04/02 Portfolio Update

Plan the trade and trade the plan

I'm not saying that it is easy, specially on days like Today, with major indexes movng beyond 1 st. deviation and with several gaps at the opening. Nevertheless, I believe that Trading Well is a matter of having a good plan and study for each and every position. For every trade I place, I make sure to have:
1) A pre-trade study of price action and volatility
2) A pre-trade plan of action, with pre-defined profit targets, stop losses and adjustment points 3) A day-by-day monitoring system and methodology for setting up contingent orders to adjust positions, take profits and protect my capital

By having these things in place, I`m confident with myself and that I`m trading well. I have adjusted to the current market environment by reducing my $ exposure, by diversifying the timing and instruments I`m trading.

Now let's look at each position and see what happened Today.

1) RUT 52-Day Condor:
Notice that Voladility didn`t drop at all Today. RUT moved almost 1.5 st. deviation, and RVX didn`t move anything. Should things settle down the RVX can drop and bring the p&l back up. There is about 93% chance we will stay away from the up-side stop. Let`s see what Tomorrow brings.

2) XLE Double Diagonal:
Profits dropped by a little Today, nothing major, and still very far away from the closing points. Another one that has great probability of staying through the weekend.

3) OIH 36-Day Condor:
OIH still inside the volatility cone, Today`s move gave back the 2% we had, but didn`t cause any major loss. Notice that the CALL insurance will start to become less effective as time passes, bringing the stop closer, right now the stop is about .50c from the short strike. Still great chances of making throught the weekend.

4) GLD Calendar:

GLD gave back the profits it took so longer to acumulate, this doesn`t make me very happy, however, on the bright side, there is a great chance we`ll stay the weekend and get these profits back up next week.

5) MNX 45-Day Condor:

Being a young position, it hurt a bit more to get a bigger day, yet it is still inside the volatility cone and P&L not out of control. Volatility has fallen since the position started, however not Today, so should the market settle, it might drop and help P&L. There still great chances (93%) the trade will be around Tomorrow.

6) EWZ Double Diagonal:

Ouch! Such a dramatic move a day after I entered the trade, luckly it is a double-diagonal, so I expect it to recover faster if EWZ stays put for a few days. Nevertheless, let`s monitor it very closely.