As I did last week, this week’s goal was to make another $300 trading NETFLIX, APPLE & GOOGLE. Since I trade options, it’s imperative that I have a goal in mind as to the amount I want to make on a trade. And if you want to get into trading too then this is one of the things I tell anyone who asks me about when to get in and get out. Have a plan, set a goal and stick with it. It takes awhile to understand the charts and realize when volume and other indicators are waning or rising to give you a signal to get in on a trade or get out of it. But like all things in life you win some and you lose some. But the idea is to have more winners than losers.
That’s pretty much how yesterdays trades went. Out of the three option contracts in these companies I had two out of the three as winners. The loss was big but so was one of the wins. So they offset one another but I came out on top anyways. This is thanks to the power of diversification. It’s important not to put all your eggs in one basket no matter how small the eggs.
Well, to put it simply, APPL (apple) went down, Google and Netflix went up. However apple did come back up at some point during the day but I made a huge mistake by selling it before it did and it costed me.
During the morning session, Google opened high and the trade I had set up ( a call option predicting the price will go up) did just what I wanted. It went up $3 then $6 and then $10. At ten dollars, I pulled the trigger and collected my profits.
While concentrating on this trade however, Apple was up a bit but still losing me money so I left it alone hoping it would become profitable at some point then sell. So I shifted my attention to my second screen to keep up with Netflix. It went down at first then did a steady rise for a while. Then it bolted and went up by $4. I waited a bit longer because the volume was increasing and the bulls were in the market (more people buying than selling which sends the stock rising) and it went up by $6 and again, I pulled the trigger and collected my profits. Here is the account activity:
This was the daily total but, not exactly as I will explain below.
You can see and I label on the image that I bought the Apple call at 9.85 or $985. Then I turned and sold it as it dropped at $305 and breaking on of my cardinal rules to
never trade on emotion.
I was certain that it would keep dropping because one, the stock hasn’t done much lately and law suit after law suit just keeps the negative sentiment piling on. And recently they are being sued by Boston Univeristy for what it claims to be a patent infringement. So my wanting to sell wasn’t too unjustified. But…………….
I hate this part
I usually continue to monitor a position even after I sell it. I do this to torture myself in a sense. I am shocked that most traders don’t die from heart attacks.:) Anyways, the main reason I do this is so that next time I am in a similar situation, I can remember the mistake I made. And this was a mistake indeed because yesterday and today, the stock bounced back and it did so nicely to were I would have made $200 plus on the trade. But once again, a lesson learned.
The good news is, it was a damn good week and next week is looking even better. So, I am going to raise my challenge for next week to $1000. This is all thanks to the Fed Chairman, Ben Bernanke. He gave a wonderful speech a day ago that sent the markets roaring to new highs. We have a much clearer view of what he is going to do next as far as tapering the U.S economy and the interest rate. In a market full of uncertainty, a little certainty especially from a powerful man like him, the bulls come out running. And that’s a exactly what happened and what’s setting up my trades for next week. They are already up 12% and I hope the trend continues.
Next week’s challenge, make $1000.