Yesterday, we broke down the first half of my trading performance from 2022.
Let’s quickly recap…
As the bear market took hold, Q1 and Q2 2022 actually worked out pretty well for me.
During my small-account challenge, I turned $10,000 into $130,000+ in just over a month.
Then, in March, I nailed my biggest trade of all time on the ProShares Bitcoin Strategy ETF (NYSEARCA: BITO) for $236,413! (starting stakes: $99,949.45)
But later in Q2, I made some critical mistakes that cost me dearly…
I lost nearly $100,000 holding Tesla Inc. (NASDAQ: TSLA) puts too far into the bear market rally. This was one of the most disappointing trades of my career.
Today, we’ll go through my trades from Q3 and Q4.
I’ll warn you … this was one of the least-disciplined periods of my trading career.
I’m sharing my mistakes with you so that, hopefully, you can avoid making similar ones yourself.
Keep reading to see part II of my year-end trading review…
After my big win on BITO in June, I made a few more solid trades before my performance entered a bit of a downtrend…
I traded the following positions toward the start of Q3:
- Apple Inc. (NASDAQ: AAPL) puts for a 99% gain and a $58,744 profit…
- The Walt Disney Co. (NYSE: DIS) calls for a 146% gain and an $11,289 profit…
- Amazon.com, Inc. (NASDAQ: AMZN) puts for a 168% gain and a $15,029 profit…
But later, in August, I attempted to make a trade I never should’ve considered…
If you remember, Bed Bath & Beyond Inc. (NASDAQ: BBBY) was entering an insane short squeeze during this period.
Usually, a supernova setup like BBBY’s will be an ideal opportunity for me to buy puts near the top.
But that’s the key. You must buy your puts close to the top, or you’ll get smoked.
Take it from me…
I lost around $70,000 — nearly all of my gains from my previous three trades — because I bought puts too soon on BBBY.
My mistake was not waiting for the first red day before buying puts. I was short on the front side of the move and I paid the price.
I’ve said it before and I’ll say it again … timing is everything.
As a consolation, I was able to recover around $45,000 when the BBBY chart ultimately rolled over, but it didn’t make up for the amount I lost on the initial puts.
All in all, I lost around $25,000 on the BBBY play when had my timing been better, I could’ve potentially made a small fortune.
These types of supernova short squeezes don’t come along very often. I’m disappointed that I didn’t capitalize harder on such a slam-dunk short opportunity.
I won’t make the same mistakes in 2023.
In Q4 I began zeroing in on a particular play — shorting the cryptocurrency sector.
It didn’t start well. Again, I was too early. And to make matters worse, I overtraded as well.
I lost around $70,000 on BITO from September to November…
The BTC chart flatlined as I was expecting a big move, killing my options premium.
To add insult to injury, when Sam Bankman-Fried was exposed as a criminal fraudster, BTC tanked from $20,000+ to $15,700 … I missed my entry and didn’t get in on puts.
It’s incredibly annoying to be correct on direction but wrong on timing. However, this is the reality of options trading sometimes.
So, after overtrading short-dated contracts in Q4, I’m employing a different strategy to catch any near-term downside on BTC.
I’ve built up a very sizeable position in BITO puts that expire in March.
This way, I won’t have to be as exact with my timing.
If crypto sees a big drop any time in the next three months, I’ll bank.
I’ve explained my thesis behind this trade before, but because it’s my biggest current position (and a large part of my Q4 trading history), I’d like to recap…
I’m betting that the crypto sector will see a significant ‘Black Swan’ event in the next three months.
Specifically, I have my eyes on two potential negative catalysts:
- The potential insolvency of Binance, one of two remaining large crypto exchanges.
- The potential implosion of Silvergate Capital Corp. (NYSE: SI) – a bank central to the blockchain ecosystem with 90% of its assets in cryptocurrency.
Even if neither of these events occurs, I still think there’s a good chance Bitcoin (BTC) is headed lower in the near term.
And I don’t wanna miss another big crypto crash!
In conclusion, I’m not particularly happy with my performance from 2022.
But I think doing this self-reflection and identifying my mistakes is the key to having a much better 2023.
I hope some of these lessons can help you as well.
Here’s to making bank in 2024! Onward and upward!