This past week we were up +89% day trading SPX weekly options. Many traders would be thrilled to have over 20% average per day return on investment. Yet, that is below our historic average of over 300% weekly return and over 60% average per day. So we often get questions about what is going on when weeks like this come. Many people expect that every week we will see the huge returns. And when we experience a few losers in a row many traders get concerned. So today we will address the issue of realistic expectations regarding trading performance.
Averages are just that averages, they can vary from day to day and week to week. Just because we average a nearly 70% win ratio in our trades, does not mean that same average will be experienced every week of our trading. Some weeks we have 100% winners and others only 20% winners, it is just part of the way trading goes. A trader must learn to accept that taking losses and being wrong is all a part of this career. The key is to keep our eye on the longer-term averages. While over the past few weeks we’ve experienced a less than optimal rate of return, it is still a nice profit. And our averages for the past 2 months are right in line with all our historic averages (over 400% weekly average return so far for 2017). So these smaller profit weeks or even weeks with drawdowns are nothing to be concerned about. In fact, they are exactly as we expect in our trading.
There are periods where we hit home runs every day, and periods where we strike out and then when only get singles or doubles. This is just a part of the trading process. But the key is to stay consistent, and as we do we eventually see the huge average gains that we normally experience. So, we don’t worry about a few smaller profit weeks, or even a few losing trades in a row. We expect that we will see such things in our trading. We expect to see 30% of our trades over the longer term to be losers. We also expect to see 70% winners. Now we all know past performance is no guarantee of the future. But this is what we keep our focus on when we have weeks like we’ve been experiencing lately. January was a fantastic return of nearly 2,800% for the month, February is currently at just over 450%. Some months are clearly more profitable than others, but this is a part of trading. We are up over 3,240% for 2017 and we are only 2 months into the year! So, while February has been less than stellar, it has still been a nice month. The key is to keep our expectations realistic, and stay consistent in our trading.
This week is a prime example of the need to stay consistent. On Tuesday we hit a nice +296% profit and that was followed by three days of losses. Last week we had a nice Monday as well, followed by a small profit day and two losers. If a trader missed out on the large trades these past few weeks, clearly that would impact performance. The key is to stay consistent, keep trading and as we do, the profits will take care of themselves.
We look forward to another exciting week Day Trading SPX weekly options ahead of us.