I'm sure you've noticed in the last few days, but I've begun to day trade a bit more. I think being able to have a feel for the market in real-time is supremely important. We can't lose sight of the big picture and the direction the market "should" go, but we also shouldn't lose touch of where the market is going in both the medium and super-near term.
I missed the rally off of the March lows. My view for the long-term blinded me from the medium-term reality. I'm trying to better navigate the long-term, medium-term, and short-term.
The spike in volatility in this selloff has created a lot of chop and stocks swing pretty widely within a day. That's an opportunity to trade!
I like selling cash-secured puts as a way to bet the selloff is mostly over. It gives me downside protection while providing some sort of gain. It's safer than a short or a long. And the payoff is less because of that. I size these trades pretty big because the risk is lower than an outright purchase.
I also made a few day-trades on TSLA shares today. In 10% sizes on each of my 2 round-trips. If you're going to day-trade (on purpose), you should size the trade larger than a longer-term idea.
Today, I traded 10% of my portfolio in 4 different round-trips. They made 0.37%, 0.16%, 1.03%, and 2.21%. That's a total of 3.77%.
Because it was recycling the same 10% of my money, I made 0.37% for my portfolio as a whole just by trading actively. If the rest of my book matched the market, I just created 0.37% of alpha. In a day. Professional managers try to outperform their benchmarks by something like 1.0% plus their fee..in a year!
I made 3 round-trip trades yesterday using 10% of my book and made 0.78% combined - 0.08% on the whole.
So basically, I made 0.45% of alpha in 2 days using just 10% of my book!
And that's not even mentioning the EWA short that wasn't supposed to be a day-trade but turned into an overnight flipper, netting 1.76% on a 5% position.
Look, I realize you might not want to or be able to day trade this actively. That's ok. I just want to show you how I manage the chop. It's not always a winner - but I've found that I usually have a good feel for the short-term, a decent feel for the long-term, and a horrible feel for the medium-term. So I try to mix long and short-term ideas while ignoring the medium.
You need to figure out what works for you. I've lost a lot of money and spent a few years building out a framework that works for me. It's always changing as the market changes, but I've got a decent starting point.
Keep working.
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