We issued a midday alert for the October560C which hit $1.00 profit goals in minutes, and second buys within hours. We'll hold this signal through the FEDS announcement, and also list an OTM put for risk traders.
The market is NOT readable. The government yesterday afternoon has asked JP Morgan and others to bail out slimey old AIG, the insurance thiefs, and this will help lead the potential of the market. Trigger turns could occur on what the government now DOES NOT do.
To those of you with me for years I know you knew all this. You knew that the lack of government business regulation in the last 7 years, the true devil may care "let it fly" attitude, even the McCain supported Bush move to privatize social security, have been truly successful at helping a few get rich, and a lot get poorer.
For those of you with intelligence you are not falling for the McCain ads about lowering taxes, when taxes have been raised endlessly with each of these bail outs (Bear Stearns just had faster lobbyists), Freddie and Fannie, and the endless building of debt. This is a simple and very effective "reverse taxing" where future generations are also taxed for our sins.
Yesterday the Lehmann bankruptcy occurred because the FEDS will not bail out, and they won't, because this time they know the books are so cooked with so many brokerages and banks that they have no way to do so....
AIG is next. Washington Mutual right after that. 18% of Citigroup's profits in 2006 came from credit cards. When the bad debt game of credit cards comes fully out we'll find the losses even deeper. In 2007 I'll let you guess what percentage of profit was credit card interest, as this will be the next Wall Street game exposed, with Congress fully behind the games. The fault is not just the Republicans, but all of the "old guard."
Please remember that the very analysts we read daily are the brokerages going under.
Greed is giving way to FEAR, as it should. Republicans and Democrats are responsible here. The lobbyists have controlled our Congress, and our White House. Do not deceive yourself that this type of fiasco cannot be controlled without regulation. Free markets may work well, but our lack of controls and false financials have much left to damage us. Fannie, Freddie, AIG and Lehman paid lobbyists and accountants for many years, and no controls were in place to stop them.
Here's what Paulson said:
http://www.bloomberg.com/apps/news?pid=20601087&sid=afG.eywb_KLU&refer=home
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As traders learn to think about trading, much can be learned. Here's an example of the "next step" with a new Advanced Mentoring client
http://www.oexoptions.com/AdvancedMentoring/AM.html
"Hey Floyd...Thanks for the journalling example...that helped a great deal...
Below is some journaling as well as some questions and thoughts for you...Feel free to comment wherever you feel necessary.
As for today...
Christine and I had a long talk about trading the OEX...We discussed how it can turn into another addiction for me..how I could easily be gambling and leveraging too much money...that there is a difference between trading with a system or profitable market edge and gambling...I admitted that there were several times when I gambled...I DO NOT want to do that anymore..
I decided that today I would implement Floydian rules...And that I would leverage smaller amounts of money...Remember...my account went from $32K down to $25K...I must take prudent risk or else I am going to be done soon!
Today I bought (1) 600 call contract for 5.40 after the market bounced off of the big drop this morning. I have to admit that I was proud of myself for only purchasing 1 contract...but I was also a bit nervous b/c I figured that it was "just my luck" that the market would continue to fall and I would be making a second buy...Even so...only having $540 out there made me feel much more at ease in case I did have to make a second purchase...
Originally...I set my profit goal for 7.40 (37%)...initially, when the market moved up and reached a 15-20% profit...I was thinking about taking profit...BUT becaues I only had one contract...I thought it was OK to hold for more...The DOW was trending in a diagonal range and I was going to let her go like that for as long as I could...However...I did say that my top sell was going to be between 40-50%... I used my theoretical pricer to estimate option price at yesterday's high of the day and I put a sell order in for 7.80..I have to admit that I figured that she would blow right through my order and continue onto more upside...but to keep greed at bay I felt that a 45% profit was more than enough..
Guess what...she hit my 7.80 target price and pulled back.What a decision on my part!! I felt great! Why can't they always work out like that? Seriously...I am proud of the fact that I estimated the top today (so far...11:15am)...BUT...that is one thing that is hanging me up...trying to be perfect...hitting tops and bottoms...I can't try to be perfect because it causes me to be anxious and then I make mistakes. However, because of my limited capital...I don't know how to stop thinking that way because I should want to get the best price possible correct? I believe that using smaller contract sizes will help me control this kind of thinking.
Afternoon: I came back from the park with the girls and noticed that the DOW was just about ready to hit the pivot...I was thinking about playing the bounce off the pivot but I did not want to spend 6.40 for a contract when I bought one earlier for 5.40..I was planning on buying again if the DOW touches the low of the day..BUT my one concern...and this is Christine's major beef with me..."Why can't I just take a good trade and be finished for the day?" "Why do I feel it necessary to trade another time, especially after a good winner?" It's like I'm just looking for an opportunity to screw up...Like I can't enjoy success for too long..
I do feel such an urge to trade again before the day ends...I should just hold off...even if a good opportunity presents itself...just to develop discipline.
2:00pm...15 minutes later...I am a little pissed off right now that I had an opportuity to purchase some 600 calls at the pivot for 6.40 and now they are worth 7.40...that is the stuff that bothers me...it was a good play...it was in line with Floydian rules...and I didn't have the guts to get in the trade b/c I can hear my wifes words ringing in my head..."Why do you feel it necessary to place another trade after you already made money that day? Why are you looking for an opportunity to lose?"...
Because of that...I felt jinxed no matter what I did...if I get in I will lose...If I don't get in...I will watch my potential winner...I HATE THIS FEELING!!! It's like I'm a slave to some little voice telling me that no matter what I decide to do..I'm going to be wrong! Anyway...if the DOW comes back down..I may be getting in...Watch me lose now!!
2:50pm...I am seriously pissed off right now...I watched the DOW for the last 2 hours move into a little flag pattern...staying above the pivot...I could have bought several times...once at 6.40...another at 6.80 and once again at 6.90...(Notice the higher lows)...what do I do...I sit there paralyzed....AFRAID TO BE WRONG....AFRAID TO HEAR MY WIFE (and the demons inside) TELL ME THAT I MADE A MISTAKE...Guess what? The option is worth 7.60 as I type and probably going higher!!! This is why I HATE trading....and this is why I feel like I can't get it right...
3pm...she's worth 8.10 right now!!!! CRAP!!!
3:20...Price hs been hanging aroung 8:10/8,20 for twenty minutes now...I have to admit that if I did buy earlier...I would have been out...(even though I believe she will continue to rise shortly)...The bottom line is that I could have made another 1.00-1.50 profit today...at least...and I am not too happy about that...HOWEVER...I was just thinking that there is no reason to allow a missed opportunity to get me upset...the positives behind this event are as follows:
1. I demonstrated some discipline by only placing one trade in a day..even though there were other opportunities
2. I was able to correctly identify other set ups...that is a good thing
3. I followed the rules today
4. I made 45% on my money and did not lose a cent!
Guess what...price is coming back down..I wonder if I should jump in before the 3:30 buying frenzy!!
3:50pm...As I sit back and watch the market play itself out...I can honestly say that NOW I feel pretty good about what I accomplished today...I placed a great trade this morning (thanks to Floyd's recommendation). I was able to buy near the low and sell near the high of the day...and I obtained 45% on my money (even though I only risked $540...45% is 45%...I'm not going to get into the mind game of "What would I have made if bought 5 contracts?"...I can't get into that kind of thinking because that kind of thinking will cause me to over leverage myself...All I say to myself now when I get a thought like that is...SOMEDAY...I will be able to do this with 5-10 contracts...but not right now...and that is OK."
Today was a great day...Overall...the week was a pretty good week...I began poorly (lost $9000 b/c of fear and greed) and finished up the week making up $2000 (some of that came off of lucky trades that I really shouldn't have placed either). But the reason why this was a great week is because I learned many lessons...And today I was able to demonstrate what I learned...I am a little bit more disciplined today than I was yesterday...and much more than I was last week, Thanks FLoyd."
There is more to trading than buying or selling a signal, and the fault of a loss or the win of a gain are only partly from the math and "functional" premise. There are few , if any, real "systems that work" without the control of emotion.
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