September Trading: Lessons Learned

September was a decent month for the J. Arthur portfolio, earning 2.21% on thechart account balance. I’m trending slightly above the yearly target of 24%. It’s safe to say the trading plan continues to operate as designed.

Yet it is important to look back at what happened and see if any improvements can be made.

First off, I have become an even bigger believer in true diversification.

I say true diversification because, at its core, I view the entire stock market as one correlated entity. Sure, it’s good to have ETFs that include lots of different underlyings. That, at least, reduces the chances of a crazy move. Yet, if the S&P 500 starts blazing in one direction, usually the entire equity market reacts the same way.

That’s why I’ve tried to balance out my positions with farm crops, currencies, and energy.

diversiy

After this slight portfolio shift in September, my currency and farm trades were my best performers. A few of them hit 50% max profit within 10 days.

The products that really worked well were /6A (Australian dollar), /6C (Canadian dollar), /6B (British pound), /ZW (Wheat), /ZS (Soy), /ZC (Corn).

Needless to say, I am very happy that Tastyworks finally released futures options for trading. It had been impossible for me to get the kind of diversification I wanted without them.

Another plus for the month was that I didn’t have to close any losers. My last losing position was closed a month and a half ago. My win rate sits at 94.87%.

Also, I didn’t have to make a lot of adjustments; I just kept looking for a good trade each day with a goal of balancing out my diversification.

I do have a GDX position that I had to adjust until it became a straddle, and now I’m just waiting until it hopefully decays into a small winner. That position has been on for 80 days, which is rare but it happens.

adjustments

One final nugget of wisdom I will reiterate is that it’s CRUCIAL to be able to just let the positions play out. A great trick is to use a spreadsheet to track lots of metrics about your trades, or work on building your trading system (maybe learn a scripting language). This way, you can still feel like you are improving your trading without getting frustrated with your positions and messing with them.

Happy trading!

J. Arthur

 

 

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5 comments on “September Trading: Lessons Learned

  1. Any particular reason you use TLT as opposed to /ZF /ZB /ZT?

    Liked by 1 person

    • J. Arthur Squiers

      TLT has good liquidity and it’s a smaller product. I sometimes use /ZB, but I’m usually careful about taking on too many highly leveraged futures products, and tend to favor them for commodities and currencies. I plan to look at /ZN to add some more weight to my bond/note category.

      Liked by 1 person

  2. Any particular reason you use TLT as opposed to /ZF /ZB /ZT?

    Like

  3. Carlos Silva

    Thanks a lot for sharing your plan. It’s been a great learning experience.

    How do you target a 24% return? Its by your theta numbers? I think (from what I learn with Tastytrade) that normally you keep around 25% of your overall theta number, right?

    Or do you have others metrics that can help you project that 24% return? I think that one of the great things of trading options is that you can create (or at least) target a return that you desire!

    Again thanks a lot.

    Like

    • J. Arthur Squiers

      It’s more about keeping my other metrics close to what I view as ideal:

      $1 theta per $1K account value.
      Open Net Liq of all positions between 3-4K per 50K of account value.
      Initial credit received per position between $100-$150 per 50K of account value.

      Holding close to these metrics and following the rest of my plan is what has averaged 24% profit.

      Like

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