May 2013 Trading Performance

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This is the 4th month I am reporting my options trading performance. After last month’s stellar performance, I once again not only gave back all the profits I made, plus putting a big dent in my starting capital.

In May, I managed to lose 87.75% of total account value, bringing it down from $7,800+ to less than $1k.

Below I’ll summarize some of the stupid mistakes I made in May:

Missed Fortune

May wouldn’t be a bad month at all had I let the trade just play its course. Some notable trades were HLF calls, JNJ strangle, SFD calls that would have paid really really nicely had I held on just a bit longer.

Lack of conviction, not carrying out the trade as planned (ie. take profit too quickly on swing trades, and not stopping loss quickly on scalps) all caused my trading account to suffer.

Unrealistic Expectation

In last month’s report I mentioned to have hoped May to perform, if not outperform the spectacular gains I experienced in April (pretty much doubled my account).

In options trading, it is not unheard of that a trade can quickly return 50% or even 100%+, but it is really a matter of consistency. Statistically you will have a higher probability of making 5% return than 50% return in 5 consecutive trades.

Overtrading

I might have mentioned this mistake on a previous performance report, yet I committed the same sin in May. It is hard to fight the temptation to want to get back into trading and quickly make back your losses.

I had the good fortune of having a Mastermind member visit me over the Memorial holiday. He left me with something that I once told him before: “Slow and steady wins the race.”

Well, if it isn’t the “Those who can’t do, teach.” Hehehehehe :)

Summary

Going forward, having suffered a 75% loss in capital would mean a steep climb ahead to sea level. I always like to tell people, if you are going to fall, fall forward. I will press on.

Lastly, whatever you bring to the table, be prepared to lose it all, especially if you are trading options.

You can learn more about risk management, get real-time trade alerts, and join other elite options traders in our SRT Mastermind Group.

See you again next month!

About Steven Chang

I bought my first stock in 1998 and lost all my lunch money on CSCO (traded my way up to $80/share and didn't know better to sell!) during the 2000 dot-com bubble. I've learnt a great deal about trading and hope to share that knowledge and lessons learned with you. Be sure to subscribe to SRT blog to get email notification whenever a new blog post is published. Join our SRT Mastermind Group to network with other elite traders to share trade setups and chart analysis.
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2 Responses to May 2013 Trading Performance

  1. Mydeen Yussouf says:

    Thanks for posting Steve, timely reminder!

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