Saturday Portfolio Analysis

February 11, 2018

This past week was record breaking; one of the most volatile weeks in stock market history! Unfortunately, I and many others were positioned poorly and have suffered large losses. I talk all about that here in this week's video, but here are some key takeaways from this week:

 

1. Follow the rules - if I had stuck to the rules I have about position selection, then I would have lost less money. Know why IV is high, don't trade overall market indices or ETFs, never open new positions on Fridays, if the strike selection isn't there don't trade it, etc.

 

2. Risk is more important than reward - losses should loom larger than gains; I jumped the gun and gambled big because of FOMO (fear of missing out). Patience is important!

 

3. Past performance is not indicative of future results - the positions I entered recently would have generated profits probably 90% of the time we have had this market scenario since 2011. Unfortunately, things work until they don't, and that strategy stopped working this past week in a big way. Be more careful about getting heavily short IV the next time $VIX spikes up into the stratosphere ... that trade was becoming a little TOO reliable.

 

 

My goal for the remainder of 2018 is to get back to even and to showcase a journey. I have traded sloppy and had too many knee-jerk emotional reactions this past 6 months. Going forward, I would love to display how reverting back to strict discipline and adherence to the rules of the processes and methods I teach can dig yourself out of a hole this big - given enough time.

 

Here's to a come-from-behind victory!

 

 

 

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