Trading Journal Entry For 2/7/2014

Daily Entry For February the 7th, 2014

Today was a decidedly painful day, wiping out about a third of our profits for the week. Of course that means it will still a pretty good week, but it could have and should have been better. We knew we had no business entering the trades which we did, especially the second one. We failed to follow our own advice (and it is very good advice) to walk away when things are going against you and live to fight another day. We traded without much conviction, simply for the sake of trading (and so we would have something to report here). That’s never a good idea. If you can’t find a trade which you feel reasonably confident about then you should not be trading. End of story. Trading for the sake of trading is rarely a profitable approach and can destroy an account balance in no time flat. Don’t make this mistake.

apple versus google pair option trade opening for 2/7/2014

Our first trade of the day came at 19:03 (GMT) on the pair option for Apple/Google. You can probably pretty clearly see from the chart image above what it was we were trading on. This is set as a 5 hour chart (default is 15 minutes) and the pair was just touching the low of the day, setting up nicely for a short-term bounce play. We generally play pair options using a “reversion to the mean” strategy, as we did here. This just means that whenever the spread between the performance of a pair of assets gets very wide, chances are it will soon “revert to the mean,” and close that gap to at least some degree. Of course, things do not always work out that way. And it certainly didn’t work out that way for this trade.

We invested $100 on the trade and it was offering a OTM refund rate of 10%, for $10 returned on our investment and a net loss of $90. And this is where we should have called it a day. Unfortunately, we did not. So let’s take a look at the next loser of the day and see if we can learn anything from it.

opening of eur/usd call options trade for 2/7/2014

Here is where we usually explain our reasoning behind a trade before moving on to the outcome. In this case, however, it’s hard to even claim it had much reasoning behind it. It had been steadily rising most of the day, but that’s about as good as it gets as far as our reason for the trade. And that’s simply not good enough. We made the trade with only 10 minutes remaining on the contract and we had no strong reason to believe that the price would be higher at the end of that time than it was at our entry. This trade was made with no real conviction and just for the sake of trading, and trying to recoup our previous losses. Don’t do this! (do as I say not as do haha).

Predictably, this trade ended just as well as the first one did. Which is to say, not good at all. For this trade we invested the odd amount of $74.50, and there was no refund rate offered on the trade. Therefore it was a loss of $74.50.

traderush investments history for 2/7/2014 trading journal

That brings us to the day’s investments history summary. As you can see we made two trades for the day, a high/low forex binary options contract, and one pair options contract. Both were big fat losers. Our total invested on the two trades was $174.50, and we received returns totaling $10, for a $164.50 loss for the day. Obviously not a good day. We can, however, learn from these trades and as long as you learn from your mistakes, and avoid repeating them, you will do fine in the long-run. Don’t trade without conviction. And walk away when things are going against you.

Weekly Trading Journal Results

It’s Friday which means it is time for our weekly trading journal results. Despite today’s setback it was still a pretty decent week overall. A total of 10 standard high/low and pair option trades were made for $923.60 in total investments. In addition to this we made one 60-second series trade for a total of $30, bringing the grand total to $953.60 invested for the week. Of the 10 standard trades, 3 were losers and 7 were winners. The 60-second series finished as a 2/1 split, making for a whopping $3.60 profit on the trade. All-in-all we received $1,160.57 in returns on our investment of $953.60, for a weekly profit of $206.97, or a 21.7% return rate. We’re obviously not getting rich here, but on a percentage basis that’s a pretty good week. Although it should have been better.

Today was a banner day for the markets, if not for us. It will be interesting to see where things head next week. Personally, I just don’t see where the upside comes from right now. Not to any real extent anyway. We remain both technically and fundamentally bearish for the time being. Have a great weekend and good luck out there!

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