It’s useful for us to regularly review our decisions, to see how are doing to optimize our process whether that is investing or swing trading. When it comes to swing trading, I like to monitor my technical analysis (timing, entries, stops and targets) to see what I can enhance, keep doing or work on. Plus, whether my choice of option was correct.
Its been a great month and I am happy with my performance this month. I had a total of 6 trades and 3/3 closed were successful and 3 trades remain still in play.
11/01/2021 (first entry for the month)
$ETSY
Etsy is a popular stock and had a huge run up since Nov 2019 and has done very well during the pandemic. Earnings and revenue are up. My original target was $220 and the entry was buying the break out of the downtrend. There was no catalyst as far as I was aware at this time and this was pure momentum.
I decided on the Feb 19 2021 190 call option, this was the strike closest to the nearest resistance which if broke, would accelerate this option to my target. I estimated 40 days would be suitable to reach my target based on previous price action.
The next day, we broke through resistance on the market open and my option target was hit.
My technical analysis was spot on here and resistance was at $220 and we sold off.
My option target ($17.50) of 3:1 vs the stop loss was hit. Making a nice 6% gain for this trade. I left money on the table here as clearly the trade when for further on to $220 and the option contract went on to gain $35 of premium (see below). Clearly, as the trade progressed I could have trailed using the 4EMA on the daily chart. I only trade 1 contract so if I was trading a second I could have partially closed the position.
On 13/01/2021 I spotted two swing trading opportunities:
Unfortunately, I could not find any options for W that were cheap. So I passed on $W.
You can see, we broke out of the $280 level and re-tested resistance at $348.
On the same day I entered a trade on $DKNG.
The trade is still progressing albeit quite slowly. We are making higher highs, but due to the broad market sell-off on Friday have moved back below $55. If we get lucky over the next week we might hit our target before the contract expiry of 19th of February.
15/01/2021 I spotted an opportunity for a swing trade for ai company Palantir ($PLTR). This was setting up and was not an A* setup, but it looked like it was going run I so entered a speculative call option. My target was $40.
Sometimes, the entry is not always obvious. For example, this trade broke the downtrend in which I entered and then close back below. This is normal. Its the first test, and indication of the move which often happens.
What gave me confidence was seeing the setup all over Twitter, but also the curling upwards and higher highs of the price action. An explosive move took out the resistance of $30 which was the strike for our option.
I trailed the stop behind option using the 13 EMA on the option chart until the option target of $7.3 was hit, however, because the trade continued to progress the option went on to $16. This would have been a tricky trade to trail with the 4EMA as you can see on the 27/01/2021 price came down and re-tested the 8 EMA (red line). So one would have to monitor if the trade closed below the EMA support for significance. This is one of the reasons I go for a hard target of 3:1, which makes managing the trade easier and less prone to procrastination.
12/01/2021 I started to see signs overstock $OSTK was setting up for break of its downtrend.
A clear base could be seen (double bottom pattern) at $50 and bounce off the 200 SMA.
I decide on the $80 strike, because it had the most open interest and volume. At the time, I wondered whether it was the right choice.
The 80 strike contract target was hit and went on to $20.35 and would have represented a total of 560% gain.
The 70 strike contract possibly was a better choice. The 3:1 target of $15.10 target was hit, but the contract went on to reach $27 dollars a 620% gain. Still, not much in it between the two contracts!
So a common theme this month was clearly I am leaving money on the table and possibly as I grow my account I can add more contracts to partial close until I reach my target.