Trading Journal: Oct 23–Nov 3

Note, this article will have 2 weeks worth of trading. I was travelling part of the time where I didn’t place new trades. As per usual, when I travel the markets seem to go crazy.

On Saturday, Oct 21, I had a long walk and a solid workout. Hit a new personal best with the 100 pound dumbbells.

The consistency and discipline of working out is important in multiple respects. First, of course, is overall health. Once a person hits their mid 40s they begin the slow decline. One way to push that further down the road is hard, correct form functional strength training. Basically it forces your body to say, “Oh, wait, I’m not quite done. Don’t start falling apart just yet.” Second, the mental discipline of doing something over and over again and not wavering. That’s an integrity that passes into other parts of your life. Third, mental clarity. It’s hard not to be positive and clear after a solid workout. Last, energy levels. “You don’t have energy to workout because you aren’t working out to create energy.”

For this upcoming week, it is going to be packed. Tuesday night we are doing a joint webinar with spot gamma which will be great. They have such good trading tools. Wednesday after the close I’m flying to Orlando for the Money Show and we are also doing an event there for our own clients. Thursday and Friday I’ll be doing a Disney day with the kids.

Challenge — can I hit my daily goals while all of this is going on?

Strategies: You won’t be able to do day trades on TH and F, but you could utilize iron condors a few days out and collect theta, and also setup some cheap butterflies around key levels. If you do this a few days in advance you can get wide butterflies for cheap.

Overall market action last week was heavy and we’ve made a round trip back to 4200 on the SPX. There is talk of “black Monday” on twitter which means the odds of that happening are now zero (the market never follows the consensus of the crowd). Monday will likely be some back and forth but then let’s see if we can work our way back to -1 ATR (SPX 4300). Note, when I say -1 ATR, I am referring to the Keltner Channels and the distance from the 21 EMA. -1 ATR is 1 Average True Range which is a common range. -2 ATR is more extreme, and -3 ATR is the most extreme. In normal markets, a move to +2 or -2 ATR is a great place to take directional profits and then start looking for a move back to the 21 EMA (Reversion to the Mean).

Monday, Oct 23, 2023

I’m grateful for: Time in Wimberley this weekend, my health, my family, any challenges life puts in my way as an opportunity for growth.

I’m excited about: Today’s workout, diving more into spot gamma

Priorities: There is a lot going on this week and you are hopping on a plane on Wednesday. Get shit done and don’t leave anything for the last minute. Knock it out. All the details.

We gap down and there is a bit of an end of the world feel to the markets this morning. I’ve got Iron Condors on for Friday expiration that we held over the weekend and added additional put credit spreads on Friday to bring in more premium. They are wide and are down about 1 point at the open, no biggie.

The markets pause after about 15 minutes and the internals start to improve.

The markets keep pushing. I love big short covering days and this is starting to look like it has that possibility. I throw on some out of the money call debit spreads and am careful to manage position size in case the markets reverse.

I’ve been watching options flow data more and more and its been hugely helpful. Basically when puts get taken off and call buying explodes on the SPX, look for the markets to pop and sustain until this options flow subsides.

In the chart below, SPX spiked through 4250 which was great. We took profits on half the call debit spreads. At this point I thought we could pin 4250 or close a bit higher and I was locked in loaded for that close and holding positions overnight. Alas, the slow dribble started and once we took out 4238 ish we started to close the overnight trades. It was a weird close and options flow definitely kicked in. Overnight the ES is already up 11 points so maybe we get another crack at SPX 4250 tomorrow.

I also bought a call debit spread on NVDA today for Friday’s expiration. Lookig for a rally back to the 21 EMA daily.

Overall today was a solid day. It was almost a great day. What would have made it a great day? A close at 4250 (or better) on SPX. Oh, REALLY? Let’s rephrase that. How about, “Had I taken all profits on the call debit spreads at 4250 instead of holding onto part of them for the rollover.”

This is always the tricky part of trading. Had SPX pinned 4250 or closed above it, I would have seen max profit on the 0DTE call debit spread for today as well be in a great position for tomorrow’s call debit spread as well. It’s always great to maximize opportunities like that when they potentially setup.

The market rolled, and that’s fine. The market is going to do what it wants to do. What’s the right answer here? Take the win and move on? Or be patient and hold on for more? Being patient can be a strength, but knowing when the tide is changing and adjusting the surf board is better.

In retrospect, since this is a cash flow account, you need to adjust your mindset a bit. You are trading it like a swing trading account. Being a little too patient for the bigger moves to unfold.

Get to a good level and your call debit spread has gone from 2.50 to 7.50? Mate, take it ALL OFF and roll up your deltas if the market is still signaling strength. (Rolling your deltas simply means close your current trade that is now in the money and setting up a new out of the money trade. You book your gains and your new trade has much less risk on the table since you are establishing it at a lower debit than the current trade is worth).

The futures are up slightly after hours. GOOGL and MSFT earnings after the close so tomorrow is likely going to be quiet, and probably some upside chop into those earnings.

Today’s wins: Great trading this morning. Solid workout. Good work on the Spot Gamma webinar in terms of what to discuss tomorrow.

How I’ll improve: Treat your cash flow account less like a swing trading account. Book the wins. Roll it up. You closed your rings today, but you didn’t get a 2 mile walk in. Let’s try positive affirmations tomorrow. More time with your kids tomorrow — tomorrow evening will be a little intense with the webinar and all that jazz.

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Tuesday, October 24, 2023

I’m grateful for: My family. My kids. So many things pop up every week that take time away from them. They won’t always be hanging around. Make time.

I’m excited about: Today’s trading and today’s insane schedule. Let’s knock it out.

Priorities: You fly out to Orlando tomorrow for the Money Show, Simpler Trading workshop, and some Disney with the kids. Knock out all the details and packing today so tomorrow you aren’t running around like a crazy man. And follow the pretty colors.

8:15am Central. After yesterday’s ugly sell off into the close, the markets are set to gap up 20 SPX points. Remember this is a negative gamma environment where it is hard for rallies to last. Tonight there is GOOGL and MSFT earnings. Overall I am looking for moves to SPX 4275, ES 4300 at some point this week before we see another rollover. Of course, it doesn’t matter what I think, the market is going to do whatever it wants.

10:30am. A solid morning. For positions, I have the Friday expiration Iron Condor that we put on Thursday of last week. The idea is to sell them for 6.00 on Thursday and buy them back for 3.00 on Tuesday. These are very far out of the money and $25 wide.

When the markets are less volatile I will sometimes give them another day or more, but I’d rather book the gain and set up a new one for next Friday.

Overnight I also had an in the money put credit spread. The market gap up and run turned that one profitable quickly and I booked that gain. I also set up a new put credit spread 4330/4310 at 4.80 and bought it back at 2.80.

After this, I set up an iron fly at 4350, 25 points wide at 16.50. I ended up buying it back at 15.50. Normally I don’t mind holding these through my workout (today is yoga) but these afternoons have been a shit show. Let’s keep the money today. Also closed out the additional “TH/T” IC premium on Friday’s sell off. Sold a further out of the money pcs to bring in some extra premium on that trade.

Yesterday the markets did a slow death over the lunch hour and into the close. I think it is “too easy” to have that repeat today. More likely is the markets act like they are going to do that, suck in people to the short side, then rip their ass higher into the close. We’ll see. For today, I’m staying flat over lunch and am going to enjoy my workout.

I’m getting more clear that the purpose of this account is to generate daily cash flow in a way that causes the least amount of aggravation. This means grabbing the cash in the morning with larger positions, and then if you do want to setup additional trades, make sure that the worst case scenario is giving back less than half your gains. Ideally a quarter. For today, if you think we rally to SPX 4275, then for the love of god buy a cheap ass butterfly, don’t sell a $25 at the money put credit spread for $5.00. If the butterfly doesn’t work, you lose like $1.00. If the market implodes the put credit spread could cost you $20.00. YES, the put credit spread has a much higher probability of success, but your goal is to keep what you make, not be right and smart.

Headed out for a 2 mile walk, then an hour of yoga. The instructor, Jacq, will show up at our house at 11:30am. This is the ONLY WAY I would ever do yoga. Why not do it for free and just watch a youtube channel? I would never be able to do that. I mean that as a weakness on my part. I’d watch the markets or answer emails, or whatever. But when another human being shows up due to an agreement we already made? I’ll show up. Whether it is integrity in keeping my word, or the shame in keeping them waiting, it is irrelevant. Find the ways that trick you into doing what’s best for you.

1pm. Back from a 1 mile walk, 1 hour of yoga, then another 1 mile walk. The yoga teacher had a great quote that popped up while we were trying to hold a particularly difficult pose.

“It’s not supposed to be easy. The pose is supposed to be hard so we can observe what the mind does when shit gets tough.”

A great quote for holding hard poses and hard trades.

I see that we puked it up over the lunch hour but it looks like we are starting to push higher again. Yesterday I stubbornly held on for a 4250 pin and the markets fell apart and never recovered. It makes me gun shy to do it today — which of course menas we will likely pin. MOST importantly, however, is that my main goal here is to keep gains made in the morning and look for opportunities for asymetirical risk in the afternoons. Trades such as a butterfly where if it doesn’t work, no big deal, but if it does, it makes a big impact. No trying to grab a $1.00 credit on a $10.00 wide credit spread with 30 minutes left. That’s like having your 3 year old walk across traffic by themselves. Sure, they might make it . . .

I did throw on a cheap bullish trade for GOOGL earnings. After hours it is down so it will likely go to zero. It’s very small though so not a big deal . . . though, again, why do it in the first place? You’ve got your morning rhythm let’s stick to that and make cash and wire it out.

MSFT earnings were strong after hours and the indexes held steady. Anything can happen overnight of course but I am looking for SPX 4275–4300 to get tested to the upside and then we will see.

For tomorrow, I’ll trade in the morning but then I’m heading to the airport. I’d like to throw on some butterflies or unbalanced flies at key levels for Thursday and Friday, but let’s see how I’m feeling tomorrow.

Today’s wins: Great trading this morning, and nice work getting the walking in with the yoga.

How I’ll improve: Continue to simplify the day trading process. I’m starting to think why even bother with the afternoons. Throw on a butterfly, let it cash settle and be done with it.

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Wednesday, Oct 25, 2023

I’m grateful for: Down time. Sometimes you just need it. Flying out to Orlando later today.

I’m excited about: Today’s travel — it is always good to break out of our self created bubbles.

Priorities: Close out and manage trades, pack, all the details.

11am central. The markets gapped down after GOOGL crapped out post earnings and the VIX this morning is well bid. Overnight I went with a small position in GOOGL with a put credit spread to benefit from a flat to up open. That absolutely did not happen. I also had a put credit spread in SPX that I held overnight. The markets opened and GOOGL of course went to max loss right away. That was fine and I positioned sized for that. I gave the SPX some time as typically it will find its footing on a down day once the European close happens at 10:30am central. We got a bounce but it wasn’t much and the markets rolled over and died. I did add a new put credit spread when the SPX tested 4200 and caught a small bounce there, but it wasn’t enough to offset the overnight losses. CBOE also went down so that was fun for a while not getting quotes. Not a stress free morning.

Although this is a day trading account, I will at times hold positions overnight to exit “the next day.” When this works out it turns into an awesome day. When it is “meh” that’s fine as new trades can typically overtake the losses. With an open like this that is exactly the opposite of what you are looking for, it is tougher to manage. There are the initial losses, then, mentally, looking for moves “in your favor” vs. what is really happening in the market.

Once we got the 2nd rollover after testing 4225, I exited everything and went flat, down on the day. Annoying in that today I am also supposed to be packing, I’ve got a room session, etc. Had I come in flat on the day, it would have been a simple “sell the put credit spread at Daily L1” and cash in the gains and call it a day.

This makes me question whether I should do any overnights in this account — at the very least not doing earnings trades in this account makes sense as your goal really is just to generate cash flow and you can do that just watching the SPX and ES. Why distract yourself?

Other downsides today: Managing the overnight trades took up time where I should have been packing for the trip, AND, I missed my workout which I had planned to do before my room session. Managing the trades, skipped the workout so I could do the room session.

Kind of a shitty morning. Shitty because I imposed expectations on the markets overnight, and the markets didn’t meet those expectations. “I’ll hold these overnight trades, make my goal real quick so I can pack for my trip, workout and do all the things!” I can already hear Mark Douglas laughing in my head as I write that. But, hey, I’m alive and I get to do this.

Last night I watched the tail end of a documentary my son was watching. It was the 2006 Florida Gators run to the national college football championship. They played Ohio and were widely viewed as the underdog.

Before the game, the Florida coach wasn’t getting any sleep and was very tight, holding stress about the upcoming game. He was sitting on the porch telling his mentor this. His mentor leaned over, poked him in the chest and screamed, “Let That Mother F’er Go!!!” After the round of screaming he said, “There, now go have fun with this.”

Yes, agreed.

Today’s wins: You didn’t scream at anyone.

How I’ll improve: For the cash flow account, continue to dial in and make it easy. Trading the morning has been easy. Why are you finding ways to make that more complicated?

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Thursday, October 26, 2023

I’ll be at Disney today with the kids and likely won’t have any trades today.

And, yes — super fun day running around the parks. We walked 12 miles and knocked out Tron, Rise of the Resistance, Flight of Passage and a few others and then stayed for Mickey’s Halloween Party. Totally exhausted by the time we made it back to the hotel.

Days like this are important. I like to get out of my head and the crazy rides really get you back into “being a human.” And it is always great looking at the world through children’s point of view. This is fun. Have fun.

I glanced at the market quotes a few times to see the continued carnage. I don’t have any positions on and that’s the way it should be. Just take a few days and chill. It’s amazing what a day away can do in terms of clarity and how “trying to push it” just throws so many things out of whack. Just relax and flow with the signals and don’t try to super impose anything on top of them.

This isn’t an issue with your swing trading. Day trading is just more intense when trying to create a specific amount of income each day. Remember when you were writing Mastering the Trade and how you traded less and only took the no brainer signals because you had to write? Yeah, that.

A few of the things I’m traveling with to stay “sane and healthy.”

With most restaurant food being “shit seeped in seed oils” I always bring along whey protein and collagen, as well as electrolytes and a few vitamins and things.

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Friday, Sat, Sun — Oct 29, 2023

Friday was another Disney day with no trading. The markets were of course volatile. I’ve found there are times when it is great to just be flat and be an observer and take a few days to get back in alignment with “the trading plan” vs. getting swept up into crazy market action. The market ain’t going anywhere.

On Saturday we had an all day event with Simpler clients. These events are helpful for me to see where people have questions, what they find helpful and not helpfu. When posting trades or on a mic, there is a great back and forth via typing, but so much is lost in terms of communication vs. being in person.

These are some notes I made in conversations with clients:

1. Thank you for the Joe Dispenza book recommendation, Breaking the Habit of Being Yourself. I’m doing the meditations every day. It’s changed my life. (This book is great — this was a reminder for me to give it another listen and dive back into the meditations, which were so helpful to me a few years ago).
2. My profitability got consistent and I was able to do this full-time when I started trading less and trading smaller.
3. I can’t take short signals, even when it is a clear signal. What do I do? (This is a common thing for traders, not taking signals. What helped with this was Mark Douglas’s exercise of doing 25 trades in a row and following the signal exactly, with small size that doesn’t freak you out. Then see the results. Once you see the results, you start to realize that, as Shakespeare once said, “Our doubts are traitors and make us lose the good we oft might win, by fearing to attempt.”)
4. Trendy Jon talk: I spend some days talking more to Mark Douglas than I do my wife and kids. Preventing pain by avoiding losses can’t be done. The markets generate behavior patterns and these patterns repeat themselves . . . but not every time. If you hesitate putting on a trade it is because you are putting too much money in it.
5. Raghee: I take two trades in the morning then stop before I hurt myself. When you are trading, know your why. And for me, it’s not “more stuff.”
6. Kody: The flip side of adrenaline is fear. If the trade you are getting into gives you an adrenaline rush, you are setting yourself up for a disaster when that turns into fear. Trade smaller.

And so much more. A common theme of traders just appreciating being around other traders. It’s a profession that creates a lot of internal struggles and battles, and a community of like-minded people can help to digest the fears and move through them in a way that makes this make sense.

It was also great hitting some of the fun experiences at Magic Kingdom. I’m a fan — great childhood memories and it is fun to watch my own kids experience the anxiety, terror and feelings of accomplishment after getting on a scary ride. Best quote, “I feel so alive!!” There is something about allowing yourself to be terrfied for a moment, to yell it out, that just resets the mind and body. Highly recommend: Guardians of the Galaxy, Tron, Space Mountain, Everest, Flight of Passage, and Tower of Terror. It’s like a great reset. All of the fear and anxiety that has built up over the months and years and is now trapped in your body —scream it out and start anew.

For Monday and Tuesday, I will be at the money show in Orlando. I might take a few trades if there is a clear signal and I have a moment. The market is very oversold and I’m looking for more of a shakeout early in the week — and at some point a large snap back bounce. Some cheap out of the money butterflies for Friday look interesting.

NDX and SPX Daily Charts. We are hitting -3 ATR levels as well as the bottom of well-established channels. Ripe for a violent bounce, even if it is short-lived.

Friday, Nov 3, 2023

The markets tend to be volatile when I travel and this time was no exception. Here’s where we ended the week, after initially puking when I hopped on the plane to Orlando.

I basically missed the move down and the move up. Just the biggest up move of the year, no big deal. That is always the tough part about trading. You need to be “present to win” in terms of being their on the right days. But you never know when those days will take place. Trying to force it turns into losses, so you are either there, or you aren’t. I was traveling and at Disney in Orlando with my kids, speaking at a trade show, and all the things. By the time I got back home, the move had basically happened.

For today, Friday, I was able to get back in the swing of things.

During the last hour I was looking for a pin near 4370. Instead we got a slow bleed down to 4358. Remind me why I was trading the last hour on a Friday? Part of it was just having a room session scheduled at the close. Without that I would have called it a day around 12 noon.

For the last few weeks, the close has been a challenge for you. Here’s an idea — stop trading it LOL. The money is made in the morning. Use the close to setup swing trades or iron flies, iron condors for the next day or later in the week.

Take aways for this week?

I did trade smaller today which was more relaxing. I am used to trading large size and the stress associated with it. Meaning — large size with stops as I am not risking the debit paid or the width of the spread. This means having to pay more attention and read the markets. Or risk the debit paid and go to the gym . . .

As I move forward with this, my goal is to generate cash “and” do it in a way that allows for workouts, time with my family, etc. My biggest challenge for the rest of the year and 2024 will be in managing my time. Getting clear on what’s important and saying no to everything else.