QQQ Week of January 16th Review

Lesson Learned

Lessons from Instructor John

Don’t let your hands drop below your chest, said our instructor John. It was the first lesson of Krav Maga. My friend Michael got me to come to one of his classes that he had been taking for years. Krav Maga is a Israelyan fighting technique. It is very useful in close combat situation‘s that involve hand to hand fighting. For a regular Joe, on the street, it can also be a great way to defend yourself in a altercation. The key is to keep your hands up near your chest or above your shoulders. Your hands in this position provide leverage defend yourself. You can strike, you can block punches, you can quickly disarm a predator with a gun. But if your hands are below your chest, or down by your side, well, as John said, you can quickly become dead.

This week has been a week of reflection on my process and where I failed. Over the years, I have learned that the best defense can evolve into the best offense. When I started, QQQ Trade Ideas, I told myself I would always have trailing-stop loss orders on my positions. This would help me ignore my thoughts and emotions and quit thinking. Just follow the process. Up until the last two weeks this had work very well. And then, for some reason, I started listening to the noise.

The noise came from the talking heads about earnings and how they would be under what the street had projected for most, along with guiding down first quarter expectations. These disappointments would naturally move markets downward. In particular, the QQQ ETF. This was my first mistake…I disregarded my process. Markets have proceed to remind me that what I think is irrelevant. Markets know all and punishes though who think they now more.

On Saturday I, for a brief moment, started to play the “what if” game.
What if I had just attached a 5% trailing stop loss when I bought?
What if I had just taken my losses on Thursday and avoided Friday beating?

I can go on and on, but the simple fact is, I didn’t. So now what?
I reminded myself, the first rule of trading or investing is to follow your rules. Monday morning I will erase all emotions about the past and move forward following my rules.

Monday Morning

The following are my steps that I will take tonight and Monday morning.

Sunday
1) After 5 PM central time I will review futures and foreign market openings.
2) Review charts pertaining to QQQ, the top 10 holdings within QQQ, and any relevant news pertaining to these companies.
3) Review upcoming economic news along with any foreign news that could potentially move market.

Monday Morning
1) I will calculate the IVol premium of the QQQ and assess its if it’s at a discount or premium
2) Review pre-market conditions.

3) 30 minutes after market open, I’ll have determined the QQQ’s projected trading range and apply my trailing-stop loss position (I’ll share this with subscribers).

What I Didn’t Know that I Didn’t Know

The CBOE, Chicago Board of options exchange made available what is called Zero Days to Expiration options or commonly referred to as 0DTE options. These are options that once purchased expire by the end of trading day. There used as a quick hedge or a quick. Since the first of the year they have become very popular with the institutional traders. Unfortunately the way these work can force markets in the direction that fundamentally don't make much sense. We saw that the week of January 9 along with this past Friday. It was projected that over $1.3 trillion in options expired on Friday. That is an enormous amount. A lot of those options were call options from what I have read. It becomes just one more thing to consider when making a decision or adjusting your rules to investing or trading.

I’m working on a way to track the volume of these short dates option contracts to give you and me more insight. I’ll share this with subscribers as I make progress.

Thoughts about the Week Ahead

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