Friday, May 30, 2008

May Performance

On May 16th I made a post which included a mid month recap of my monthly goals. I was easily exceeding most of them, and was looking forward to tying up a few loose ends and having a fairly stress free couple of weeks... Well, if you follow the market at all, you realize that didn't happen!

Below are my final results for May, which take into account commissions and margin interest. As a reminder, I have decided to base my monthly goals on portfolio value.

Account % . . . . . Goal. . . . . % Actual

Trading . . . . . . . . 25% . . . . . . . . 5.65%

Investment . . . . . .12% . . .. . . . . 5.18%

IRA . . . . . . . . . . . . . .8%. . . . . . . . . 5.40%

As you can see, I did not make any of my goals for the month as far as my portfolio balance goes. Of course those results (all gains, just shown in red because they did not meet the set goal) are nothing to sneeze at. They translate to annualized returns of 67.8%, 62.16%, and 64.8% respectively.

While I am not setting realized gain goals, I am also tracking those. For the month of May my realized gains are as follows.

Trading . . . . . . . . 28.85%

Investment . . . . . 11.2%

IRA . . . . . . . . . . . . 1.72%

I really could not be more thrilled at this point. Those numbers translate to annualized percentages of 346.2%, 134.4% and 20.64%. Obviously I am not going to see these type of gains every month. In fact, I expect June to be really rough. I will probably not take advantage of every trading day with hubby on vacation, and of course I obviously am carrying a lot of unrealized losses over into June. I have a lot of open option positions that I need to close out in the next 9 trading days, and if the market doesn't cooperate, I'm in for a rough ride.

As I have probably mentioned before I have a set group of stocks that I track daily so that I can learn their rhythms for options trading. These include PCU, POT, DRYS, RIMM, FWLT, GS, and GOOG. Another thing that I track during the month is my trades in these stocks. Some of these trades are equity trades and some are option trades, and they have happened across all three of my accounts. Below is a list of the good trades per total trades for the stocks on that list that I traded in May, and whether there was an overall gain or loss in trading that stock. They are ranked best to worst by dollar amount gained/lost.

GOOG 10 for 11

FWLT 9 for 9

DRYS 8 for 11

PCU 2 for 2

GS 2 for 4

POT 0 for 2

These 6 stocks accounted for 69.98% of my realized gains for May.

There are a few key things I have learned over my past 7 months as a day trader that I need to remind myself of.

*First and foremost, close ALL option positions the Thursday before option expiration (for the upcoming month that is June 12th).

*During option expiration week limit any option trades to round trips. The majority of trades during options week should be equity trades.

*FOOLS RUSH your own due diligence before opening a position. If you don't have time to make a few basic checks before entering a position, then you don't have time to watch it once you make it.

*No Fear, No Greed...the bears are in control, and are ready in willing to shake the fearful out of their positions. Know your support and resistance areas, including type, strength and variance. Hold firm to positions pushed to the limit, but do not be afraid to take the loss once they push through. There is always another trade to be found.

*Research all positions daily for changes. My daily research includes closing price, after hours price and news, chart, short interest, market sentiment, support, resistance and possible break outs.

*Begin each month knowing if there are any days the market is closed. Market holidays should be treated like expiration days, close out all open option positions a week before the holiday, and limit option plays during the week proceeding the holiday to round trips. June does not have any market holidays, however the market closes early July 3rd, and is closed on the 4th. Option expiration is June 20th. This means that all option plays picked up beginning June 23rd need to be closed by Thursday, June 26th.

I have decided to keep my current goals through the end of August for a couple of reasons. First of all, as mentioned above, I am entering June with a lot of unrealized losses on the books, and may not be taking advantage of trading every day. Unless the first half of June is as remarkable as the first half of May was for me, I am going to have a difficult time making these goals in June. Therefore, I want to continue to reach for the sky with these lofty goals through August to determine if I am able to achieve them once I get back in the day trading groove. At the end of August I will evaluate my performance and adjust my goals accordingly for September through December.

Have a great weekend, and Happy Trading!

Always perform your own due diligence before making any investment.

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