Trading Journal: October 16–20, 2023

John F Carter
21 min readOct 16, 2023

It’s Saturday morning, October 14th. Some thoughts.

Last week’s first stab at a public journal was fun and interesting to do. It is always strange making parts of your life public, but ultimately it helps me to journal things out, and if other traders find this useful, then it is a win/win.

The big idea here is that this is a journal of my trading solely for generating cash flow. Swing trades happen in a different account and undergo a different, frankly easier, process. I’m also doing this in front of an audience with the goal of making it easy to follow and understand. This adds a huge layer of complexity. If I throw on futures to hedge, or buy back the short call and let the long call run — this just generates more questions. I love the people in our trading rooms — but some of the crowd can be fickle if things aren’t going smoothly.

Day trading is much more intensive than swing trading. There is less room for error and way more room for mistakes, impulse trades, let’s catch just one more . . . all the things. It is a huge exercise in discipline.

In swing trading a large account, one swing trade could make $100K in gains over the course of a week with no babysitting or handholding. In day trading a large account, making 100K over the course of a week takes much more time, more trades, more discipline, and focused attention. So why even bother?

Some unshowered thoughts . . .

I’m intrigued by the idea of having an account that generates cash flow no matter what is happening in the world. Once you start looking at the math of 1% a day in terms of an annual return, it gets very interesting. And once you get into a flow, the benefit over swing trading is that you have less volatility in your equity curve and fewer draw downs or holes to try to dig out of. When swing trading, I’ve had huge months. And I’ve had down months. But with a cash flow account, you can still pay the bills while holding onto your swings.

Thoughts for the upcoming week:

  1. This should be fun and something easy to follow. Something you could teach your kids. This means not worried about every $TICK reading or nuance in the market. You don’t have to focus on everything. Narrow it down to that one thing. That one small corner of the market. This isn’t something you should be ruminating about all day long.
  2. Lesson learned from last week: You need to dial in your position size. In the small account, I was doing 1 SPX contract per 9K, and in the large account 1 contract per 14K. The loss on the iron fly and the Friday loss took the small account negative for the week. I don’t want to deal with “doing the math” on every trade. Let’s see, I will do 112 lots for the large account and, wait, just a moment, shit, the market is moving, uh, yes, 8 lots on the small account. My plan is to adjust the balances so that the small account is 1/10th the size of the large account.
  3. Also dial in the per contract sizing. I like 1 SPX contract per 10K, but I have also built up huge intestinal fortitude over the years. What is the right size for you to hit your goals and it isn’t a big stressor for people in the room? With 1 SPX per 10K, if you catch 2 points, that is 2% and you are basically done for the day. With 1 SPX per 20K, you need to catch 4 points to hit 2%. Somewhere in the middle is probably the right answer. It’s not about when you are right, it’s about how much heat you have to take while finding out if the trade is going to work. I think the right mix for credit spreads could be 1 lot per 15K, 25 points out of the money, 0 DTE if done before 11am central, and then go out to 1 DTE if after 11am central. Again this is for protection against when it is not quite working out like you thought.
  4. Dial in your asymetical risk as well. Credit spreads have the highest probability but the most risk if shit goes sideways, which it will a small percentage of the time. A wide butterfly a few days out is cheap and can turn into a home run once in a while. That is basically like a swing trade. Throw on a GTC exit order at 50% of the width of the spread or let it cash settle and risk the debit.
  5. SPX is great for all the reasons, but let’s broaden the net a bit. Keep an eye on NDX and a few momentum stocks like NVDA. Same setup with QP and QH.
  6. This brings up 0DTE. Day of expiration trades are great for all the reasons, but take into consideration the following: Consistent cash flow plus cushion when a market is moving against you. 0DTE can turn ugly very fast if it moves against you later in the day. 1DTE solves that problem.
  7. And consider 3 to 5 DTE iron condors to hold onto for a day or two. I’m not necessarily thrilled by this idea, but the end goal is to average 1% to 3% a day, so it doesn’t really matter how it happens.
  8. Last but not least . . . although I love the markets and could very happily sit in front of the computer all day, I know it is important for my health to get out and move. And it is important as a human being to be present and make time for my family and my friends. This can be hard to do as both a trader and an introvert. (People who don’t know me are surprised I’m an introvert — it is just important to get that quiet, recharge time or I just start getting irritated). After 6 to 8 hours alone, I turn into a social butterfly.
  9. This should be done in such a way that it is fun, low-stress, and non-obsessive. This will be related directly to position size, type of trade, and time to expiration. Friday was a good example of exactly the opposite of this.

Friday I wasn’t able to close my rings. I do give myself 1 day a week where I don’t have to close them. That means it is time to get moving! We are in Wimberley today with the trainer showing up at 11am and we have some hills to go hike.

Saturday we hit it hard with the trainer and did multiple hikes.

A rare Kudu and Bongo sighting . . .

Kudu, Bongo and Zebra Hanging Out

Saturday night we hosted a small gathering . . .

My wife looking fly Saturday Night

For better health, I generally avoid alcohol and have gone months without it. Had a few glasses of wine on Saturday night. Slept like crap, as my Oura Ring confirmed. My best nights of sleep I’m getting close to 90 minutes of REM and 90 minutes of deep sleep. I was dragging Sunday. A good reminder to stick with water.

Sunday Morning — post a few glass of wine sleep score

Monday, October 16, 2023

I’m grateful for: Amazing Texas weather this weekend, healthy kids.

I’m excited about: Podcast interview later today, watching Suits with Maria.

Priorities: It’s Monday. Relax.

The markets sold off on Friday and there was an expectation of continuation today. But the markets were up, DXY down and that combination — after everything “knows” the market is going to puke — typically turns into short covering all day long.

With the gap up this morning, it is always tricky — wait for the possible gap fill or just jump in? With the $TICK strong and the dollar down on the day, that is generally supportive for stocks. I go ahead and sell far out of the money put credit spreads on SPX. The idea here is that I am looking for choppy to up, but I don’t have a great entry signal here. By going with out of the money (20 points below current market) I can wait it out a bit. Ideallyl we chop around and I collect premium while the market figures out what it wants to do. If it breaks higher, then the theta decay will kick in quickly.

In the room, I posted that I’m selling out of the money put credit spreads here. Many picked up on this and placed their own trades and then exited when I posted that they were at 40% of profit. Some wanted a specific trade and didn’t do anything. For the butterfly a little later I posted the specific trade.

Entries: A little before 9am central
SOLD -10 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4335/4310 PUT at 4.20
SOLD -100 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4335/4310 PUT at 3.90

Exits: 9:20am central
BOT +10 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4335/4310 PUT at 2.10
BOT +10 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4335/4310 PUT at 1.25

The markets continued grinding higher. Lofty levels for a new put credit spread but the idea that we could test SPX 4400 tomorrow is in play. I setup a butterfly for tomorrow’s expiration. I like this trade due to the asymetrical risk.

BOT +10 BUTTERFLY SPX 100 17 OCT 23 4390/4400/4410 CALL at 0.90
BOT +100 BUTTERFLY SPX 100 17 OCT 23 4385/4400/4415 CALL at 2.00

11am. I’m tempted to add another put credit spread, but I’ve already hit my goals on the day and I have a butterfly in place for tomorrow. Go workout and come back and see if there is anything setting up.

1pm. Back from the market. Very sideways action. There is nothing to do here until the last hour. Everthing is pointing towards a strong close. I’m looking at unbalanced flies and possibly some cheap call debit spreads.

2pm. Hop on the mic for the gold room. The market is choppy and starting to grind higher. I place a low cost out of the money call debit spread in case we get some short covering into the close. I’m fine if this goes to zero. If we do go to 4400 SPX it is a 20x return.

I look at selling a put credit spread at 4375, but it gets away and we are now trading at 4380. I put on a credit spread here as we can get a fairly fat credit.

BOT +10 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4390/4400 CALL at 0.40
SOLD -10 VERTICAL SPX 100 (Weeklys) 16 OCT 23 4380/4375 PUT at 1.80

The market chops around, tests 4375, then starts to march back up to 4380 into the close. It’s an opportunity to get out and make a small gain. I hold on for the cash settlement and in the last few minutes the markets dump.

This takes out the put credit spread, and also takes away the day’s gains, leaving a small gain of $125. I’m fine risking a portion of the day’s gains for a closing trade. This one got a little more away from me than I’d have liked.

For tomorrow, I have the butterflies for 4400. If this level is tested, I’ll be watching to see if the $TICK and $DXY are supportive of this — meaning we would likely pin there, or if this turns into a hot spot sell signal.

Summary thoughts: Solid start to the day. For the close, I liked the pcs setup, but the last 5 minutes anything can happen. Stick to asymmetrical risk for the close.

Today’s wins: Easy and clean trades in the morning. Great workout — I had zero motivation to workout today but having a trainer show up gives me no choice. Overall more relaxed today.

How I’ll improve: Can we do 1 trade in the morning and a butterfly for the close and just stick with that? Stay hydrated.

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Tuesday, Oct 17, 2023

Last night, the temperature dropped into the low 40s, and we didn’t put the heat on. In the morning, the house was 61 degrees. I slept amazing. In fact, I think this is a record amount of deep sleep. Even though I only slept 6 hours, I feel refreshed.

I found I get the most deep and REM sleep when I take 50mg of Apigenin. It’s something found in Chamomile tea and helps me sleep hard. I use the Double Wood brand off Amazon for anyone interested. (If you use melatonin, it works well with it).

It helped that I closed my rings yesterday. A hard strength workout and a lot of moving around typically equate to a good night’s sleep. Oh, and no alcohol. Back to water.

This morning, I listened to the following audio clip. I listened to it a few times on a morning pre-market walk.

“It’s the universe’s job to do anything you want. To give you anything you want. But they said you have to ask. What is it you want in your life? Write it down in detail. So that if you were to visualize it, you can see it, you can hear it, you can even smell it. The more detail you can put into the mental picture of what you want to create, the easier it is for them to know what you want. An exact picture of what it is, release it them, and then we just sit back and watch the magic.”

This is something I’ll revisit. I used to have everything mapped out and visualized. A ranch, 7-figure trading account, have Simpler Trading voted one of the best places to work in Austin, sell a portion of the company, etc, etc. I hit a lot of my goals, and this all kind of peaked at the end of 2021 when all kinds of crazy big things happened. (More on that later). Since then, I kind of just . . . stopped visualizing anything specific. I’ve been thinking in terms of “How about more freedom and simplicity?”

So, how does the universe work with something like that? I mean, it is open to a lot of interpretation. As I look back, I think the universe has been confused about exactly what I mean by that haha. Like, your life can get simpler if parts of it implode, or you get frustrated and walk away from something . . . but that isn’t necessarily what you were looking for.

Shit! Listening to that phrase made me realize I need to take a pause and think and RE MAP out a clear vision for “everything.” A new map. Fresh and clear. I don’t want the universe to continue with its misinterpretations. “Well, he did say he wanted simplicity right? We really are helping him!”

I’m grateful for: The land in Wimberley, cool weather, great kids, and the opportunity to work with traders.

I’m excited about: Chill day at the ranch. Quiet day alone with my thoughts and charts. (I’m working in Wimberley on my own today).

Priorities: Next week there is a lot going down with Spot Gamma, Orlando presentations, etc. Rest up and start knocking shit out. While you are traveling, you will likely be doing more iron condors and iron flies. Portable chargers! I want to continue to make my daily goals even on days when I can’t be in front of the PC. It depends on the day. We may do a Disney day with the kids in Orlando. On that day either no trades, or they are small enough that you just risk the spread on an iron fly. This is an area I want to refine with the iron flies and it will be a perfect time to do it.

The markets gapped down this morning and, after about 30 minutes, staged a reversal.

Entry 9:14 am Central

SOLD -10 VERTICAL SPX 100 (Weeklys) 17 OCT 23 4360/4345 PUT at 5.80
SOLD -100 VERTICAL SPX 100 (Weeklys) 17 OCT 23 4350/4325 PUT at 7.20

Big reversals can be tricky to trust, but the key is looking at TICK and other key asset classes. In this case, DXY has been a big driver of stocks. The fact that it reversed and took out yesterday’s lows is a big deal. Think, “shorts are shitting their pants.” Market moves hardly ever make sense when compared to the headlines. But they always make sense if you think of it in terms of traps. Trapping people short. Trapping people long. Rinse. Repeat. How else would the market move? It’s the market's job to sucker you in. Panic and short the lows! Cave in and buy the highs!

It can feel like chasing in the moment. At times like this, I like to go with a slightly in the money put credit spread. If the market pauses a bit, you don’t get killed on theta decay like you would buying a call in a rapidly rising market.

SPX at lunch looks like 4400 is in the bag.

Exits
BOT +10 VERTICAL SPX 100 (Weeklys) 17 OCT 23 4360/4345 PUT at 2.80
BOT +100 VERTICAL SPX 100 (Weeklys) 17 OCT 23 4350/4325 PUT at 2.80

I did throw on an unbalanced fly on NVDA for .09. Then suddenly it was up like 8 points and the unbalanced fly didn’t seem like a great idea. If you aren’t familiar with these, they are great in terms of getting in very cheap, but if they explode against you, the max loss is the width of the spread, vs. the debit paid like a regular butterfly. I should have done a regular butterfly. I personally don’t worry about it, but I do worry that I placed the trade and people are following it and they may not totally understand the risk. I close it out for a small loss.

So I go for a walk. I have some videos I made while on the walk that I’ll upload here later. My main takeaway was to get away from the markets and take a break before I succumbed to being convinced I needed to bet more on a pin at 4400.

Walking with Wildebeests

Wrapping up the walk with the invading ducks and Maine Coon Cats

By the time I get back and it is time for me to hop on the mic, Bandit decides he had found his place to take a nap.

While on a hike, the markets did a pause and basically perfect rollover back to the 21 EMA on the 30M chart. We pushed through H2 Daily as well and that was enough to stop the advance. I missed this move but more importantly, I didn’t load up on trades convinced today was the day we pin at SPX 4400. Kept the morning gains.

Some folks in the room stuck around and caught the rollover.

Nice catch on the rollover.

Make your money and keep it.

The nice thing about QH is it keeps a person in flow with the markets. Today I did assume 4400 SPX would be in play. Leaving the butterfly on was fine — but had I succumbed to throwing on big put credit spreads around 4400 that would have turned a winning day into a losing day.

Overall, these are good comments. It is helpful for me to see how people are using the tools. My goal is to provide guidance and confidence and not throw out trades because people are looking for action. If you stare at the charts too long, you will always find something to do.

For tomorrow, I have these trades on overnight in both accounts:
BOT +1 BUTTERFLY SPX 100 18 OCT 23 4390/4400/4410 CALL at 0.90
SOLD -1 IRON CONDOR SPX 100 (Weeklys) 18 OCT 23 4380/4410/4380/4350 CALL/PUT at 21.00

10 lot and 100 lots accordingly. The idea with these trades is they benefit from a quiet open and slightly up action. If the markets implode it is manageable.

Small account on the day: +3,150
Large account on the day: +52,500

Summary thoughts: Solid day. I feel like had I stuck around I could have caught a solid down move — but I also realize I was locked into the idea that an SPX 4400 pin today was “in play.” When I left for a hike, we were at 4390 and shorts were on the run. That said, I had my cheap butterfly from yesterday so if it happened, I was covered. No need to be a pig.

It is a reminder though to EMPTY MY MIND. Yes, it is good to realize things like SPX 4400 could be a solid pin and you had a cheap play in place to take advantage of it should it happen . . . but that doesn’t mean it is 100% going to happen. Probabilities, probabilities, probabilities.

Markets: How Did I Beat You?
Me: You are too fast, too unpredictable.
Markets: Do you believe my being faster has anything to do with your results? In Cyberspace? Hmmmm. Again.

It gets tricky because I have nailed big pinning moves before, and when that happens with a butterfly it is often a gain of 10X or more and can have a huge impact on the week. So, of course, I want to keep an eye out for them. You played it fine — next time remember the pin ain’t guaranteed to happen and consider it might be time for Mr. Market to rip the late comers a new one. It would have been fine to setup the call credit spread on the QH signals AND still hold the butterfly in case of a pin. They are two separate ideas. And most importantly, the risk on the butterfly was SMALL. Let the market do its thing. The butterfly's job is to catch the big waves.

For tomorrow, we have another SPX 4400 butterfly in play, as well as an iron fly at 4375. A quiet open followed by quiet strength would be ideal. Remember TSLA and NFLX earnings also — markets will likely be quiet tomorrow, which would also be good for the iron fly. For earnings, TSLA has a $13 move priced in, which seems low and NFLX has a $28 move priced in which seems insanely high. NLFX has been straight down for a while. That bad news seems priced in. I’ll look at this tomorrow.

Today’s wins: Easy and clean trades in the morning. Nice 2-mile hike. Good job not adding new put credit spreads based on your thought that SPX 4400 was a high-probability pin. It was also nice just waking up in Wimberley and having a day of solitude. Great for sanity and clearing out my thoughts.

How I’ll improve: “Pray to God, but keep rowing for shore.” If you are convinced SPX 4400 pins tomorrow, keep an eye on the QH for rollover signals. Just in case you are wrong and the market is right.

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Wednesday, October 18, 2023

I’ll have more updates here later tonight or tomorrow — headed downtown for meetings and will transpose notes and screenshots after.

Basic summary: I was positioned for chop to light strength. Markets gapped down and then started walking down. Stopped out of the iron fly for 3 points. Tried a put credit spread on a bounce of L1, stopped out for 2 points. When I start the day 0 for 2, it always happens when an overnight goes into the crapper. I’m a big fan of not digging deeper holes so I stop on the day. The toughest thing about “gap down and walk down days”is adding new shorts — as short covering rallies come out of nowhere. A “meh” day.

Best way to play a gap down, walk down day? Because of the slow grind, the out of the money puts aren’t ridiculously priced. Just buy some and hold on until the 20M momentum turns green.

NOTE — I have my screenshots for this day in Wimberley and am currently in Austin and I will update these Friday or Saturday.

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Thursday, October 19, 2023

I’m grateful for: Spending the last 2 days in Wimberley. Just a great time to hit the pause button on the day to day busyness.

I’m excited about: Sitting down with Maria and planning out 2024. Let’s create vs. react.

Priorities: Markets are getting more volatile. Test out long calls and long puts today vs. just credit spreads.

While the call credit spread came in quickly and I cashed it in, that theta decay was REALLY SLOW this early in the day. It would have been better to buy 2 or 3 slightly in the money SPX puts. Consider this tomorrow morning.

One thing I noticed is that when SPX hit 4300 support, I was waiting for more theta decay in the far OTM call credit spread and it was SLOW. I was looking to sell a put credit spread at support, but I hesitated because I was still trying to manage theta decay.

When trading futures, this isn’t an issue. Hit your target. Get out. Get opposing signal? Get in. I’m going to look at long calls and long puts for the morning session as well. At the end of the day, I want to make my daily goal the easiest and smoothest way possible. Sometimes that means selling premium. Sometimes that means just catching 10 points or more on the SPX or NDX.

Ok, so in the chart above, I was doing yoga while this craziness ensued. There are pros and cons about working out mid day. Haven’t seen a move like that happen in quite a while.

While the SPX was up here, once I saw red arrows, I decided to buy puts instead of selling a call credit spread. This trade lasted about 25 minutes.

Now that the markets are moving again, it is important for you to do a top down review tomorrow using the following.

All in all, a decent day in terms of making daily goals — but a little frustrating in that it could have been a killer day.

Today’s wins: Clean call credit spread in the morning. Clean long put trade later in the day. Good call taking half off on butterfly. Yoga, 2 mile walk, hydtration wtih electrolytes.

How I’ll improve: I really want to dial in and “flowing with the tide” on these daily goal trades. This is different from swing trading. Just continue to refine your process and grab your daily cash in your cash flow account. Your daily challenge is to make it less complicated and less time consuming.

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Friday, Oct 20, 2023

I’m updating this on Sunday and this is a good demonstration on why it is critical to document this stuff in real time.

Last night, Maria and I had dinner with a dozen other people where we hosted the former president of Mexico, Vincente Fox, and his wife. We had a private table at Dean’s Italian in downtown Austin. The event was interesting and Maria and I got to sit across from them. The conversation format was a little strange in that it was a Q&A and the entire table was guided to have “one conversation.” A phrase that he said which stood out, “The shortcut to happiness is to serve others.”

I drank 2 tequilas and recall feelings a little dull Friday morning. Knock this off Carter.

For trading, I’m looking at charts on Sunday as I didn’t capture any real time. I do remember shorting the ES at the open as well as selling call credit spreads. AND I remember getting out way too soon.

I had made my goal early in the day, then proceeded to have to nurse a position for a few hours. It turned out ok but a waste of time as I had already hit my goal and it was a Friday.

You tend to get in a little early. This next week let’s focus on letting the signals change first or at least scale in and start small and add as the flow changes.

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John F Carter

INC 500 Founder, Simpler Trading. Member: EO, YPO. Husband & father of 3. Options trader. Rare coins, home schooler, zebra breeder. Author, Mastering the Trade.