Well it's been a while since my last post which was July options expiration. Even before that I had really stopped posting two months prior as I had kind of settled in to what I was doing and had little to share or discuss. But a lot can change in a short period of time, I lost my ass big in the August and September expiration cycles. I still haven't updated my spreadsheet but I'm down over $80,000. For me that is a huge number as I was only averaging about $4,000 a month before the loss. So do the math and it will take me a few years just to get back to par. The good news is after taking a few weeks off I have now regained all my psychological capital and as of this morning I'm back trading again. There have been several good byproducts of such a horrifying event that I'd like to share.
The first is simply that I still have enough capital left to trade and should be able to target my monthly living expenses of $2500 indefinitely. So nothing major changes for me other than the psychology of accepting the damage. Second is that, the truth is, even at my best I was barely making a living so until or unless I lost big I was probably never going to entertain the idea of starting a new career. I had put that search on hold as I thought I was on the border line of having enough capital and experience to give trading a shot. I had been wanting to try trading for a living and now I know that I'm just simply not ready. I need more capital and more experience and I think I'll know when I get there, but it isn't today. Perhaps in the time it will take me to get to a capital level I think is adequate I will also gain that experience I need. The third positive to emerge for me is that I had a very unhealthy attachment to money. I had wrapped my whole self esteem and outlook on life based solely on having what I considered to be a safe nest egg. I had spent the previous five years of my life in what I call a permanent state of semi-paranoia always worrying about losing it.
And as many of you have probably experienced in life, the actual event happening that you fear most isn't actually that bad. What is far worse is the torture you put yourself through worrying about it. So in a sick way I'm actually happy to exercise this demon and I think I'll be able to live a healthier happier life going forward. Money truly isn't everything and I had to break my addiction to that misguided belief. However, I would absolutely trade places and give this experience back for the money, that's the truth, see how sick my behavior is/was.
Below is the chart for bond futures where I took the majority of my losses. I was also short volatility derivatives at a VIX of 27 and cut those once we stayed above 40 for a few weeks. I was short big on ZB at a cost average of about 127 (highlighted in green) on the Friday going in to the weekend where the debt ceiling debate was threatening to end in default on our debt. I thought that was BS and was willing to short in to the weekend. Congress reached an agreement on Sunday night and bond futures opened up with a half point gap down on the chart at about 127'16. So I was comfortable in waiting and taking my short off later in the day for a small profit. That day never materialized and the chart never looked back. Each day I found myself feeling like I would love to short at these levels so I just kept staying in the trade. I'll save the daily drama of my mindset as each day rolled on but the short version is I lost my mind and eventually cut the trade for a loss at 140'24 where the purple oval is I highlighted. That's about a 14 point loss per contract, on bonds which sometimes don't trade 14 points in a year!! Had I tried to stay in any furhter I would surely have lost my mind again the day the FED announced they were keeping rates at 0% for two years and sent ZB up 5 points in two days to a new all time high of 146. You get that, a new all time high ever in the history of bond futures and I was short big. Nice trade meat.
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