Trade The Journey

Trade The Journey

Trade Review for Week of June 23rd

Trading Asset:

SPY (S&P 500 ETF)

Strategy: Vertical Spread

1ST Spread (SPY)

Leg 1: Buy $546 Call

Leg 2: Sell $550 call

Premium: $4.7

Profit/Loss: $4.56

Hypothesis: Positive sentiment after mild CPI and PPI report.                                                                                  

Hypothesis Explained:

Falling inflation could prompt the markets to anticipate monetary policy easing sooner than initially expected. The markets appear to be responding to economic data as the Federal Reserve continues to emphasize its data-dependent approach. While the upcoming Fed meeting will announce the latest rate decision, the market’s attention will be on the press conference and dot projections.

Trade Management:

I bought near the low at $539.75 and held through a daily pullback. SPY pulled back following the data release but closed near the top of its recent range between $539.75 and $543.42. The moving averages, particularly the 50 SMA, continued to trend sideways. By closely monitoring the market, I decided to hold the position if it didn’t break through the support level. This decision paid off, and I closed the trade the following week as SPY surged on Monday.

Trading Review:

If only every trading week could be as favorable as the last. I felt confident about this trade as SPY had gained momentum from the previous week. Although I am still reacquainting myself with the market after several weeks off, this trade effectively recouped losses from previous trades. Trading is heavily influenced by the market environment, technical analysis, and, importantly, market feel. Developing a market feel takes time and can easily be lost without regular engagement. Market feel involves sensing the market’s emotions and having a good idea of potential movements.

I’m thrilled this trade succeeded, especially since I wasn’t monitoring the market as closely as I should have. One lesson I learned from casually watching SPY is that I hadn’t formed a firm decision on its direction. Instead, I observed and identified potential movements. In the past, I’d choose a direction with certainty, often leading to trouble. Taking time off actually helped my trading skills by renewing my passion and openness to market possibilities. This mindset allowed me to enter and exit positions with less stress. I no longer felt compelled to stay in a position if it seemed unpromising, confident that another better opportunity would come along, even if SPY continued to rise after my exit.

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