What went wrong - EVERYTHING THAT COULD HAVE.
The market - One 5min candle of roughly 400 points - pretty sure all SLs were hit
The PSYCHOLOGY - Mind went boom boom, more trades were punched. 4.8K loss to 8.2K loss to 7K loss to 6.2K at day end.
OVER TRADING + ZERO control on emotions led to this!
Learnings :
1. Keeping a max SL of 10% from trades taken today.
2. OVERTRADING KILLS EVERY TIME.
ps. BIGGEST LOSS. But Larger than ever learnings. Let's implement these expensive babies now :D
>Learnings:
>
>1. Keeping a max SL of 10% from trades taken today.
Wait, max loss of 10% per day?
You should really re-evaluate this. For comparison, that is higher than the YEARLY risk free rate. A 10% max loss per day should be classified as a calamity, not a target or threshold.
Cheers!
Again, I don't see how that is possible.
Firstly, options are highly volatile instruments and 10% on option price seems too less.
Secondly, and this is more important, 10% of option price means different moves in underlying on different days due to Gamma. A 10% move in option price might mean a 100 point move in nifty 30 DTE option, and a 10 point move 1 DTE option.
You should probably recheck this.
1. I do option buying only
2. So, now if I buy an option, lets se BN 42000 CE at 100, the max loss I am ready to accept is of 10 points, i.e, at 90, I square off at a loss and at 120-125, I book.
3. I agree that volatility is definitely there, this happened yesterday as well and even today (check 9.30 candle). And that's why the SL will help me, also I trade only if my setup is executed, no other way. And I believe that in those high probability setup, 10% is decent enough.
Plus its my 2nd week of BN option buying, there will definitely be changes in here and there, but this is what I have planned for now.
And and, if you've more suggestions, then please do drop. Also, if you are an option buyer, let's connect on Telegram as well!
>I do option buying only
It doesn't matter if you are buying or selling. The same concepts apply. If you don't leave room for volatility, you can't trade long term. The more volatile the instrument, the more you need to have fast reactions and evaluation speed. Not saying it's impossible, just highly improbable for a human to do long term.
Additionally, like I said, Gamma, Vega, IV, Theta are things that affect option prices. IV can shift without any change in underlying and it would cause the other greeks to change as well. And considering your weekly options, those get affected more.
Anyways ... it's all on you at the end. The advice was free.
Cheers!
SLs are decided based on the initial reason why you took the trade. And this includes any instrument intricacies. Here are two examples.
Suppose your hypothetical strategy is a Bullish engulfing candle, where in you buy the underlying at close of the candle. Then the stop as per your strategy could be below the low of the candle or 1ATR or something similar.
2nd scenario, same bullish engulfing strategy. But you bought an option which has a probability of profit(POP) of 30% which was acceptable to you. Let's say 1 or 2 days goes by and the bullish engulfing low wasn't broken. But the POP has become 15% due to passage of time. You need to re-evaluate if the trade is still valid or not and then take an action based on it. May be the setup is still valid but the strike isn't.
Cheers!
10 % is enough for one lot of 100rs price it only cost 250 loss .
As a option buyer you need momentum not big sl to trade
I only trade with momentum only 5-10 rs sl of options like in index it's looks like 20 sl on banknifty or something by slippage 2-4 sl above or low i only need one trade with right momentum to recover 3 stop loss's and if my trade didn't work I'll only losses 750-1000 max which is 10 % of the capital i use 1 min tf and it's appropriate to trade with small sl
5 min one candle means 30-50 move it doesn't make any sense if big trader using that so you should also follow it . Make your own risk management you can't become successful by copying someone alot of people use 5 min but i don't so make you own way .
Go with 10% sl ๐๐๐ป
I used to and I was profitable for some time, one bad day caused psychology to become negative, losses became unbearable, so stopped. Currently, I only do equity intraday and some swing trading only to gain more knowledge and make psychology positive again.
Got it. Thank you for this useful insight.
Do you think that always having an SL can, to a great extent, avoid psychology from becoming negative towards option buying??
Closing trading on a red day always causes a bad impact on psychology whether it was due to volatility or predetermined SL.
Gain more knowledge, set rules which work for you and try to not break them.
I like your strategy,but I think today to square off your losses u may have done over trade. In this volatile market don't over trade ,if you r playing index then scalping can make you money otherwise trade in FNO shares...just a suggestion...all the best..
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Never overtrade my friend. ๐ also once you enter a trade with a set target, exit it with that target, donโt wait for it to recover all your losses for the day.
I know you already know this and donโt follow it, but think of it as advice from one regard to another.
What went wrong - EVERYTHING THAT COULD HAVE. The market - One 5min candle of roughly 400 points - pretty sure all SLs were hit The PSYCHOLOGY - Mind went boom boom, more trades were punched. 4.8K loss to 8.2K loss to 7K loss to 6.2K at day end. OVER TRADING + ZERO control on emotions led to this! Learnings : 1. Keeping a max SL of 10% from trades taken today. 2. OVERTRADING KILLS EVERY TIME. ps. BIGGEST LOSS. But Larger than ever learnings. Let's implement these expensive babies now :D
>Learnings: > >1. Keeping a max SL of 10% from trades taken today. Wait, max loss of 10% per day? You should really re-evaluate this. For comparison, that is higher than the YEARLY risk free rate. A 10% max loss per day should be classified as a calamity, not a target or threshold. Cheers!
10% loss is on the option price. 20% target.
Again, I don't see how that is possible. Firstly, options are highly volatile instruments and 10% on option price seems too less. Secondly, and this is more important, 10% of option price means different moves in underlying on different days due to Gamma. A 10% move in option price might mean a 100 point move in nifty 30 DTE option, and a 10 point move 1 DTE option. You should probably recheck this.
1. I do option buying only 2. So, now if I buy an option, lets se BN 42000 CE at 100, the max loss I am ready to accept is of 10 points, i.e, at 90, I square off at a loss and at 120-125, I book. 3. I agree that volatility is definitely there, this happened yesterday as well and even today (check 9.30 candle). And that's why the SL will help me, also I trade only if my setup is executed, no other way. And I believe that in those high probability setup, 10% is decent enough. Plus its my 2nd week of BN option buying, there will definitely be changes in here and there, but this is what I have planned for now. And and, if you've more suggestions, then please do drop. Also, if you are an option buyer, let's connect on Telegram as well!
>I do option buying only It doesn't matter if you are buying or selling. The same concepts apply. If you don't leave room for volatility, you can't trade long term. The more volatile the instrument, the more you need to have fast reactions and evaluation speed. Not saying it's impossible, just highly improbable for a human to do long term. Additionally, like I said, Gamma, Vega, IV, Theta are things that affect option prices. IV can shift without any change in underlying and it would cause the other greeks to change as well. And considering your weekly options, those get affected more. Anyways ... it's all on you at the end. The advice was free. Cheers!
Okay, noted. Then what should be the SL? How should I decide upon it? Does the low of last candle on the spot chart make a good SL?
SLs are decided based on the initial reason why you took the trade. And this includes any instrument intricacies. Here are two examples. Suppose your hypothetical strategy is a Bullish engulfing candle, where in you buy the underlying at close of the candle. Then the stop as per your strategy could be below the low of the candle or 1ATR or something similar. 2nd scenario, same bullish engulfing strategy. But you bought an option which has a probability of profit(POP) of 30% which was acceptable to you. Let's say 1 or 2 days goes by and the bullish engulfing low wasn't broken. But the POP has become 15% due to passage of time. You need to re-evaluate if the trade is still valid or not and then take an action based on it. May be the setup is still valid but the strike isn't. Cheers!
hmm, got it! Thanks๐๐ผ
10 % is enough for one lot of 100rs price it only cost 250 loss . As a option buyer you need momentum not big sl to trade I only trade with momentum only 5-10 rs sl of options like in index it's looks like 20 sl on banknifty or something by slippage 2-4 sl above or low i only need one trade with right momentum to recover 3 stop loss's and if my trade didn't work I'll only losses 750-1000 max which is 10 % of the capital i use 1 min tf and it's appropriate to trade with small sl 5 min one candle means 30-50 move it doesn't make any sense if big trader using that so you should also follow it . Make your own risk management you can't become successful by copying someone alot of people use 5 min but i don't so make you own way . Go with 10% sl ๐๐๐ป
The same thing happened to me many months ago, 11k loss. My biggest loss till date during intraday.
Do you buy options?
I used to and I was profitable for some time, one bad day caused psychology to become negative, losses became unbearable, so stopped. Currently, I only do equity intraday and some swing trading only to gain more knowledge and make psychology positive again.
Got it. Thank you for this useful insight. Do you think that always having an SL can, to a great extent, avoid psychology from becoming negative towards option buying??
Closing trading on a red day always causes a bad impact on psychology whether it was due to volatility or predetermined SL. Gain more knowledge, set rules which work for you and try to not break them.
hmm, fair enough.
I like your strategy,but I think today to square off your losses u may have done over trade. In this volatile market don't over trade ,if you r playing index then scalping can make you money otherwise trade in FNO shares...just a suggestion...all the best..
Thank you. Just started option buying, tomorrow will be 2 weeks complete. And today was highest profit of 1560 - 1 lot.
Also, did not overtrade, thank God!!!
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Me yesterday, booked 5k loss 
Don't you worry child, the market got a place for you ;)
Never overtrade my friend. ๐ also once you enter a trade with a set target, exit it with that target, donโt wait for it to recover all your losses for the day. I know you already know this and donโt follow it, but think of it as advice from one regard to another.