more! Instead I just emotionally sold – quick and uncalculated.

Anyway, above I go into the video and show you what happened.

Stock: BYSI

Trade: Short via Put Options
Catalyst: (negative) Failed FDA approval.
BTO: DEC17 21 5 PUT @ $0.6500 (December 1st)
STC: DEC17 21 5 PUT @ 0.7500 (December 2nd)

The price 1 hour later was, @ $1.05

Lessons:

1. Don’t be impatient during entry. Wait for better price entry.
2. Don’t be emotional during exit. Watch the charts, let them tell you when to sell.

Chart (notice the green entry, red exit arrows)

Today I was upset with myself. Why? Because I broke one of my new trading rules.

Recently, I made a rule “Do not Loose More than 50$ per day, and if you do, stop trading for that day”. However, this morning I entered a trade pre-market, carried it into the open, and saw it drop. I lost 54$. No biggie. I have been on my best winning streak ever, so this was bound to happen. However, what did I do next? I hit the “biggest gainers” chart, selected the newest gainer with high volume, and impulsively entered a position. Despite going green for a minute or so, it ended up tanking, so I lost another 50$. If I had not “revenged traded”, and had stuck to my “daily loss limit”, I would have had a smaller loss.

Additionally, my 2nd trade was more than my lot limit (currently 100 shares).

So really, I broke three rules today:

1. Exceeded daily loss limit.
2. Revenge Traded
3. Exceeded current lot size.

That is why I don’t feel good about today’s trading.

I would have felt fine with my 1st loss, because it was expected and followed the rules.

Instead, a little voice said “you can win back your losses!!”. Bad advice.

I certainly hope I learn from todays mistakes.

Perhaps there was some over confidence that contributed to the rule breaking above!

See you tomorrow!

P.S. I also was trading LONG on a red day. My system flow chart suggests a SHORT on days where futures are red, and early main index candles are red. Another mistake today!

P.P.S I also was buying a stock that DID NOT have a strong demand story. The shares traded was just a small percentage of float! Next time I got long, I want to see a strong demand story! The float needs to be trading over and over!