Hey Guys,
The market took a huge hit yesterday. It already seemed bad yesterday when I sent my morning email, when the S&P 500 was down 50 points from the prior close. But it was like each time I checked the market throughout the day, it was down more. By the end, the S&P 500 had dropped a whopping 125 points.
The timing of the market plunge was really bad for me considering how much risk exposure I had. As I mentioned earlier in the week, almost all my accounts were filled up with positions.
In particular, many of my options positions are down big right now. And my option trades carry a larger risk-per-trade than my stock trades, so the highs and lows are more extreme. I have a large number of option positions that reached their time limits today, and I'll be manually closing them right near the closing bell today. The trades aren't over, and anything can still happen, but it's probably quite likely that I'll be looking at sizeable losses with most of the option positions I close today.
I also had some losses with stock positions in the last 24 hours. Positions that looked promising ended up dropping like rocks yesterday. Between my main account and my double down account, I hit a few stop losses (ROKU, EXPE, IWF) and had a few positions time out and end up with losses (DDOG, ANET, NTAP).
With the major drop in the market and in my account balances, I had some tough emotions come up yesterday. The main one was probably frustration.
When that happened, what I did is I tried to step back and look at the big picture. I thought about how I was physically safe, even though it felt like what I was going through was a big problem. The way my emotions were running, it was as if my safety was on the line, but in fact, it wasn't. I was sitting in my house, with food and shelter, and with my family nearby and safe. Noticing that helped me keep things in perspective, and it de-intensified my emotions to some degree.
The other thing I did was recall my own trading experience. I've lived through a lot of drawdowns before. And I know from experience that sometimes it seems like the end of the world on a really bad day, but then life goes on and at some point things don't seem so bad anymore. Going through that multiple times has helped me learn that sometimes our minds catastrophize, and being aware of that helps me stand back and have more of a choice how to respond when those thoughts come up.
I'm not saying that this drawdown isn't a big deal. There is very real monetary risk involved, and we are seeing that clearly right now. But what I am saying is this: realizing that life is about more than just money can 1) de-intensify our emotions around money, and 2) almost paradoxically, potentially help us make more money from trading. Being able to live through drawdowns (and the emotions that come with them) is a key part of reaping the potential long term rewards of a trading approach like mine.
I took on a couple new positions today. In the double down account, I bought a stock position for AU and an option position for EXPE.
If you have any questions or feedback, I'd love to hear from you.