Well Guys, this ride is getting wild!
My account is down more than 12% from it's high earlier this week. That was abrupt shift! When I started the day yesterday, my Morgan Stanley stock position was up about a quarter of the way to the profit target, and then within just hours it hit its stoploss. The entire financial sector dropped like a rock yesterday. And in my extra options account, every single trade was a loser this week.
Here are a couple things that might be helpful to know:
1) Just last month, I was in a similar situation. I took a lot of heat in a short period of time. Just a week or two later, I had a huge profit week as the market rebounded. Also, back in March, I lived through market turbulence, taking a major drawdown along the way, and then my biggest profit streak of the year blossomed out of the storm. That certainly does not mean profits are around the corner. But it does mean that I've been here before, and I'll be here again. And you never know, during a storm, when the sun is going to show up again.
2) At times when there are a lot of losses, I like to look at this page. It has a list of tickers and their performance in back tests. When I look through those results, I see strength. Ticker after ticker shows that it could have performed quite well over the last 20+ years with this strategy. And yet baked into those numbers are tons of episodes of market turbulence (which are not visible just from looking at the numbers on that page). From the high level we can see "Applied Materials had a 37-19 win/loss record in back tests", and that can be inspiring. Yet we also are now getting a taste of reality that reminds us that along the way, there are periods like this that have to be lived through. To be able to benefit from a potential 37-19 record over 20 years, it's not always a walk through the park. There are periods of turbulence and turmoil. So at times like this, I like to look at that page and remind myself of the bigger picture potential of this trading approach. There's a reason I stick to the plan even when it's stormy like this.
Although these things help me stay the course with my trading approach, keep in mind there is real risk here of course, and you have to do what's right for you.
I bought a couple stock positions today and I also bought an Ebay option.
I had a lot of positions hit their time limit today (and a couple that hit stoplosses). Most of my expiring options were nearly worthless. What I like to do for those is set up a "market sell" order so that if there end up being any buyers, then I'll get at least some value out of the position. If the option has some noticeable value left, then I prefer to use a limit order to sell and I stick it between the bid and the ask.