Good Trade, Scaredy Approach

Yesterday I mentioned that I'd expect XLP, XLI, XLU to have a positive performance, from these three I chose XLI and narrowed it down to RTX. Before I get down to RTX's performance, let's look at all the sectors.

As shown above, XLP and XLI came in second and third in the return today.

This morning I was hesitant with this call, especially because the sectors did not look like this at the beginning of the day, they started re-adjusting after 10:30AM. This is the first part where I think I need to start trusting myself and my model. I've seen it work over and over, day after day for the past three weeks – except of course, when there are war news destabilizing the entire market.

Today I decided to have a zero day to expiration contract based on what I was seeing RTX do. Let's now take a look at the performance for today alone:

I've highlighted that I entered the trade at 11:03 when the price was $194.49. At this time, the 0DTE contracts for $195 were $0.40. I didn't stay long because I was trading with scared money. I sold the 4 contracts I purchased at 11:23AM for $0.45 each. Now, while I didn't lose money, I left a huge opportunity on the table. As shown in the chart, we see that the price reached $196.69 towards the end of the day. The price of the call went to $1.97 – I experienced regret, so much regret.

For context, the four contracts would've yielded $788 which would've given me a $628 profit for the four of them if I would've stayed in.

The problem was, I didn't trust myself and I was scared. It's not like the stop price limit was even reached. Meaning, if the contracts would've gone down to $0.30-$0.25, then I would've exited and taken my stop loss. Instead, I didn't want to take any losses today and I left a huge opportunity on the table.

The bright side

I am satisfied with the fact that recently, my approach has shifted; it has improved after backtesting and future testing. I enhanced it. I got better. I also didn't lose money today which is always a win.

I'm starting to hit the point where I have to actually trust the work I put in. I spent my nights studying the charts before I go and trade the next day, I show up prepared. I must listen to my instincts with this and allow my instincts to follow the logic. The logic told me there was going to be positive return in XLI today, that happened. I also expected RTX to have a green day, that was true as well, at least for the day.

While I am not upset about how this played out today, I think it did give me so much FOMO. However, it is a lesson that I will be applying next week.

I may not blog the next two days as I will be working on my automation for this, but overall the ROI in learning today and this week was absolute gold.