The rally continued right out of the gate this morning, moving against our SPX May Iron Condor position.
As I've written previously, I believe that risk management is the most important part of being a successful trader. It's never pleasant to take a loss, but is part of the business and something we must accept. With so many opportunities in the year to trade weekly positions, it's best to exit a position for a small loss and look forward to the next entry opportunity.
While the May SPX Iron Condor is a "test kitchen" paper trade, I still practice the same risk management as if it were a live position. At 10:19 am EST this morning, the position was very close to the pre-set max loss of 100% of the credit received, and it did not appear that SPX was going to slow down. Thus, the position was closed.
A summary of this position is as follows:
Credit Received: $3.20
Debit to close position: $6.10
Resulting loss: ($2.90) plus commissions, 11.1% of margin
Once again, I am not recommending this trade to be entered live; I will continue to place paper trades and may modify the guidelines to increase the potential for gains on this no-touch strategy. I want to keep you all informed as the testing progresses, so will continue to publish these trades.
As the current time, SPX has moved over 14 points since the open today; which is over a one day standard deviation move. As per our guidelines, this is outside the limit for a new trade entry. There will not be a new trade entry today. Entry for the "test kitchen" Iron Condor and Put Credit Spread for the May 4 cycle will be tomorrow if market conditions are suitable. The conditions are outlined in the guidelines for these trades which were published May 6 and 12, respectively.
Here is the link to the articles referenced: Link to Articles
Trade entry details will be posted tomorrow evening if a position is entered.
As always, stay keen on your risk management and trade carefully.