Sunday night Recap Friday August 15 and what we're doing tonight.

Friday closings:

Friday was a good day for us!  We netted $17 in real papermoney with two trades closing.  Our Iron Condor on GLD closed at our profit target.  That was great!  Our Iron condor on QQQ closed at our loss-side stop.  Which wasn't so great.  But, the overall result is that we gained more than we lost, so we had a net positive week.

Overall, our success rate is still better than 60%.  We'd like to have it be better than 70%, so we're still working on that.  In the course of the last almost 4 weeks, we've made almost $100 net.  Now, that's definitely not enough to live on, but it's about $100 more than we had before (in papermoney).  Since we're running our paper money account based on the size of our real money account, it's good practice for us.  We've got a bit of along road ahead of us to turn this into an account where we could, theoretically, live off the proceeds.  But we're getting there.  It's like the tortoise and hare.  Slow and steady wins the race.

So far, these last almost 4 weeks have been a great way to reaffirm what we learned, and to test our some theories and ideas.  I think two of the most important things we've learned so far are:

1. How to put a conditional order on which helps reduce the number of "bad" trades initially -- you know, the ones that go against you right away.  This saves commissions as well as eliminates any losses
2. How to put a trigger order on so that when we enter a trade, our stops are put on right away.  This helps eliminate a great deal of risk we were taking on when entering the trade one night and putting the stops on the next night.  

I'm feeling pretty good overall.  Not a bad way to start the week.

So -- what happened with QQQ -- in other words, why did we hit our loss:

Here's a snip of the TD Ameritrade/TOS chart for QQQ going back about 2 weeks:

If you ignore this past week, and look at the previous 5 days, there was a good sideways trend.  That's what we were looking at when we sold the condor.  However, then last week happened, which was obviously an uptrend.  That uptrend messed up our condor.  Even though the price of the underlying is still within our strike ranges, it got too close to the top and triggered the stop.  I'm interested to see if this is going to continue to go up, or if it will turn around again.  

So then the outstanding question remains:  Should we have cancelled out the condor when we recognized the uptrend (which we did, see my comments from last week), and saved some of the loss?  

Or, were we "correct" to let it go to our max loss rule on the possibility that it would still turn around at a level of resistance at the high point?

There's definitely a case to be made both ways.  We did talk about this in retrospect, and Nick and I are confident in our rules and the fact that we followed them, even though this position went against us.  

On to next week!  What are we going to do?

At the moment we have three contracts carrying over from last week:

TWTR -- doing well.  We'll watch and see.  We've got a trail stop in place now, and we're already guaranteed a favorable close.  So that's good.

SPY -- We sold the condor, and I'm honestly surprised we didn't get stopped out of this as we did with QQQs last week.  However, Friday was a down day, which we needed to happen for it to stay in our range.  We're riding this one out and seeing what happens.  

IWM -- I can actually change this to a trail stop now.  And this is another one we watch and see what happens.

New positions to kick off the week:

Again, not easy to find tonight.  Nick found several Iron Condor options that fit our rules, but the returns are lower than we usually get.  Still within our rules, but lower.  I found one vertical on EEM that works, so we'll do that.  Then get started on the Condors. 

First thing, though, we're putting these on a "1st trig OCO," so we will have our stops on immediately.  Have I mentioned that I like this concept recently?

Okay -- so EEM -- a snip of the last several days (again, from TD Ameritrade/TOS):

The last two days look to me to be a bearish engulfing candle pattern.  And Nick says he trusts my readings of candles since I've taken the more advanced technical analysis course so far.  (Though I readily admit, I have a LOT to learn.)  Having said that, we are looking at the September 45.50/46 call vertical, which fits our rules and banks of the price of the underlying continuing to fall.  Overall, however, the long-term trend in EEM is up.  So, using a call option banking on the price of the underlying to fall is betting against long-term trend, in favor of a short-term pull back.  Given the bearish engulfing pattern along with the fact that the high for the last 12 months was only 2-1/2 weeks ago and hasn't gotten that high again, I think the short-term pull back is reasonable.  

To hedge our bets a bit, however, I'm putting on a condition that the underlying has to hit the $0.20 below the low of the previous day, just to confirm that pull-back happens.  

It was interesting to note, however, that the condition on the 1st order carried through to the OCO closing orders when I did the "1st trig OCO" entry.  I'll have to remember to modify that if needed.

And for our second trade of the night:  An Iron Condor on YHOO.  This is definitely a sideways moving stock.  

Specifically, we're selling the 40/41/32/33 September expiration iron condor.  No conditions on this one, though we did put it on using the "1st trig OCO" so we've got stops in place.  

And that's the game for tonight, folks.  Hope you enjoyed!  Looking forward to how this week will go.

Happy Sunday night!