Hey Guys,
That was such a busy morning! Last night's watch list was absolutely overflowing with tickers. There are trades setting up all over the place. I picked up VLO and COUP stock positions in my main account. I grabbed MGM and JD in my low-priced account. And I got options for RNG, COUP, and JD in my extra options account.
I woke up this morning to see that I got hammered on my ALNY position. They reported earnings overnight, and the stock price gapped way down. It was actually the biggest gap down loss I've taken at Mindful Trader thus far. That's one of the inherent risks of swing trading: potential gap downs. That risk is especially amplified at times when companies report earnings. I knew that risk was there and I stuck with my plan in order to mimic the back-tested approach. I took a loss on this one, but I don't regret the decision at all. Any time I stick to my trading rules, I feel good about my decision. This same loss will show up in the back test, and I'm taking the right steps to stay in lock step with the back test.
That said, I still felt a sting when I saw it! One thing I conscientiously thought about this morning is that I can't control the market, and the market can't control me. So when there is a stinger of a loss (which there are bound to be if you're actively trading in the stock market), I allow myself to feel the sting, then remind myself of the fact that I'm following an academic back-tested approach that has long term potential, and then let it go. There isn't a need for me to carry around the weight of the sting all day. If I keep carrying that feeling around, then it's like the market is controlling me, despite the fact that I have no control over the market. That's not what I want and that's not how it has to be. So I try to fully embrace the sting in the moment, then let it go and move on.
I closed a couple other positions that reached their time limits too (EXPE in my main account and UBER in my low-priced account). I also have options positions that have reached their time limit today. I normally would close those at the end of trading today, but I will be away from my desk at that time so I will instead be closing them out in the middle of the trading session today.
Also, there is a trade change to report: I took an options trade for WMB yesterday. I failed to recognize that it has earnings coming up. I am going to close that position today at the same time that I close my other expiring options positions. With options, I don't like to hold the option through earnings. The reason is because right when earnings get announced the volatility is really high, and that makes it so that if the profit target gets reached, the profit multiple isn't as lucrative as non-earnings trades (despite assuming the typical full risk on the trade). So I don't like to take options trades that overlap earnings.
If you have any questions or feedback, I'd love to hear from you.