Jan. 15, 2013- A good profitable day

The market gapped down today and reversed from there. Positions I was holding overnight were PCLN & GOOG call and BIDU put. On the open, I bought an AAPL put as it broke down below 500.00 and sold the put when stock price was near 490 for a nice $170 profit. I also sold BIDU put as it tested the support level from prior breakout area for a nice profit. At this time, market started rallying higher and so did PCLN and GOOG with it. PCLN pushed higher into prior day’s resistance at 665-666 area where I sold my call for a nice overall profit. GOOG pushed higher on FB news but gave away most of its gain in the next 1 hour.

Overall, it was a nice day. A couple of big lessons that I am learning from stock market everyday are

1. Buying support and selling resistance works more often than not. If you do your homework and be patient to wait for the best opportunities, then you can make money in the stock market.
2. One of the tricks of the market- When the market opens lower and holds the gap down, it is usually a good area to buy. This is the time when everybody is usually scared and fears the market. And on the other side, when market gaps up and fails to hold the gap, it usually goes back down.
3. Stop Loss– Take small losses to keep yourself in this game and save money and also emotional capital. Over the long run, following stop loss is the most important rule. 
4. Follow the trend– Go with the trend. If the trend is up, then buy calls. If the trend is down, then buy puts. 
5. Strategy– Having a game plan and a strategy before hand helps to take good decisions at crucial times. 
6. Mistakes– Keep on improving on your mistakes and find out what works and what doesnt work for you.

 

Jan 10, 2013- Nice profitable day

A nice day today. LNKD broke out over the resistance area. I was able to take profits at the resistance hit near the 118.5 area. One of the things that happens when I am already in a position is that I sometimes get too involved in thinking about the position I am in and dont think objectively. e.g. with the AAPL strangle of 505 put and 540 call, I was always hoping for the stock to break out or break down without realizing that it was not able to clear resistance or break support areas. To resolve this situation, I am going to think objectively and re-analyze my situation with regard to the current position. I will close out the position if its not going anywhere and put my money to work somewhere else. 

Lesson- always try to be objective when you are in a position. Detach yourself from your current positions and think objectively about where the stock has the potential of going based on the chart.