Jon,
This trade reached ‘Max allowable loss’ point with 37 days to go. When I closed Bull Puts my P/L was somewhere around -2,500
A typical IC can make anywhere from 1,600 to 2,500 on a 10 lot, so a losing trade shouldnt lose alot more than what it can make if everything goes well. The market moved almost 3 standard deviations in 1 month, I made adjustments as I planned but this trade was getting away from me. The worst case is that if I did nothing this trade could erase 6 months of profits, the best case is I could have continued to make adjustments and this trade would have lost ‘less’, BUT for the next 4 weeks I’d have to commit more time and mental capital to this trade than I wanted to. So I pulled the plug. I went back and reviewed this trade a number of times and thought about what could I have done differently to have a better outcome and the answer is nothing. Well, I could have closed it for +5% in the first 2 weeks but I didnt get the memo that the wheels are about to come off this train. So the takeaway here is, have a plan before entering a trade, execute that plan when the time comes and IF/WHEN you reach your Max allowable loss point – dont argue, negotiate and/or change the plan, just make sure you live to fight another day.