Monday, February 10, 2020

Feb 10 Trades


Today I closed five trades including an spx 0 DTE (zero days to expiration) and four were winners. The first trade  was  SPX 0 DTE trade based on the modified bollinger bands strategy  on 5 min candles, and the next two trades were on AMZN, and IR based on the same modified bollinger bands strategy but on daily candle. The fourth trade was an SPX 7 DTE trade that turned out to be a looser that I did a very rookie mistake that instead of sticking to a plan, and be disciplined and learn that a stop loss is there for a reason I kept on rolling until my loss was more than the original loss I would have incurred originally but a good lesson learned from this loosing trade. The fifth trade is an spx 5 DTE IC trade based on backtesting. In this post I will try to explain the strategy used for these trades, and the same strategy that I use to share my trades on the free whatsapp group that I have which is open to anyone who would like to join.

Trade 1: SPX 0 DTE trade

In short for the modified bollinger bands strategy, I scan spx on a 5 min candles for 5 closes below or above a modified bollinger band of standard deviation of 0.382 a well as the 50 SMA. 

At 1:35 m central time, SPX 5 min candles came up on my chart by showing 5 closes on the 5 min candles above the modified bollinger bands and 50 sma. 

So I placed the trigger above the highest of these candles and at 1:48pm the trigger triggered so I entered a put credit spread  and I sent out an alert on the whatsapp group.

On these kind of trades on the 0 DTE spx trades I like to take profits at 50% and go on to the next trade so when we entered we collected 0.7 on the PCS and I set a GTC order at 0.35 with our stop loss being three times the credit received so in this case 2.1.

Today around 2pm (12 minutes) SPX  went up in price and our profit target was hit and we closed the trade for 50% profit and we sent the alert to the whatsapp group that we closed it in case anyone was following it thus making a profit of $40 profit per contract since I got a better fill than the GTC order I had by $5. 




Trade 2,3: AMZN and IR trades

In short for the modified bollinger bands strategy, I scan everyday the stocks for 5 closes below or above a modified bollinger band of standard deviation of 0.382 a well as the 50 SMA. 

On February 4, NXPI came up on my scanner by showing 5 closes on the daily candles above the modified bollinger bands and 50 sma. 

On February 5 the trigger above the highest of these candles triggered so I entered a put credit spread and I sent out an alert on the whatsapp group.

On February 6, AMZN came up on my scanner by showing 5 closes on the daily candles above the modified bollinger bands and 50 sma. 

On February 7 the trigger above the highest of these candles triggered so I entered a put credit spread and I sent out an alert on the whatsapp group.


On these kind of trades I like to take profits at 25% and go on to the next trade and our stop loss is two times the credit received as you can from the images below how much we collected and how much we paid to exit the trade and keep the profit. 


 

  
Profit on AMZN trade is $40 per contract, and on IR trade is $45 per contract. 

Trade 4: SPX 7 DTE:

On January 31st the conditions for spx called for a Call Credit spread based on a strategy where if the 8 EMA is above the 21 EMA and the 21 EMA is above the 200 SMA and SPX close below the 8 EMA then to open a 70% OTM CCS with taking profits at 50% and setting the stop loss at 370% of the credit received. This strategy has yielded for the last 5 years 80% win rate with 60 wins and 15 losses. 

So we opened this trade:

STO -1 VERTICAL SPX 100 (Weeklys) 7 FEB 20 3265/3270 PUT @1.9

The next day the market gapped up above our spread and clearly at this point it was a total loss and i was going to be ok with the 5-1.9= 3.1 loss or 310$ loss per contract. 

But on February 5th, I decided to roll to a strike higher and i was able to find a strike that made sense at that point to roll and keep 5$ credit on the spread so i rolled

BTC/STO +1 CONDOR SPX 100 (Weeklys) 7 FEB 20 3265/3270/3325/3330 CALL @1.85

So the first trade I collected 1.9 and the roll cost me 1.85 to a higher strikes. The idea was to have spx close below 3325 and thus it will expire worthless and I will keep $5 thus breaking even on this trade. 

Again this time the market gapped higher  and on Feb 7 I decided to roll and pay a little fee and hope spx will close below my strikes and I would have a small loss and I was going to be ok with that. At that time the market was just grinding higher so I rolled my spread again and paid a small fee.

SOLD -1 VERT ROLL SPX 100 (Weeklys) 10 FEB 20/7 FEB 20 3330/3335/3325/3330 CALL @-1.05

So the first trade I collected 190$ and the second trade I paid 185$ and the third roll I paid $105 so now if spx xlose below 3330 I would loose that 105$ and i would be ok with that. The moment I rolled spx started trading lower and if I held to my spread I would be able to get out of it for a small loss smaller than the 105$ although it would not have epired worthless. 

So today I woke up and I felt good that the market gapped down and thus my trade was going to expire worthless, and at the end it did not and it kept going higher, so I did the mistake again and decided to roll to today's expiration to a higher strike pay a little fee for that and hope it will expire worthless so i did this roll

BTC/STO +1 CONDOR SPX 100 (Weeklys) 10 FEB 20 3330/3335/3345/3350 CALL @3.40    ROLL

SO now I paid 340$ to roll and let it expire worthless (which turned out to be a mistake, a rookie mistake) and spx did not expire worthless and I ended up closing the trade at $4.8 for a loss that was way too much than the original 3.1 or 310$. 

The loss on this trade is as follows:

$190 - $185- $105 - $340 - $480 = $920 loss which hurts a lot because I did several mistakes rather than staying disciplined and on plan with the original strategy to close the trade at a loss and move on. I do not remember the last time I had this big loss on one contract but definetly lesson learned and this will make me more disciplined than ever to stick to the plan and the strategy no matter the noises I get to roll and try to roll because the loss can be bigger than the original one. Lesson Learned for sure. 


Trade 5: SPX 5 DTE IC:

This is a new strategy that I started after running the backtest on a 5 DTE trade after a friend of mine alerted me to try it out and test it so i did. the results were spectacular in regards to the win rate and the idea is that you go more contracts than 1 with these odds of winning. 

The strategy calls for an IC 5 delta on spx 5 DTE (open monday with expiration friday) when 8 SMA is above the 21 SMA and spx close above the 8 SMA. 

Here is the result of the backtest:


The results are for the last 10 years, 96% win rate with 148 wins and 6 losses only. So on feb 5 we entered a 5 DTE spx trade:

STO -1 IRON CONDOR SPX 100 (Weeklys) 10 FEB 20 3380/3385/3220/3215 CALL/PUT @.35

Again I know it is low premium to collect, but the idea is you have a high chance of winning, and thus you go more than one contract to benefit from that and the 5 DTE lets you keep doing this trade almost every week. 

Today this IC expired worthless and we kept the full profit of $35 per contract. 


Total Profit for Feb 5 2020 profits:

Trade 1: $40
Trade 2: $40
Trade 3: $45
Trade 4: -$920
Trade 5: $35


Total: -$760 per contract.

Total February Trades Profit/Loss: -$678 per contract.

It will take me a long time to get over the loss of today but I really have learned from it a lot to apply more in my trading style. 

Please note that I am sharing per contract and when I send my alert to the free whatsapp group I send 1 contract because each person has a different risk tolerance and for easy math for example if it is 30$ per contract then it is $300 per 10 contract. this way a small account user or a big account user can decide if they want to go with one or more than 1 contract. I usually trade sometimes 3 and sometimes 5 contracts but I like to share 1 in case there are people that have small accounts and want to grow it 1 contract at a time. 

Hope this blog helps you find profitable strategies and in case you want to follow my trades please join the whatsapp group