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yalgaar

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The point with paper trading is to understand the strategies, see how a trade evolves day by day, see how the adjustments impact the trades etc...  Some people also do very small tracking trades for the same purpose (although some trades can't be setup to use a small allocations).    IMO, focusing on paper trade fills vs live fills is missing the point of it.

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2 minutes ago, Kim said:

Exactly! And I can tell you that I myself still do paper trading when checking a new strategy. It's not about being a new trader, and it's not about fills. It's about understanding new strategies and avoiding costly mistakes.

 

16 minutes ago, Yowster said:

The point with paper trading is to understand the strategies, see how a trade evolves day by day, see how the adjustments impact the trades etc...  Some people also do very small tracking trades for the same purpose (although some trades can't be setup to use a small allocations).    IMO, focusing on paper trade fills vs live fills is missing the point of it.

Agreed. It helps you understand basics of how strategy works. The dynamics of how all different greeks impact the P&L. I agree anyone and everyone should do it. I am not denying that. But being told you should paper trade when you are losing money following official trades does not make sense! 

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12 hours ago, yalgaar said:

My best wishes to you buddy! I can totally understand since I had exact same expectations and got very disappointed and annoyed! I do suggest the following since I plan to do the same:

1) Don't give up so easy. Keep taking the official trades just don't chase the price. If you get filled at official price, great otherwise let it go.

2) Pick 1 of the strategies here and read every single post in the discussion when the trade is taken. Ask questions and understand everything about it. Take your time to slowly learn it and master it.

I've read this whole thread . . .   nice to see it kind of come full circle - back to more of a constructive tone.   It is very hard to have good "context" when using remote "conversations" via the WEB - so we all need to have a flexible and empathetic attitude when discussing ideas, Pros/Cons, issues, etc..   Good to see that most of us really do want a positive and productive discussion (even if we have to circle around a few times).

 

In addition to your two points above, I'd like to add a third one (with some background):

 

One of the lessons I've learned (and the hard way - as always) is that it is VERY easy to actually get into trades . . .  and it is a lot harder to get out of them.  This is especially true when things aren't going your way.   Most non-professional traders tend to put too much hope and blind optimism into their trades - they don't manage their risk well  (getting into and especially getting out of trades).   It is easy to be emotionally involved with a trade - and not let it go and move onto the next.   Overall trade and risk management is KEY to making money in the equity markets - all of them.  I've learned to manage my trades a LOT better due to what I've learned on SO --- and this applies to general stock picks as well as options plays.  To me (outside of good entry strategies), it is the most important thing I do.   When something isn't working, get out of it, stop doing it, re-group, review your trade logs, seek help, etc..  Don't keep riding a three-legged horse, hoping it turns into a four-legged horse.  ;)

 

Also, we have to remind ourselves of the fundamentals --- did we have a good setup/strategy, has anything changed in the overall market or context that requires us to adapt/morph what we do?   These last few months have caused me to constantly review/analyze what works FOR ME and what doesn't.   In the end, we are all responsible for adapting what we learn on SO to our style of trading - given our time allotments, account size, technology we use, mindset, emotional makeup, etc..   I give @Kim, @Yowster and many others credit for showing their ugly babies, discussing what isn't working - in THIS market and being willing/able to adapt and change.   This is key . . .

 

Anyway, too much coffee on a Saturday morning . . . .  hope you ALL have a fantastic weekend and a very successful next week in the markets!

Edited by MaryPaananen

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6 minutes ago, yalgaar said:

Agreed. It helps you understand basics of how strategy works. The dynamics of how all different greeks impact the P&L. I agree anyone and everyone should do it. I am not denying that. But being told you should paper trade when you are losing money following official trades does not make sense! 

A suggestion for you, that is re-inforced with members posts when closing recent trades (DG, LOW, TLT).   Many members pick their own profit levels and close trades without waiting for the official trade closing notification.    You see people closed their own trades with these stocks earlier than the official - some at lower gains% compared to the official, some the same and some higher.   Since you indicate that many of the official winning trades have been losers for you, for a starting point it might make sense to pick a profit level you are comfortable with and set GTC limit order to close your trade at that profit level.

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Suggestion to @Kim & @Yowster

 

This might be a topic for another thread but wanted to mention this here. I wanted to start a discussion about the reasons why following official trades does not create the same/similar performance for the members and how this can be improved.

My understanding is that this is only due to not getting fills like the official trades. We need to talk and understand how this can be improved. Is this due to not enough liquidy? Is it possible to put this in numbers that can be analysed? Again I do not understand the reasons of not disclosing how many members are there in the SO community who we all are completing against to get filled. I think this information is vital to analyse what could be going on. This can be improved using such information. 

I have the following suggestions:

1) If you could disclose the number of members...we as community can analyse these numbers and come up with ideas so all can still benefit.

2) Official trades should be announced first. Only after 10 minutes of announcing the trade..it should be entered. This ensure official trades are also competing with the members. This will ensure official performance will reflect closer to what members are seeing as well and what members can expect.

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13 minutes ago, MaryPaananen said:

It is easy to be emotionally involved with a trade - and not let it go and move onto the next.

This right here is probably the Achilles heel of all traders, but especially retail traders. You really have to operate with the mindset of a psychopath and be completely void of emotion, which is obviously HARD to do. It is something I struggle with but am getting better with. I think one of the ways to do this is trade SMALL. Smaller than you think. Obviously if you have a tiny account you can only do so much. But if you are new and you come in here with a 100k account thinking you are going to trade 10x the trade size, then you are just a gunslinger and quite honestly, delusional. Start at 1x for as long as it takes to show some consistency managing the trades. Notice I said nothing about making or losing money. That is not the point. You can be a terrible trade manager and get lucky and make money. Are you following your rules? Do you understand what you are trading and what the risk is? Can you remain emotionally detached trading just 1x? 

 

This is why paper trading is absolutely useless (other than using it to understand your brokers platform and the trade mechanics). You don't get that feeling of getting punched in the face, kicked in the stomach, or getting chopped off at the knees. 

 

Edited by pintodave
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27 minutes ago, MaryPaananen said:

I've read this whole thread . . .   nice to see it kind of come full circle - back to more of a constructive tone.   It is very hard to have good "context" when using remote "conversations" via the WEB - so we all need to have a flexible and empathetic attitude when discussing ideas, Pros/Cons, issues, etc..   Good to see that most of us really do want a positive and productive discussion (even if we have to circle around a few times).

So very true. I only follow 2 rules when posting anything online. That is...Do not write anything online that you would not say it in person when face to face. Do not hesitate to type anything that you would say it in person.

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On 8/22/2020 at 10:36 AM, yalgaar said:

Suggestion to @Kim & @Yowster

 

This might be a topic for another thread but wanted to mention this here. I wanted to start a discussion about the reasons why following official trades does not create the same/similar performance for the members and how this can be improved.

My understanding is that this is only due to not getting fills like the official trades. We need to talk and understand how this can be improved. Is this due to not enough liquidy? Is it possible to put this in numbers that can be analysed? Again I do not understand the reasons of not disclosing how many members are there in the SO community who we all are completing against to get filled. I think this information is vital to analyse what could be going on. This can be improved using such information. 

I have the following suggestions:

1) If you could disclose the number of members...we as community can analyse these numbers and come up with ideas so all can still benefit.

2) Official trades should be announced first. Only after 10 minutes of announcing the trade..it should be entered. This ensure official trades are also competing with the members. This will ensure official performance will reflect closer to what members are seeing as well and what members can expect.

I feel like we start going in circles. We are trying to provide an advice based on our own experience and mistakes. Some people would take the advice, others prefer to make their own mistakes. It's really up to you which path you choose.

Regarding your suggestions:

1) We don't disclose number of members. As I mentioned before, I'm closing the service to new members periodically to provide a better experience to existing members.

2) We are opening a discussion topic first where all parameters of the upcoming trade are fully disclosed.

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4 minutes ago, Kim said:

I feel like we start going in circles. We are trying to provide an advice based on our own experience and mistakes. Some people would take the advice, others prefer to make their own mistakes. It's really up to you which path you choose.

Are you referring to a specific mistake here or you are making a general statement?

5 minutes ago, Kim said:

1) No we are not going to disclose number of members, and this is the last time I'm going to say it. As I mentioned before, I'm closing the service to new members periodically to provide a better experience to existing members, but seems like it doesn't matter to some members.

May I ask why would you not disclose this? My apologies if I have missed if you have already explained the reasons. I already explained why this information is vital to the format of this system is designed.

 

8 minutes ago, Kim said:

2) We are opening a discussion topic first where all parameters of the upcoming trade are fully disclosed.

Thanks for this. I will start focussing a lot more on the discussion topic for the upcoming trade.

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2 minutes ago, yalgaar said:

Are you referring to a specific mistake here or you are making a general statement?

May I ask why would you not disclose this? My apologies if I have missed if you have already explained the reasons. I already explained why this information is vital to the format of this system is designed.

 

Thanks for this. I will start focussing a lot more on the discussion topic for the upcoming trade.

I'm referring to general advice that comes from the mentors and veteran members, like paper trading, learning before trading, setting your own profit targets etc.

Regrading number of members - this is an inside information that is not relevant to you. Why not relevant? because nobody (including me) doesn't know the size of account members trade. 100 members trading a 10k account is equivalent to one member trading a million dollar account. Plus not everyone is doing live trading. A lot of members don't try "to earn back their subscription fee" but actually follow our advice and learn the strategies first. Many do it for 6-12 months, similar to mentoring programs where people $5-7k and don't expect to get it back after 3-4 months.

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34 minutes ago, Kim said:

I'm referring to general advice that comes from the mentors and veteran members, like paper trading, learning before trading, setting your own profit targets etc.

Regrading number of members - this is an inside information that is not relevant to you. Why not relevant? because nobody (including me) doesn't know the size of account members trade. 100 members trading a 10k account is equivalent to one member trading a million dollar account. Plus not everyone is doing live trading. A lot of members don't try "to earn back their subscription fee" but actually follow our advice and learn the strategies first. Many do it for 6-12 months, similar to mentoring programs where people $5-7k and don't expect to get it back after 3-4 months.

I already agreed to Yowster's post about very good advise about setting my own targets. That absolutely makes a lot of sense. A lot have been talked about paper trading and its value. No point in mentioning and explaining it in every other post. It seems counter productive.

 

40 minutes ago, Kim said:

Regrading number of members - this is an inside information that is not relevant to you. Why not relevant? because nobody (including me) doesn't know the size of account members trade.

Not sure if I am reading the tone wrongly here. But it almost feels like my suggestions and my question are not taken in a positive manner. I have already given all the reasons why number of members information is vital. I am asking the reason why it is not shared. Its your business, you sure have the right to operate it the way you want and not share information. But saying what I am asking is irrelevant is nonsense while I multiple times explained why it is vital!

 

Also would you consider taking the official trade after 10 min of it being announced like I mentioned in the earlier post?

 

 

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15 minutes ago, yalgaar said:

I already agreed to Yowster's post about very good advise about setting my own targets. That absolutely makes a lot of sense. A lot have been talked about paper trading and its value. No point in mentioning and explaining it in every other post. It seems counter productive.

 

Not sure if I am reading the tone wrongly here. But it almost feels like my suggestions and my question are not taken in a positive manner. I have already given all the reasons why number of members information is vital. I am asking the reason why it is not shared. Its your business, you sure have the right to operate it the way you want and not share information. But saying what I am asking is irrelevant is nonsense while I multiple times explained why it is vital!

 

Also would you consider taking the official trade after 10 min of it being announced like I mentioned in the earlier post?

 

 

At this point we will have to agree to disagree.

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Kim. For some of us newbies.  This exchange is very thought provoking for a lot of us. Even though, I’m my case.  I agree with you point of view.  It allows me to understand the different points of view and therefore make the subsequent post that much more relevant, when you understand the poster point of view.  
 

Troy

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Let me give some perspective from my own personal experience.   When I first joined SO in 2013, I was just a regular member just like everyone else.  I had experience with directional options trades but wanted to learn about the non-directional trading.   When I entred official trades, I didn't always get at or below the entry price but I tried to enter near the official price and sometimes waiting a day or more to enter.  I tried to not pay more than 1% or 2% more for straddles as they have lower gain targets, I'd pay a little more at times for calendars since they have higher gain targets.  I'd set my own exit targets, not waiting for the official trade notifications.   But, from the very beginning, I tried to adapt the trades to other stocks for my own trades.   And back then, it was more difficult because we didn't have the RV charting tools to make the analysis quicker and easier.   Once I'd mastered the in's and out's of the trade setups and how IV changes played such a huge role,  I began to come up with tweaks to the trades - that's how the entire hedged straddle setup originated right around the timeframe when weeklies became available for some stocks (I knew that in the vast majority of trades we didn't get huge stock price moves so the shorts would add to smaller gains and make small losers break-evens or small gains).

 

Even now, although Kim and I discuss some trade ideas, we react to each other's trade posts like everyone else when we try to enter.   I apply my same logic for entering Kim's trades that I did back in 2013, and I'm sure Kim does similar when I post new trades.  @yalgaar - regarding your suggestions around opening trades, I mean no disrespect but I feel these ideas come from your goal of trying to match official trade performance, where the SO goal is to educate as to why the trade setups look good when we enter them.   I spend a ton of time explaining setups and answering member's questions - happily doing so knowing that they ask because they want to learn.   I need to spend my time looking for new trades and answering the questions, so I don't want to add extra rules and restrictions as to when I enter a trade.   Since I've been at SO, in general, the disgruntled members usually are the ones that only follow the official trades and the happier members are the ones who try to use the knowledge to create their own trades.   I realize that a lot of people don't have as much time to devote to trading, so its more difficult for some people to adapt SO trades to their own stocks.   If you can only play the official trades, then don't go in and expect the same returns, but if an official trade has a 10% gain and your same trade winds up a loser then it's probably you who missed an opportunity to exit.   I always use the analogy of when a analyst issues a stock upgrade/downgrade - does everyone get to buy/sell the stock at the same price as when the recommendation came out?   Of course not and I don't think any investor would think so, so it always perplexed me as to why there is so much discussion about entering SO trades at exacly the same prices as the official (I never had that assumption when I tried to folllow and enter an official trade).    Based on the discussions and unofficial trades forums, many people are actively working on applying SO techniques to their own trades - and that is ideal and makes me happy that the time I devote to answering setup/strategy questions is helping people with their own trades.

 

For the official trade strategies, I'd encourage people to learn the stratagies and research their own setups because there are 2 main reasons that a good setup doesn't turn into an official trade:

  1. For the higher priced stocks, the allocation size is simple too big.   I know that when we were doing a lot of the NEHS trades, people were using stocks like AMZN and got good results but the allocation size was orders or magnitude higher than an official trade.   Same thing applies to some earnings hedged straddles for some higher priced stocks.   Also trades like call ratios on AAPL and TSLA over the last month or so.
  2. Some stocks don't have enough volume/OI to work as an official trade, but for an individual investor can work well.   I do these kind of trades a lot in my own personal trades (I don't mention them in unofficial trades because I know if I do then they can turn into a psuedo offical trade).

If you are unsure about something, post your setup and question in the unoffical trades forum (or send personal messages) and many members try to answer your questions.

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2 hours ago, Troy Mclure said:

Kim. For some of us newbies.  This exchange is very thought provoking for a lot of us. Even though, I’m my case.  I agree with you point of view.  It allows me to understand the different points of view and therefore make the subsequent post that much more relevant, when you understand the poster point of view.  
 

Troy

I agree with you. It's good to see different opinions and different perspectives, although it can be pretty upsetting to be accused of misleading marketing, when in fact we do zero marketing and zero advertising. All the necessary information is in the service description. It describe exactly what SO is what it isn't. All you need to do is reading the service description before subscribing to set the right expectations. But I guess people see what they want to see. Members who feel misled are free to look elsewhere and compare what other services offer. 

To add to @Yowster last post, at this point he is posting 70-75% of the trades, so for his trades, I'm in the same boat as the rest of the members. And I do exactly what I recommend other members to do: being patient, scaling in and out, setting my own profit targets, using slightly different strikes and expirations etc. Yes, I miss some trades here and there, and I also take some unofficial trades, there are plenty of them. My personal account performance is very close to the official performance, and I'm trading few times the official model portfolio size and keep higher percentage of the account in cash. So it's completely doable, even for larger accounts, and it's not just few members that learned to do it successfully, it's much more. But yes, you need a lot of effort and practice to do it. Show me how to make 100% a year with no effort, and I will close the service immediately..

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Based on discussions it is suggested to paper trade for 6 months before deciding to put any money into trades , does it means to pay 6 months subscriptions before deciding to continue with this system ? 
mans id someone does not want to continue he then paid for education ?

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22 hours ago, mike0a said:

Based on discussions it is suggested to paper trade for 6 months before deciding to put any money into trades , does it means to pay 6 months subscriptions before deciding to continue with this system ? 
mans id someone does not want to continue he then paid for education ?

It is suggested to paper trade for as long as necessary before committing real money. it is suggested to treat SO like any other mentoring program. For some people it could be one month, for some 6 months, for others 12 months. Members are free to cancel anytime.

Our first and most important suggestion is: Learn first, trader later.

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8 hours ago, pintodave said:

This is why paper trading is absolutely useless (other than using it to understand your brokers platform and the trade mechanics). You don't get that feeling of getting punched in the face, kicked in the stomach, or getting chopped off at the knees. 

 

I don't agree that paper trading is "absolutely useless," but I completely agree that it won't help a trader develop the emotion-management skills necessary to be a good trader. As you say, it's not the same when you know the money isn't real.

 

But this circles back to the basic problem under discussion. You've got members complaining to Kim and Yowster that they aren't replicating the official performance (or coming close to it). There can be only three possible reasons for that:

  1. the trader isn't sizing, entering, managing, and exiting the trade correctly from a strictly technical standpoint (completely excluding the emotional component); 
  2. the trader isn't sizing, entering, managing, and exiting the trade correctly from a strictly emotional standpoint; and/or
  3. the trader is doing everything correctly both technically and emotionally, but it is literally impossible to match the entries and exits of the official trades. 

 

Paper trading absolutely helps with #1, especially with complex options strategies. Changes in IV are difficult to model, and you really need to see them to understand them. Paper trading is far and away the best tactic to help with this, since you can practice the technical side and observe the trade behavior with zero risk. 

 

Paper trading won't help with #2, as you correctly say. But if #2 is the trader's only problem, then I humbly suggest that the trader really isn't at the point in their development yet where they should be paying someone else money for trades to follow. Good picks can't overcome trader emotion. Things have a way of falling into place once the emotional side is in order.

 

The theory being urged by a few folks is that #3 is the real problem--and apparently in some folks' minds, the only problem. On the one hand, I completely agree that no one will ever be able to consistently get the same entries and exits as the official on every trade. That's true of most advisory-type services, and it's definitely true of any service that trades in multi-legged option strategies. It is hardly an SO-specific issue.  

 

But on the other hand, it's demonstrably true that you can get better entries or better exits on many SO trades. The rub is, doing so requires the trader to be on point with items #1 and #2 above. So then we're back to the issue being either one that paper trading can solve (#1), or one that it can't solve but that suggests the trader should focus on the emotional side before paying for a service (#2). 

 

Just my two cents, as usual. Take all with a grain of salt, etc.

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15 hours ago, Yowster said:

For the official trade strategies, I'd encourage people to learn the stratagies and research their own setups because there are 2 main reasons that a good setup doesn't turn into an official trade:

  1. For the higher priced stocks, the allocation size is simple too big.   I know that when we were doing a lot of the NEHS trades, people were using stocks like AMZN and got good results but the allocation size was orders or magnitude higher than an official trade.   Same thing applies to some earnings hedged straddles for some higher priced stocks.   Also trades like call ratios on AAPL and TSLA over the last month or so.
  2. Some stocks don't have enough volume/OI to work as an official trade, but for an individual investor can work well.   I do these kind of trades a lot in my own personal trades (I don't mention them in unofficial trades because I know if I do then they can turn into a psuedo offical trade).

If you are unsure about something, post your setup and question in the unoffical trades forum (or send personal messages) and many members try to answer your questions.

Thank you very much @Yowster Very good advice. I intend to follow all this in my learning process. 

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16 hours ago, zeon said:

I have down some of my own trades and skipped some several trades. But I would be curious to know how many members are able o match the published  results  

Very few. 

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On 8/22/2020 at 9:42 PM, Kim said:


I'm in the same boat as the rest of the members. And I do exactly what I recommend other members to do: being patient, scaling in and out, setting my own profit targets, using slightly different strikes and expirations etc. Yes, I miss some trades here and there, and I also take some unofficial trades, there are plenty of them. My personal account performance is very close to the official performance, and I'm trading few times the official model portfolio size and keep higher percentage of the account in cash. 

Nobody has. But it's no doubt that SO strategy is profitable in a long term run! I have canceled my subscription about year ago but I use SO as my benchmark. 😊

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9 hours ago, OptionTrada said:

Very few. 

I'm curious how do you know that? Even I don't have that information. 

What I do know is that many members reported that they make well north of $50k/year using SO strategies. Pretty good ROI on $1k investment. Many people in the US (not to mention many developing countries) don't make that kind of income in their full time job. But it took those members much longer than few months to get there.
 

28 minutes ago, Ticc said:

Nobody has. But it's no doubt that SO strategy is profitable in a long term run! I have canceled my subscription about year ago but I use SO as my benchmark. 😊

Thank you @Ticc I still remember your post

"for me it is big satisfaction that I have made this trade before you did. (same strike, same price) The reason was as same as you had. I have spend lot of time with learning last few months from you and now it pays off. Thank you."

And for me it is a big satisfaction that many members are still using what they learned here even after cancelling.

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31 minutes ago, Kim said:

What I do know is that many members reported that they make well north of $50k/year using SO strategies. Pretty good ROI on $1k investment.

$50K return on $1K!!! You sure you didn't do a typo? This would be like 4900% ROI. Did I get this wrong?

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Just now, yalgaar said:

$50K return on $1K!!! You sure you didn't do a typo? This would be like 4900% ROI. Did I get this wrong?

No I didn't get it wrong. $1k is your investment in SO subscription fee.

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I respect everyone’s point of view and understand that some may have wanted the pot of gold delivered with the subscription.  My $1,000 invest has produced a 0% return.  However the education and dedication of the staff is well worth the cost.  Thank you SO

Troy

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I don't mean to sound indifferent as I remember feeling like this too.  I remember getting so excited about the official SO performance and I was day dreaming about all that money I was going to make.   Each time I saw Yowster and other make profits when I was losing money felt like a knife being jammed into my heart.   It sucked.  I get it.  

 

Based on my own journey - the sooner you stop trying to duplicate the official trades and admit to yourself that you cannot duplicate them the better.   Unsubscribe from the SO alerts and just follow the unofficial trades and the trade discussion group to see what people are looking at (many times you find these trades before the official ones giving you a chance to get in early).   

 

Are Kim and Yowster trying to pull a fast one on us?  No - but you also cannot replicate their trades exactly because some of these trades have low liquidity.   As soon as any market maker sees 100s of orders coming in at the same strike they are going to raise the price of the options.  This means you will always get filled on the losing trades and maybe get filled on some % of the winning trades.   This can easily flip a strategy that makes 50% a year to one that makes 0% per year.

 

So - once you admit that to yourself you have two options:

1) Give up.  Move onto the next guru who claims they can make you a millionaire.  

2) Figure out how you can make this strategy work.   Whenever you miss a trade you can complain which won't change anything or instead ask Yowster what exactly he was looking for when he entered.  Learn from him so you can spot your own trades and maybe get in before everyone else.  

 

 

I went from complaining about SO and quitting here to just closing out several calendar trades for 30% each.  None of them were official trades or even mentioned on the board here.  Just used the information Yowster teaches us and VOLHQ to find my own setups.   

 

 

 

 

 

Edited by FrankTheTank

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Thanks @FrankTheTank, I agree with almost everything you mentioned.  The only point I'd like to comment on is when you said " but you also cannot replicate their trades exactly because these are options with very low liquidity."    I avoid setups with very low liquidity (although I use them quite often for my own personal trades).   If we only used the indexes and high options volume stocks like AAPL, AMZN, etc we'd only have a couple of trades a month and I don't think anyone wants to see that.   I actually thought quite a bit about make CPB an official trade because its volume is never huge, and is a bit lower this cycle - but we have a track record with it and we typically can get fills near the mid on entry and exit so I decided to use it.   That said, your general gist about learning the strategies and analysis and applying them to your own trades is 100% spot on.

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The point's been made before, but even very high liquidity options can have their prices (and especially spread prices) temporarily disrupted when a sudden influx of orders hits. This is the algos trying to predictively front run the order flow. So I second @FrankTheTank's remarks. But also, I say again, there is no such thing as an options advisory service that doesn't suffer from this problem, especially ones that trade spreads or multilegged strategies. 

 

Also, maybe it's been mentioned, but I want to give Kim some kudos for allowing this discussion on a non-member board. Any prospective SO subscriber can see this. If this whole thing were a ruse or whatever, you'd think he'd prevent threads like this from being publicly visible on his own site. (You'd also think he wouldn't allow monthly memberships that can be canceled any time.)

 

Edited by DubMcDub

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@DubMcDub I'm actually glad that this topic has been created and it's open to non-members. I believe that prospective members can read posts from members like you and see the real value of the service. It also helps to set the right expectations and filter people who are not willing to put an effort or those who "cannot sustain losses". 

Of course everyone will see what they want to see, but we have nothing to hide, and we are trying to be as open and transparent as possible. "We are different" has to be proven by actions, not words.

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If I may post a contrasting experience to @yalgaar's...

 

I am the newest newbie when it comes to options trading.  After being a long stock investor for decades, I decided this year, after the crash, to figure out what options could do for me to provide a hedge. I did some free online courses, listened to a lot of podcasts, and then managed to lose thousands of dollars buying puts on a stock in an industry I am intimately familiar with, learning the valuable lesson (again, but with options this time) that the market doesn't care what a fair valuation is, and that it could stay irrational much longer than my options' expiration. I now realize this is a fairly typical entry for many a new options trader.  I then sampled a few trade advisory services and then ended up here, intrigued of course by the returns, but also by @Kim's articles here and on Seeking Alpha.

 

I joined SO in July.  Since then I've done 7 trades: 6 official (BYND, UBER1, UBER2, LOW, BBY, BILI) and one unofficial (XLNX). Only one has been a loser (UBER2) 

 

My tips, all of which have been gleaned from advice from members here:

 

1) As everyone here seems to repeat Ad Nauseum, "Don't chase the entry!"  For me, this means that if I can't get in within 2-3% of margin on official, I let it sit.  From a post here I learned how to plot the strategy price so I can see it move during the day.  I might place a day order for the first day, or even 1-2 days after the official notice, at the official price (or within 3% of margin if it looks like it will not go down), and then I just wait.  If it doesn't get filled, I just walk away from the trade. As Kim has pointed out, the prices do sometimes go well below the official.

 

2) Once I get a fill, I immediately set a GTC close order because I'm on the other side of the world, and I can't be bothered to sit in front of the computer all night.  For an earnings trade, if it doesn't get filled prior to the earnings announcement, I would plan on walking up before market close to close it, but I have not had to do that yet. My average GTC target has been around 10% return on risk, but I'm not stuck on that.

 

Apart from SO, I'm playing with both VolHQ and ChartAffair, and I realize now that I'm going to need OptionNet to visualize potential trades better. I use IB but their option "Performance" visuals are lacking. But that is all I plan on getting. I am now reading books by Wolfinger and Augen, and I'm fully aware that this journey is going to take years.  The more I learn, the more I realize how little I know.

 

My results thus far: for the 6 winning trades I have averaged around 10% (unsurprising I guess given my target, but very surprising to me given that the average time in market was around 3 days per trade), and I lost 0.5% on the one loser.  I'm glad to report that my first 2 months have more than paid for my subs!  More importantly, I've learned A LOT in just a few weeks, and the curve remains very steep, but here I feel there's a culture of mentorship, something I'm going to need.

 

Edited by betaboy3000
Formatting and spelling

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@gf58, wow what a gem of a post. It's one which needs to be read a few times, and on a regular basis. You are raising the bar very high for the rest of us mere mortals 🙂

1 hour ago, gf58 said:

So I pulled some data, identified some micro structure behaviour, got a sense of where the punji traps were and adjusted my approach.

I have a feeling that there's little nuggets of golden knowledge in there - if you feel like sharing it on a new thread at some point, then I for one, would be very grateful. But no pressure, and no expectation. 

 

Happy trading.

 

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@gf58 I went ahead and ran my numbers and I thought they looked good: So for the month of August with just one trading day to go I have closed on 8 SO trades----for me there were 7 winners and one loser. Overall performance after commissions was 8.75%--please see explanation below as I have already closed 2 active open SO trades.

 

I have already closed out CPB and KR for my profit targets and they are still open trades with SO---the main reason for closing these early is I will be spotty next week at being able to monitor the trades--my big winner this month was the TLT trade.

 

In addition using SO trade theses and using smaller allocations ( because I am still learning ) for these trades I added another 1.3% after commissions with 7 winners and 2 losers and actually the 7 winners came after the 2 losers--so 7 in a row. If I had used the usual allocations I use for SO official trades the gain after commissions would have been 6.3%.

 

My losers on my own trades were: BYND through earnings hedged straddle X 2, Winners were ZM pre-earnings calendar, PTON pre-earnings calendar, BBY earnings straddle, ZM pre-earnings calendar #2, ZM pe-earnings calendar #3, and CRWD pre-earnings Cal, and PTON pre-earnings calendar #2

 

Obviously I am more comfortable with the pre-earnings calendars than the straddles, but my comfort level is growing with time on screening for the straddles.

 

Next to try to learn better over time is the ratios--note I have not traded any of these on my own as I do not feel I have studied them enough to really understand how to pick high probability winners.

 

The real reason for my post is not to boast but to show other new members what learning the strategies and being patient and selective with entering trades can do to increase the odds of winners and add to overall returns/success

 

So overall a gain of 10% on the month--not bad for an amateur.....I think many others probably did better than this....

 

P.S> I am also in the Anchor Trades on EFA, IWM, and SPY and these are also doing quite well

Edited by porgie

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Thanks all.

 

I had some own goals through poor execution of the officials, missed some officials through not being able to get in but also got headwinds from some better prices on the officials and earnings ratios/VXX Fades. I count those as part of it because the value of SO is so much more than just the official trades, its also the unofficial ideas and most of all the feedback from other traders in the forum. I think that countless others hit the nail on the head that the best way to implement the SO strategies is to learn them like the back of your hand and execute them on your own. So perhaps its not a big surprise that some of my best winners have been ones I've done on my own. So @Kim I've probably done slightly worse than that on the officials but the learning I've gained from them/forum discussions has enabled me to add in some great additional trades....and because I'm only looking towards my own positioning that has allowed me to approach some less liquid situations which has expanded my universe of opportunities further. 

 

Great work @porgie! 10% for a month is fantastic by any measure. I find it very very helpful mentally to go through the numbers on a weekly/bi-weekly basis. I've said elsewhere that the key for me is on focusing on executing the plan as well as I can and letting the plan/edge in the plan take care of the result. Regular reviews give me the confidence to do this. It also helps give a bit of a learning plan of what I want to focus on next.  It looks like you've identified areas that you're more comfortable going out on your own. I'm much the same, I haven't had much success with earnings straddles...my official ones are fine but my self generated ones are not so good. Drawing from my experience with some of the less liquid ratios + other unrelated discussions, I suspect that the gap for me on earnings straddles is due to poor entries...my hunch is that because the avg gain on a successful straddle is much lower than other strategies, a good entry price is much much more important for consistent success. The learning opportunity will be different with everyone but until you review your numbers you cant begin to know where to focus your attention.

 

I don't know how the education system works elsewhere but in Australia its not uncommon for kids from fancier schools really stumble in their first year of uni. High school can be an environment where their devoted teachers are structuring the lessons for small class sizes to teach them exactly what they need to know to get a great result on the end of year exam. Uni on the other hand features massive classes where the unpaid tutors arent exactly motivated to throw a life preserver to an individual student who's falling behind. Its a bit of a culture shock as all of a sudden you realise that -syllabus aside- you've got to take charge of your own learning, assess your own abilities and develop a study plan specifically for you...no one else is going to save you from drowning if youre not prepared to try to tread water yourself. I couldnt ask for a better set of resources to learn from than those available at Steady Options...but if you only put in the contact hours and dont do any study outside of class then you're not really getting your full money's worth. Analogy aside: I couldnt recommend more strongly that members review their own numbers and set your own study plan based on this.

 

@zxcv64 unfortunately my approach wasn't all that exciting. I pulled some 5 second data from TWS via the API and worked up a bid/ask of the spread across a couple of sessions to get a feel for what the true mid might look like. I noticed that certain low liquidity legs have some really strange behaviour...The ask might be 1.95 and then all of a sudden the MM with blow the ask out to -say- 4.00 and then lower it back down to 1.95 by a cent per second...and this could be happening to multiple legs at the same time in the spread (occasionally cancelling out the apparent movement). I also noticed that putting in an ask at the right level would cause them to immediately update their ask their real level/skip the countdown.  I have no idea why this occurs but it it took some of the unknown out of it...or at least made me a little less trusting of the true/ONE generated mid particularly with low liquidity chains.  I noticed that these random spikes could throw the real mid off by 10-20% in one session...so although the mid might look stable in ONE the real price might change as soon as you put an order in. The best solution just seemed to be to throw an order for a single combo in several dollars below the mid/down at insult prices and then patiently step you way up..once you get a hit/establish the actual market mid you can then scale in from there. Not rocket science but its an improvement I never would have captured if I hadn't been launching my own trades and making myself focus on one thing at a time.

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@gf58 A quote from your post above

 

"The best solution just seemed to be to throw an order for a single combo in several dollars below the mid/down at insult prices and then patiently step you way up..once you get a hit/establish the actual market mid you can then scale in from there. Not rocket science but its an improvement I never would have captured if I hadn't been launching my own trades and making myself focus on one thing at a time."

 

That seems to capture the essence of getting into some high probability trades. I also learned if I have the time to keep an eye on the computer---is to adjust your entry price to reflect a decent RV throughout the trading session. Another new lesson "learnt".

 

See if others agree---say for instance a stock with reasonable liquidity has an RV of 5.0 on an earnings straddle 6 days prior and the median RV is usually 6.0--you also note RV stays relatively flat up to earnings and median T-0 RV is 5.5---so the setup looks good. The stock is trading at 100.00 at the open---so you place an entry straddle order a little bit low ( the 5.0 RV entry would be 100*.05= 5.00), so you start at 4.90-4.95 or so---now the stock goes to 105 a few minutes after the open. So the new entry at RV 5.0 would be 105*.05= 5.25. I've learnt to adjust the entry price a bit higher to get into some winning trades---in this case I may ratchet up gradually to 5.10-5.15 or so to see if I can get filled at a still reasonable RV. Perhaps at a smaller allocation, then scale in if the price comes back as you mentioned.

 

Thoughts from the group?

 

 

 

 

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@porgie this makes perfect sense, especially if you have a larger account and can scale in.

And lets remember: trading is a business. As in any business, prices are involved, and our profitability of success will always depend on our ability to get good fills. Every business revolves around this cost equation... If getting good prices was so easy, there wouldn't be any markets/any business...

Sometimes playing with orders helps too, increasing/decreasing by couple cents, pausing and resubmitting. It's a negotiation. In the same way you don't pay a full MSRP for your car (I hope), you should never pay an asking price for your options.

 

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13 hours ago, porgie said:

That seems to capture the essence of getting into some high probability trades. I also learned if I have the time to keep an eye on the computer---is to adjust your entry price to reflect a decent RV throughout the trading session. Another new lesson "learnt".

@FrankTheTank seemed to be getting some nice results with earnings calendars from tracking RV across sessions and entering when it veered lower; then turning it around quickly when RV veered to the higher end. Not sure of what tools you're using but a middle ground enhancement might be to spend a couple of minutes prior to each session recording RV prices at 15 minute intervals from the last couple of sessions (you could do this with ONE etc). This could give you an even higher probability but still practical target. To run with @Kim's analogy of negotiation, its always advantageous to know that that the dealer has quietly sold the same car for xx recently and then being patient enough to wait until they need to come down to your position to hit their sales quota.

 

NB. I did buy a car at sticker price once. I was a beautiful Alfa Romeo convertible with red leather seats and a jet engine under the bonnet. Obviously after a test drive my brain wasnt fully engaged. Mistakes are OK as long as they're only made once.

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