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The fool's game's not foolin'


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#11 NAV

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Posted 15 December 2017 - 11:12 AM

 

 

 

 

With $10 in the trade, it’s also fun to say on good days like today — Made $7900 today with my 10 grand in the market and now I’m flat with no overnight risk! What a fool am I?!

 

When the market moves in gaps with flat days (short range), the day traders look like fools. When the market moves back and forth in large ranges or a strong trending day,  day-traders look like geniuses. In the big picture i.e over the long run, what  matters is the sustainability of any system and consistency - whether you day trade or swing trade. 

 

I have been watching your system. It's pretty darn good on trending days. But what about those flat days ? Can you post a chart for a few of those flat days. I am trying to understand if the profits on winning days compensates above and beyond the losses sustained on those flat days, given that we are seeing more of flat days in a month than trending days. In years like 2008, your system would make a killing.

 

Good trading !

 

most of the days are good if ur long.....

 

 

Except down days, when we don't get to see you. laugh.png


"It's not the knowing that is difficult, but the doing"

 

"No warning can save people determined to grow suddenly rich" - Lord Overstone  (The great crypto mania of 2017)

 

“I am so bullish. I have to sit down and calm down” - Ralph Acampora laugh.png 

 


#12 da_cheif

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Posted 15 December 2017 - 11:33 AM

 

 

 

 

 

With $10 in the trade, it’s also fun to say on good days like today — Made $7900 today with my 10 grand in the market and now I’m flat with no overnight risk! What a fool am I?!

 

When the market moves in gaps with flat days (short range), the day traders look like fools. When the market moves back and forth in large ranges or a strong trending day,  day-traders look like geniuses. In the big picture i.e over the long run, what  matters is the sustainability of any system and consistency - whether you day trade or swing trade. 

 

I have been watching your system. It's pretty darn good on trending days. But what about those flat days ? Can you post a chart for a few of those flat days. I am trying to understand if the profits on winning days compensates above and beyond the losses sustained on those flat days, given that we are seeing more of flat days in a month than trending days. In years like 2008, your system would make a killing.

 

Good trading !

 

most of the days are good if ur long.....

 

 

Except down days, when we don't get to see you. laugh.png

 

why should i.......when theres an army doing it for me...if i did call a short term top (only my subs get that) doing it here all i ever got was grief .even tho there hasnt been many down days eh....top pickers come out of woodwork.....thats all they know....ol mcdonald had a farm e i e i oh ...with a top top here anda top top there...nickles n dimes   675ono  snort



#13 diogenes227

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Posted 15 December 2017 - 01:11 PM

 

 

The market’s first ninety minutes chopped out two short signals and two long signals before settling into an downward trend for the rest of the day.
 
That slide into the close saved the trade for the day. After an initial draw down of $1500 (on a $10K buy-in on each trade)
 
Size ranged from 72 to 90 contracts per trade.

 

 

 
What kind of STOP size do you use with this system ? I am assuming at least 2 SPX points (or .2 on SPY). With that assumption loss per trade on each contract (assuming a delta of 0.5) would be $10 or $700 on 70 contracts that you traded. I am using the lower end of the size you mentioned. With four losing trades, you would have lost $2800. This is in a ideal scenario without slippages and commisions. If you add slippages and commision, i would say the loss per trade would be at least $14. That would put the loss at $980 per trade and $3920 for 4 trades.
 
But you claim you had an initial drawdown of only $1500. Can you explain the math ? This is only possible if you use a STOP size of less than a point on SPX (or less than .1 on SPY). Is that the case ?

 

 

You got me. 

 

For the purpose of the blog entry I did all those calculations based on the TradeStation chart in the blog, which has a commission and slippage assigned to it.  The slippage number is not always accurate because it usually ranges from two to four cents per contract on those most traded strikes.  I have three cents assigned to the trade as a ball park number.  Sometimes closer to expiration, that number can stretch a bit on individual trades. The blog entry is just for discussion generally because its calculations are never that far off and its usually the subject matter -- the systems, timing, stocks, whether or not the coffee's perking -- that I think matters most there. I link to it on Twitter and StockTwits and Reddit and Facebook at times so its purpose is more general than here.

 

That being said, I went back and reviewed the actual trades based on your comments and you're right, there was more slippage than I reckoned but no where close to your calculation.  The chop chop at the beginning of the day cost $1927 instead of $1500, and I did not take the first put buy on the open because I had long signals from the previous daily close, reducing the final result on a splendid Thursday to 75% instead of 79%.  Boo-hoo.

 

There is math in the stops of course but not any that I focus on.  There is no range on the SPX or SPY to determine my stop.  What determines the entry and stop are the open and a moving average on SPY and the SPY options if that's the trade, on QQQ and its options if trading the Naz. They vary all over the place and they can stop out on the close of a bar that was bot on its open (that happens more often than one likes but it's usually no more than a little loss).  The initial entry has a tight stop each day but, yes, whipsaw days can kill you, and trending days are what you live for.  And, by the way, since it's a day trade, there is no over-night risk.

 

The approach I've developed for options now is all in the Link within the link above that I tongue in cheek call "The Fool's Game."

 

There are tons of options strategies for hedgers and institutions with deep pockets and massive portfolios to protect or enhance, but for the little retail option trader (or at least for me) that's all too complicated.  The Greeks are all Greek to me.  So in trying to develop this system I've taken inspiration from the greatest market guru of all time, Henry David Thoreau - "simplify, simplify, simplify." It either goes up or it goes down.  If it's up above its open buy the calls, if it's down buy the puts. Don't buy any size you that will make you sweat.

 

Good luck and good trading.

 

P.S. Here's next week's 266 call look like at the moment, the profit per $10K is the white rectangle on the lower right :

 


Edited by diogenes227, 15 December 2017 - 01:16 PM.

"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx.

I spent half my money on gambling, alcohol and wild women. The other half I wasted, W.C. Fields.

#14 bighouse1006

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Posted 15 December 2017 - 01:29 PM

I think you are a skilled trader. I ran a similar system years ago. Pretty much the same size per trade on a day trading basis. I ran into one major issue over the course of a year. You will probably see the same thing soon enough.

#15 diogenes227

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Posted 15 December 2017 - 01:52 PM

I think you are a skilled trader. I ran a similar system years ago. Pretty much the same size per trade on a day trading basis. I ran into one major issue over the course of a year. You will probably see the same thing soon enough.

 

Thanks for the warning.  Do you happen to recall the signs that was about to happen? 

 

It is on my mind, given that it might not be far off, that the time the turn takes to transition from a bull to a bear could be...shall we say...difficult.


"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx.

I spent half my money on gambling, alcohol and wild women. The other half I wasted, W.C. Fields.

#16 NAV

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Posted 15 December 2017 - 11:11 PM

dio,

 

Thanks for the detailed exlanation. Much appreciated. 

 

I will throw in my 5 cents as far as day trading is concerned. I have daytraded QQQ options and the ES futures between 2002-2008 and made money in that. So i know a little bit about day trading. 

 

Now i rarely day trade for a couple of reasons - the game has become too competitive due to algo trading and with VIX below 10, the range sucks for day trading most of time, except those 5-6 days in a month when we get trending moves in the intraday chart. Most importantly i realized it was not good for my health over the long term.

 

As far as making money is concerned, i think money can be made in any form of trading (daytrading, swing trading, positional trading or long term investing). It's the skill that counts. I have made money in all three types of trading. 

 

I often hear the phrase "There is no overnight risk in day trading". True. But all that risk gets moved to the day session. There is no free lunch. Multiple whipsaws, slippages, commisions are all real day time risk. And then we have non-monetary risks - watching every tick on the chart, high blood pressure, high cortisol levels. It impacts pretty much every organ in your body silently. That's a long term health risk, which cannot be monetarily quantified. Anyway, not much of a concern, if you are in your 20s or 30s, when your body can take the impact. Also this overnight risk is purely a psychological phenomenon. In swing trading, there is overnight risk only on the first day when you carry the position. If the market follows thru the next day, you are pretty much gauranteed a easy ride for the next 1-10 days depending on the size of the move. It's almost like free money without any effort, in contrast to the daily battle that happens in the battlefields of day trading. In my case, age taught me that lesson. Those 5 years of day trading seems like eternity to me, most stressful period in my trading career. I am not saying this flippantly, but carrying position is a routine for me like having dinner every night and i rarely worry about it. Only when there are some big news items do i keep checking the overnight quotes. Overnight risk is only for those who trade insane leverage.

 

Having said that, the health concern/stress part can be completely eliminated, if you can fully automate the system (mechanical system + Autotrade). I am yet to meet a single guy who has done that and has been profitable for a couple of years. Technologies like Google deep mind, which claims learning and intuition capabilities will soon start competing with humans. This game is only going to get tougher and tougher.


Edited by NAV, 15 December 2017 - 11:13 PM.

"It's not the knowing that is difficult, but the doing"

 

"No warning can save people determined to grow suddenly rich" - Lord Overstone  (The great crypto mania of 2017)

 

“I am so bullish. I have to sit down and calm down” - Ralph Acampora laugh.png 

 


#17 OEXCHAOS

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Posted 17 December 2017 - 11:59 PM

NAV, it's unfortunate that we don't have an <3 button. Gold there. :)


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#18 fib_1618

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Posted 18 December 2017 - 08:46 PM

NAV, it's unfortunate that we don't have an <3 button. Gold there. smile.png

 

Or a thumbs up button.

 

Fib


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