On Selling a Contract...

I said this yesterday and I'll say it again. Trading energy sector holdings is not my favorite ride – at least in the current war times that make it so unpredictable. Now, I know that my responsibility is not to 'predict' the price of a stock but rather ride the waves. However, the trends for the energy sector overall are not so stable from my point of view, I wonder how professional traders feel about them during geopolitical tensions.

Either way, let's jump right in to today's performance. Based on yesterday's analysis, I mentioned I'd track PSX, VLO, and AVGO; AVGO was the backup plan in case the energy sector had a reversal. The reversal was minor and I saw an opportunity for an entry in VLO.

Let's look at a zoomed out VLO chart to understand its performance in comparison to the observed trend from last night's analysis.

As shown in the chart above, we can certainly see that the uptrend continued, we know this because the price remained higher than its previous close price. We also saw that VLO tested the resistance of $249.25

Let's zoom in

In the above I've highlighted where I entered and where I exited. This was possibly my least favorite trade so far. It dragged and I wanted out almost immediately, but I waited because I knew that the $250 mark would be reached during 1-2PM

Now, on exiting a contract... I've never thought about it, I just execute. I typically don't care about the bid and ask, but today I saw how being careless about this can impact your bank. I say this because I purchased the contract at $2.95 and sold it for $2.65, but this wasn't the intention. As shown above, the price for VLO had increased by ~$2.50 which put me back at a small profit. However, when selling, the bid price was $2.65 while the ask price was $3.80

Where I went wrong was where I just sold it and ended up selling it for $2.65 instead. This put me an overall 9% loss of my bank, which is not terrible, but it is a small mistake that if not contained and managed now, could affect me when the bank is bigger and the stakes are higher. So I must mitigate this going forward.

Today overall wasn't the most horrid day in my trading journey, but I did almost feel like I shouldn't have traded anything and would have rather sat on my hands. To be honest, I think is what I'll do if XLE is the only high performer from the previous days.

It is early today, so I will perform my analysis later, but from the looks of it, the health care, staples and financials were the greatest drivers today. Reference below from today's performance:

Now, I typically like to keep my options small and only have 2-3 stocks available for the next day. However, XLV in the past has been shaky for me so I'll use Financial and Staples as backup for tomorrow. It may be overwhelming maybe, maybe not. All I know is, I'll be prepared for good entry, and from today's lesson learned, I'll also be prepared to execute a good exit.