week 2 sucked. gave back week 1 gains and then some.
the numbers #
trades this week:
- total: 7
- wins: 3
- losses: 4
- win rate: 43%
- avg winner: $310
- avg loser: $485
- net: -$1,010
account:
- started week: $340,520
- current: $339,510
- weekly return: -0.30%
- may total: -0.14% (-$490)
what went wrong #
may 10 correlation disaster:
had 3 positions all in tech. market dumped 2%, all hit stops.
lost $1,400 in one day.
positions:
- QQQ put spread
- AAPL put spread
- MSFT put spread
correlation between them: 0.92
might as well been the same trade 3 times.
wrote correlation checking code after this. won’t happen again.
other losses:
- may 9: $280 loss, stopped out too early (paranoid after correlation loss)
- may 12: $385 loss, IV crush after earnings
- may 13: $190 loss, rolled position badly
what went right #
added correlation checking:
new code checks correlation before adding positions. won’t allow >0.7 correlation.
tested on last 30 days: would’ve prevented $1,000 in losses.
kept position sizes small:
losses hurt but didn’t blow up account. still have $339k.
at old position sizing, may 10 would’ve been $2,800 loss instead of $1,400.
learned expensive lessons:
- correlation matters more than i thought
- tech sector moves as single unit
- need true diversification, not just multiple positions
may goal status #
goal: break-even to +$5k for the month
current: -$490 (15 days in)
need: +$490 to break-even, +$5,490 for goal
remaining time: 16 days
needed weekly: +$250 to break-even, +$2,750 for goal
break-even is still possible. goal is unlikely unless i have big winning week.
changes for week 3 #
1. correlation limits enforced
code now rejects positions with correlation >0.7 to existing positions.
tested: would’ve saved $1,000 this week.
2. sector exposure limits
max 40% of capital in any sector. forces diversification.
3. tighter stops on earnings plays
IV crush losses are predictable. should’ve known better.
4. weekly correlation check
even if positions start uncorrelated, correlation can develop. checking friday.
week 2 trades breakdown #
| date | type | credit | outcome | P&L | correlation |
|---|---|---|---|---|---|
| 5/8 | QQQ put | $0.88 | win | $385 | n/a |
| 5/9 | AAPL put | $0.75 | loss | -$280 | 0.89 w/ QQQ |
| 5/9 | MSFT put | $0.82 | loss | -$295 | 0.91 w/ QQQ |
| 5/10 | SPX call | $0.95 | loss | -$825 | stop cascade |
| 5/11 | TLT call | $0.65 | win | $280 | -0.45 w/ stocks |
| 5/12 | GOOGL put | $1.20 | loss | -$385 | earnings IV |
| 5/13 | ES future | - | win | $315 | 0.82 w/ SPX |
3 losses were correlation-related (QQQ/AAPL/MSFT). won’t repeat.
comparison to april #
april weekly average: -$3,100 may week 2: -$1,010
still losing but losses are smaller. progress i guess.
psychological state #
frustrated but not panicking.
losses suck but they’re educational. correlation risk is real and i have code to prevent it now.
down $60k total since january. not great but still have $339k to work with.
4 more months at this burn rate = broke. need to actually become profitable soon.
personal shit #
broke up with J (as expected). lasted 5 weeks. new record is still 6 months.
therapy wednesday. talked about trading losses and correlation risk. dr. r said “sounds like you learned something expensive.” yeah no shit.
haven’t been to the gym in 3 weeks. need to fix that.
sleep is still bad. waking up at 2-3am checking futures.
week 3 preview #
focus:
- trade less (quality over quantity)
- enforce correlation limits strictly
- aim for +$500 to offset this week
- avoid earnings plays unless IV edge is huge
new rules:
- max 2 positions per sector
- correlation must be <0.7
- weekly portfolio correlation review
- no positions day before earnings
may forecast update #
conservative: -$2k to break-even (from -$5k to +$2k original) realistic: -$1k (from -$10k original) optimistic: +$2k (from +$5k original)
lowered expectations after week 2. rather under-promise and over-deliver.
silver lining #
correlation lesson cost $1,400. could’ve been $10k later when position sizes are bigger.
better to learn now with small account than later with big one.
code is better. risk management is better. will pay off eventually.
3:40pm sunday. week 2 done, moving on. week 3 starts tomorrow.
-AK