Tim Knight - underrated

[Davidkot81 11]

Sorry to discuss a competitor but I wonder if anyone has thought of combining high volatility scenarios with the predictive edge using the strategy of Tim Knight.

Based on the fact his PROPHET/autochartist has produced accurate predictions 65-70% of the time, that alone makes me think he might deserve to get the Nobel prize in Economics

I also find alot of tastytrade to be lacking but I tune in daily to Tim's show and find it very insightful. There are also macroeconomic points to be discussed (short term increases in S&P but likely bear market to come in 2016.)

Combining a volatility skew based strategy (a-la Dan Passarelli/CBOE conservative strategy) with Tim Knight/ autochartist strategy seems like an informative path.

What do you think?

[Edwin 63]

Thanks for the suggestion, I don't use Prophet charts, I have never known what the difference between Prophet and normal TOS charts are in terms of features and functionality.

I follow TastyTrade, but not Tim Knight.  They only give him 15 minutes at 3:15pm EST.  I normally pay more attention to Market Measures, and other back study segments, and some of their call in segments, as well as ShadowTrader.

Anyways, for those that are interested in figuring out how the scan you are referring to works and how to set it up (I didn't know what it was or how to do it until I looked at these two links).  I had no idea TOS or Prophet had such a feature.

 

http://www.autochartist.com/think-or-swim-how-to-access-autochartist/

 

Can you go into more detail about the volatility skew strategy?  Do you have some examples?  

[Kim 7,943]

Thanks for posting.

I have absolutely no problem discussing other strategies or competitors. Our goal is to learn as much as possible and expand our offerings. Any discussion has a potential to help.

[Davidkot81 11]

Sure. Yes Prophet charts is incredible and even if it's accuracy were 55% it still would be worth an enormous amount of money. More intriguingly it also gives data relevant for the overall economy and sectors so there's some scholarly heft there.

This is where I want to craft a more probabilistic directional strategy that complements Kim's (likewise brilliant) nondirectional strategies.

With Dan Passarelli's approach, who authored "Trading Options Greeks" (and also runs another mentoring service which I am a customer of - disclaimer) he has some key rules that in the background accompany a strict understanding of the combined effects of all trades in a spread to evaluate the final values for delta, gamma, vega and theta. He is important because he traded and led education at the CBOE, and learned from Jim Bitman, one of the first option educators.

Number one, is that you generally want to trade credit spreads and condors and butterflys only in areas of high volatility by looking at volatility charts of the underlyings of interest. Volatility percentile should be over 50-60% when trading those types of strategies. Also it is preferable to engage in calendar/diagonal trades when you have nice IV skew where shorter term options have a higher volatility than the long term one you are buying. Volatility must be considered for every trade you do and if low should make you think twice about the trade (unless buying/debit spreads are appropriate).

The major downside is his technical analysis which I think is not sophisticated enough. Ergo, enter Tim Knight and prophet.

There are more details about his strategies and advice but I probably should stop there and I would ask him if you interested further. His books are quite informative.

[Davidkot81 11]

*Correction "even if its accuracy"

I definitely recommend "Trading the Close" every day M-F 3:15-3:30 et on TastyTrade with Tim. It is the best part of the entire site.

Edited December 18, 2015 by Davidkot81

[Davidkot81 11]

Someday maybe we can have a conference and invite the smartest people in options investing (Nassim Taleb, Kim, Passarelli, Tim Knight, Mark Longo) at a roundtable or miniconference..

Also.. Tim Knight doesnt do options (!). He only buys and shorts stock.

[mike_tee_vee 35]

Thanks for this info!  How do you determine the accuracy of the Prophet charts?

 

Also, what studies do you use in Prophet to determine market bias and direction of the indexes?

[Davidkot81 11]

Autochartist.com uses the prophet system. They have done backtesting showing all but 2 patterns have an accuracy rate of over 60%. Accuracy is defined as the underlying hitting the predicted target in the time frame referenced.

I am still trying to work out the best way to use the data.