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Weekly Trading Stats:

Total Trades: 17

Winning Trades: 7

Losing Trades: 10

Win Rate: 41%

Weekly P&L: -$150.56

Weekly ROI: -3.38%

Beginning Balance: $4,453.88

Ending Balance: $4,303.32

Weekly Trading Recap:

Monday and Tuesday were terrible trading days for me. I was missing clear setups, getting frustrated, and then chasing low-probability trades. To make matters worse, I had some risk management mistakes that led to larger-than-normal losses. By the time I stopped trading on Tuesday, my weekly P&L was deep in the red, my confidence was rattled, and my frustrations were boiling over.

I spent all of Tuesday afternoon studying my trades in an effort to turn things around. During my trade review, I uncovered a couple of things that were hurting me. Fortunately, I was able to get them fixed and end the week with three solid days of trading. 

Here are the mistakes that I uncovered:

1. I briefly mentioned this above, but I was missing clear trade setups early in the trading day. As a result, I became super frustrated and I started chasing low-probability trades (revenge trading) rather than waiting for my next A+ setup.
   
   The Fix: I realized that missing out on a good trade that I correctly identify but don't enter is significantly more painful for me than entering a trade and getting stopped out. I already have a rule that says I must move around and emotionally reset after each trade, but now I've started doing the same thing after missing out on a trade.
   
   
2. I've been getting the direction right on the majority of my trades but I've been setting my stop losses too tight, and as a result, I've been getting stopped out right before $SPY makes its move. I had multiple trades on Monday and Tuesday where $SPY either hit my stop loss on the dot or it went 1-4 cents below my stop loss before ultimately moving in my direction.
   
   The Fix: When I go on losing streaks, I tend to get too tight with my stop losses. It's like I'm subconsciously expecting each trade to go against me so I try to limit the amount of money I can lose on the trade. To combat this, I've started reminding myself each morning that I get the direction right on the majority of my trades (which is true). I've also started defaulting to a wider stop loss with a smaller position size. This prevents me from getting stopped out so quickly and it gives my trades more room to breathe. The downside is that expanding my stop losses means I must also expand my profit targets to maintain a proper risk/reward ratio. It's a balancing act that I'm still figuring out but I'm definitely making improvements.  

Learning Lessons of the Week:

In addition to the learning lessons mentioned above, I learned a couple of other things this week that have improved my trading. 

1. When setting stop losses, the amount of room you give a trade depends on what type of setup it is. If you're counter-trend trading a quick pullback, a tight stop loss is preferred. If you're trading a reversal with big upside potential, you want to set a wider stop loss just in case price makes one more low before beginning its ascent.
   
   
2. Sometimes you'll enter a trade and price will move sideways for longer than you expect. As a result, your option will lose value and your stop loss will no longer line up with your invalidation point. Previously, I was expanding my stop loss when this happened but that caused me to increase my risk to unacceptable levels. After taking a couple of losses that were 2X my max allowable per-trade loss, my trading coach shared something with me. He said it's completely fine to move my stop losses back but if I do that, I need to exit part of my position (even if it's at a loss) so that I maintain proper risk. Seems pretty obvious but for some reason I hadn't previously considered this.
   
   
3. When I'm getting ready to enter a trade, I pull up the chart for whatever option contract I'm looking at. Many times, that chart will show a clear level of support where price has repeatedly bounced. Seeing that gives me more confidence in my trade plan and it gives me a great target for my entry. What I learned this week is that you can get additional insights by pulling up the opposite option contract. Oftentimes, on good trade setups, you will notice price bumping into support on the CALLS chart at the same time that price is bumping into resistance on the PUTS chart (or vice versa). This can be an excellent signal for a trade opportunity - assuming $SPY price action supports it.
   
   In the image below you can see an example of this from 8/10/23. Here I have the $450 CALLS chart on the top and the $449 PUTS chart on the bottom. As you can see, price hit resistance on the CALLS chart at the exact same time that it hit support on the PUTS chart. This also lined up perfectly with a pullback on the $SPY chart, signaling a great opportunity to go short, with a clear entry target and invalidation point. 
   

Trading Goals for Next Week:

Next week, I'm going to be "dad-ing" pretty hard. It's a full schedule of school drop-offs, ballet classes, and doctor's appointments for the kids so I don't expect to have very much time to trade. Based on that, my weekly goals are as follows:

1) Don't jump into boredom trades when I'm not 100% focused on trading. 

2) No single-trade losses greater than $60

3) 50% win rate for the week

4) No impulsively entering trades immediately after getting stopped out. 

Alright, that's it for this week's trading recap and learning lessons. Hope you have a fantastic week ahead.

- Eric