Total's trades net me $400+

As a short-term trader, one of the things I love are news events that are guaranteed to move the market in some fashion. Events such as those allow me to bet one or the other, and the leverage of options really allow me to profit off of those quick moves.

Today is a good example. I knew early today that the minutes of last month's Federal Reserve would move the markets. Traders and analysts would be scrutinizing every word to see if another cut was on the horizon.

Feeling optimistic, I bought 30 October 53 QQQQ (Nasdaq-100 Index) Calls and 15 November 54 QQQQ Calls, as well as 10 October 158 SPY (S&P 500 Index) Calls. Around mid-day, the calls were about even, but the market had been fluctuating up and down for a while.

Right around 1:30PM, 30 minutes before the minutes were to be released, volume picked up, and the price started to trend upward. After the news was announced, that all the Fed governors were unanimous on the rate cut decision, the Nasdaq actually went negative while the S&P continued upward.

I wasn't phased. It always takes a bit of time for the market to digest Fed news.

By about 3:30, the frenzy started, and both Nasdaq and S&P ended up, pushing my Qs and SPYs to, so far, a $414 gain. I expect another good day tomorrow, but I will sell off some to decrease downside risk. By Thursday, I plan to dump it all.

The week, moving, and reader questions

This has been a hectic week. In my trading, I caught a great dagger in USU last week and made about $1000 from the trade. I thankfully dumped it about 3 hours before it started crashing two days ago.

While I was very excited about this, I also had other things on my mind. Primarily, I have been looking for a new job since I believed I had no real future career at my current position. I resigned this week, and I will write more about this subject over the weekend.

To reader questions who are curious about how I learned to trade and want to learn to trade, I will try to run a series next week.

For now, I need food and drinks or else I will go crazy.

Learning to Trade... the hard way

So the last week of ups and downs have taught me two lessons I really should have known:

1. Use bracket orders to set sell points, both at profit-taking and loss-prevention points.
   
   
2. Gold used to be a hedge against the stock market. Now, it mirrors the stock market.

(1) I realized because the market has been making huge swings, and obviously, trading at work prevents me from watching the market constantly. I ended up missing great selling points and then getting really screwed on the way down, as everyone jumped on the profit-taking wagon.

I now have a pricing rule for my options (using + to indicate profit percent and - to indicate loss percent):

25 cents or less: +40,-25
26-50 cents: +25, -20
51 cents to 150 cents: +15, -10
151 cents or more: +10, -5

If you consider options in general, you will see these price points make sense, as early on, the out of the money options tend to swing a lot and have lower prices. Closer to the money options are also more expensive, but this also prevents huge swings.

(2) I did manage to sell my gold options for a 5% profit, but for a good 3 days, they were down 20%. Why did this happen? I thought perhaps when the market was down, people would rush to a safe commodity, gold. Instead, as a co-worker explained to me, gold has been mirroring the market in recent years because the same money being put into the market is also put into gold. So when investor confidence is low, and the market is tanking, that same money is not being reinvested into gold. Instead, its probably being pulled out of the market altogether.