ETF Options Trading: Remember It’s Never The Same Day Twice!

Last week, I was contemplating my recent ETF options trading performance because it seemed less satisfactory than my prior year’s performance.

I was still feeling pretty good because of locking in $65,000 in ETF trading profits over the past 30 days, but that winning run followed what I thought was a dismal January/February.

Instead of merely guessing about my recent trading performance, I took the time to run the numbers and analyze my key trading statistics.

After all, winning in the stock market always boils down to simple math.

Upon reviewing my trade stats, I discovered there was nothing wrong.

I simply failed to remember it’s never the same day twice!

Continue reading for an insightful mini lesson to newbies and a fantastic reminder to experienced traders.

Never The Same Day Twice

After cozying up with a spreadsheet to analyze my stats, I found my average profit per trade over the past couple of months (including all winners and losers) was only +12%.

This was not so great compared to my average gain of around 20% per ETF option trade in the first six months of the previous year.

Had I lost my touch?

Not at all!

I realized I had simply fallen victim to the faulty thinking that the current stock market is the same as what I was dealing with before.

In actuality, I needed to remind myself that EVERY day in the stock market is unique — it can never be the same day twice!

Since my ETF swing trading strategy focuses on a single chart pattern with specific rules, it is easy to mistakenly assume my results will always be the same.

But this year’s stock market required me to make some tweaks to the implementation of my two options strategies.

And it’s starting to pay off.

Calling An Audible

A few years ago, I began sharing the ETF options trades I was using to amplify the profit from my existing ETF trade setups.

It was an aggressive approach I called ETF-ATM and my trades started averaging +20% profit per swing trade, with a win rate around 85%.

Although the profit performance was great, these trades were quite volatile – as options trades usually are.

Further, I could only carry out this options trading strategy on about half of my ETF trade setups.

As such, I came up with a more conservative strategy named ETF-RS that could be applied to almost ALL of my ETF setups.

This new ETF swing trading strategy only generated about half the profits of my ETF-ATM system (+10% per trade), but was much less volatile — less stomach churning.

And here lies the clue to the difference in my options trading performance this year.

We had a tough pullback in the market in January/February and I got hit with some personal trading losses.

Normally, there are enough ETF options setups that I just trade more often to make up the losses.

However, the market’s character this year was providing me with fewer setups than usual.

I wasn’t making my money back fast enough.

That’s when I made a strategic decision to “call an audible,” just as a football quarterback might do when facing a surprise defense formation.

I began doing options trades on every ETF trade setup I could, requiring me to use my less profitable ETF-RS strategy more often than last year.

Consistency Pays Big Dividends

It is true my average profit per ETF options trade is lower this year, but I have compensated by adding more ETF options trades.

On the table below, you can see from the dollar results that I have actually increased my total options profits.

I was more aggressive about using my less aggressive strategy – and the tweak has paid off.

Below is a list of all ETF options trades posted for subscribers of my ETF swing trading newsletter so far this year:

 

The stock market is an ever-changing master that presents us with a different haiku every few months.

However, you can still generate consistent profits by simply following a sound trading strategy that is methodically implemented again and again.

As I’ve said in the past, my ETF trading strategy is actually pretty boring — and boring is great when it continues to significantly increase my trading accounts each year!

As always, feel free to personally contact me by email or phone with any questions or comments.

Jack Loftis, PhD | founder

You Don’t Know Jack?

Jack Loftis only trades ETFs and ETF options, each with a very specific swing trading strategy. Since 2001, Jack has been publicly sharing his trade results with more than 13,000 followers on StockTwits. Mr. Loftis generates about 10 ETF trades every month (always using the same pattern), and averages around a 90% win rate. Jack shares his trades with subscribers of his ETF swing trading service. Sign up now to start your trial subscription today.