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"Secret Hedge Fund" Buys... Very, VERY Good


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#21 OEXCHAOS

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    Mark S. Young

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Posted 10 July 2018 - 09:00 AM

 

Mark,

 

2x is a healthy leverage. Even 3x is borderline manageable. The kind of leverage that CLX is talking about is 15x to 25x kind of thing, which is outright dangerous.

 

I used to use 5x leverage and trade the ES when my account was small. These days i don't go beyond the 2x lev ETFs.

 

 

I was back on the original point. :)

I agree with you, otherwise. I probably told you this years ago, but when I first started trading, the OEX options were brand, spanking new. My dad loaned me 10 grand and I added a bit of savings, and started trading options. At first I was very conservative, but I started getting hits. I got more and more aggressive as I ran a string of 39 trades without a loss over $100! By the time I was done, I was trading 400 lots of OEX options on a $150k account (this is 1983 and I was 19-20 years old). I had NO understanding of the leverage I was using, NO understanding of the risk I was taking, NO understanding of the need to control risk, and NO understanding of my own mortality.

The market painfully addressed these lacks of understanding for me.

All I can say is that I'm glad I paid some tuition and bought a car, as I'd not have had anything to show for that effort.

 

It did color my trading ever since, however.

 

Mark


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#22 fwsnkjv

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Posted 10 July 2018 - 12:38 PM

Wow, some great and very interesting lessons on this thread. Thanks to all for sharing the real world.

#23 CLK

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Posted 10 July 2018 - 03:30 PM

I think you can pyramid to a point. I don't want to try and compound 10 doubles in a row, no loss, I think that is

extremely low odds in today's markets. I do think that 4 consecutive doubles has good odds, so if I take just a $500

position and trade 4 doubles that's 8k, so I then take and put $7500 to the side and repeat with another $500, so the next

string of trades may be a breakeven or total loss, on a 5k account now my account is still over double. The system has

to be better than 50/50 and may have to stand aside some in an extended consolidation. There were only a few whipsaws

during the volatility, so I think it can be done, just have to be aware of the market context.