Expiration Week

I've learned some valuable lessons this week with regards to trading. These markets are good for daytraders, IMO. This week pretty much all my trades were in the right direction of the market, as I'm a buyer first and then a seller. But, very few of my trades was I able to take profits off because volatility was so great, spreads were often big on the 2 stocks I traded this week: FLSR and my main one, BIDU.

When I waited for confirmation of the move going against me, what had been a profitable position turns negative. However, I still ended the week positively, though, the past 2 days, I gave back all the profits I made and then some. Not a good thing.

As I get into a positive position, I will need to do a better job of locking in my profits. Since I'm an options player for now, this may mean in greater volatility to put a trailing stop on the option. There were times in just a matter of minutes, my small position could be $100-400 and a few minutes later be down that same amount. If I begin locking in the profits from an options' standpoint, this allows me to take profits rather than take costs home. When you're doing a number of trades where each trade is $100-400 costs, that gets to be pretty expensive.

I'm doing a better job of scaling in to a trade, which means I may be getting in earlier than confirmation and I will get in for a small position. Usually it's just one contract. As the move is confirmed in my favor, I will add another contract. With BIDU, really, with some of the moves it makes, you really don't need to trade a bunch of contracts to make enough family to support a family of 3-4. This keeps your commission costs down.

On a side note, I did ask my broker recently to reduce my commission fees and they did by $2 per trip. This adds up greatly. Today I probably made about 20-25 different trips. That's almost a tank of gas I got to save today to put back into my brokerage account.

One of the good things about trading expiration week is the majority of fluff is out of the options, however, if there is any padding, can you hear the sucking sound that is made when they suck the time value out of your OTM option? It's always best to get as quickly ITM as possible during expiration week.

What I really liked about BIDU options are the ATM options were in the $3-5 range and it's been moving this week, so that's been great to get cheap options that move, which means money in your pocket if you can get in and out at the right times.

When one has a small account, one needs to learn to take the smaller amounts and build up. Yes, you do have to take into account option buying power and you may use that up all early. So, choose wisely.
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