I recently started ootions trading in July 2024. Being a new trader and limited income I was hapy with $100 profit a day.
Then things became better and I started making $200-300 on some days, nothing in others. The biggest loss I had was $600 which made me sit out of trade for a week as I was absorbing the bitter feeling.
Cut short to 2 months and I took my account from $27 k to $32k. I was on cloud nine, overconfident and thinking that I will make 100k an year. My risk taking ability also increased and thats where things went south.
In a week I lost $7k which is around 21% of my capital. When I lost for the first 2 days I went back to risk mamagement and made a rule not to loose more than 1% of my capital. But for the next 3 days I only had the focus to regain my lost money. No matter now many plans I made, the moment I lost a trade I would go on to cover it loosing more and getting sucked into a spiral.
Today I am sitting and contemplating, I am self doubting myself as I thought I was doing decent. I was confiden as well.
But with 1 bad week and series of bad decisions within that week I now think that options trading is not for me. I did a lot of research before getting into this, tried learning technical analysis and what not
It all came tumbling down.
Just wanted to share my experience here. I learned this the hard way that you should never trade to regain your losses you will end up loosing more. Its like cat hing a falling knife
Lost 20% of my Capital in 5 days.
byu/Left-Worry-2607 inoptions
Posted by Left-Worry-2607
13 Comments
You didn’t fully understand the risk and was too focused on the reward. Next time try using less of your account.
I strad of using 20% of your portfolio for options, try s much more sustainable 5%. If you lose it all then your portfolio still stands. If you hit a nice 4x, then reallocate and continue with the 5.
Just for some perspective;
1. when you start trading in an up-tending market everyone think they are a genius
2. revenge trading almost always makes things worse
3. using a daily P&L as a measure of success almost always ends badly since the market doesn’t reward that trading as bad positions are forced by chasing an arbitrary daily return
4. you have millions of traders for company here, this is very common to have happen
Take a step back – realize it is good for you to be self doubting. Good traders deal with reality, and if things have gone badly own it.
Maybe try paper trading for a while before using actual money again.
Chin up, and use the experience.
“My risk taking ability increased and that’s when things went south” The key to having a successful strategy is consistency, consistency, consistency. If you are deploying a new strategy, keep it isolated from the one that is working.
It’s not about how how you win, it’s about how you lose.
This is a normal part of the journey. How you deal with it and what you learn from it will determine if you actually are good at this.
Anyone can profit. Consistent profit is the real measure of successful trading. That’s why “how you lose” is what actually matters.
“Risk management” it’s called.
Essentially assess the situation and use your brain to either make sure this doesn’t happen again, or work out how much drawdown is expected in your strategy. Sometimes a 30% gain expects a 20% loss as part of the risk.
Easy. Inverse your trades.
Your initial profit target was $100 a day. That’s 25k a year on a 27k account. You started too aggressively and then got more aggressive.
Review your trades to ensure you aren’t over trading. You may want to consider trading shares instead of options for a bit, especially if you’re slinging weekly or 0dte’s
dont worry bro, if u cant handle being red for a day, u wont last in the game. it beats the life out of u till u become emotionally unattached to money. Thats when u will begin to profit. You can only look forward, cant go in the past, what happened… happened. U stil got 32k-7k=25k left to lose, we believe in you!
Here’s the secret (applies to all trading, not just options): When you find a strategy that works* you increase your gains by increasing your position sizes on the *same* strategy, not by employing a riskier strategy. To be clear you still follow the rule of only risking 1-2% per trade, but as your portfolio gets bigger so should your positions.
*No strategy works 100% of the time. What matters is that your gains exceed your losses over a given period of time.
Having capital limits on your account might help.
My options account is limited to £15k and any profit over it is taken out for long term savings.
I have a 1% per month target to make any more than that I’m Happy.
you’re going in way too heavy. it’s easy to make money when prices just go up, and IV does not expand. no one ever makes a youtube video talking about
– how to make money with options, while the markets are going up, AND
– how to then also make money while IV expands, AND
– using the same rules, how to make money while things go down
its too much info for newer people to latch onto at first, and scares people away.
try r/optionscalping and take it easy.
I lost 50% of my capital in a day in the past lol