Yesterday, I opened this long call: Bought MAY 94 CALL @ $6.25 debit
Today, I got stopped out as it faced a resistance near 100.
Sold MAY 08 94 CALL @ $4.95 debit
(4.95-6.25)/6.25= 20.8% loss
What went wrong with the trade is I accidentally set my stop at 20% instead of at 50%. Had I done 50% I would still be in it now. 20% is WAY too tight.
So my new rule for trading long positions is to not place a stop at all, but size the trade for max loss upon entry (only risking for the whole trade what I am willing to lose on my portfolio). Luckily I sized this trade at 2% of my total account, but only lost 20% of that 2%= 0.4% of portfolio. Not too bad...
So overall, this was a good learning experience.
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