Hey Guys,
The bulls and the bears got in a tussle over the last 24 hours. The market was up to start the day yesterday, but then the S&P 500 fell 80 points throughout the day before climbing back up a lot of the way overnight. There's some volatility in the air. After a year like 2022, this volatility is nothing new.
I haven't entered any new positions yet today, although a number of positions triggered relatively late in the trading session yesterday. They were positions that were on my watch list. Each day I set up buy limit orders using the Potential Entry Price for tickers on my watch list. I do this for both the stocks and the options, and some of those trades triggered late in the day yesterday when the market dipped. The vast majority of my trades occur early in the trading day, but sometimes trades occur later in the day like that.
I had some stock positions reach their time limits today, so I manually closed those positions this morning. In the main account, I closed TCOM and WIX for a small net profit. In the low-priced account, I closed FUTU and XPEV both for partial losses.
My open positions are a mixed bag right now. Some are up and some are down. There is one in there that stands out to me: ABBV. I mentioned it yesterday. The option got about 30 cents away from the profit target, and then dropped all the way down to breakeven as of this morning.
Before I got into algorithmic trading, I used to get really wound up when something like that would happen. In my mind, I would berate myself for not taking a profit and consider it to have somehow been poor judgment on my part, as if I should have been able to tell that the stock was about to tumble.
But obviously, none of us have crystal balls. No one truly knows exactly what will happen next with any given stock. And that's one reason it can be nice to have an systematic trading approach. Then it's ok if some trades do what ABBV did. It's even expected. We don't have to criticize ourselves for missing a potential profit. Quite the opposite, we can actually congratulate ourselves for sticking to the plan, because in the long term, there might be better odds of having success in the stock market if we can stick to a strategy that has an edge rather than shooting from the hip with our trading decisions.
So ultimately, ABBV reflects an event that is statistically all but certain to happen from time to time. So we can be at peace with it. It also goes the other way. I had one trade last year where the price got within one single penny of my stoploss and then turned around and went all the way up to hit the profit target. Since I don't use discretion to set my exits, I can just set them and forget them and accept that sometimes there will be some near misses. Ultimately, the trade isn't over until it's over, and we therefore don't need to get mentally invested in the results of the trade until it's closed.
If you have any questions or feedback, I'd love to hear from you.