Not making money yet

[porgie 118]

 Congrats @gf58----7.8% in one month!!! Lets see--even 7%/month computes to 84% gain on capital on a year of similar and not unachievable months. Thanks for sharing and here's to more similar months!!

[Kim 7,943]

Thanks for sharing @gf58 and I really like your approach.

Our current August return on closed trades is 9.5% excl. commissions, so 7.8% actually comes pretty close, depending on your broker. 

[zxcv64 771]

@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.

 

[porgie 118]

@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 August 29, 2020 by porgie

[gf58 771]

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.

[porgie 118]

@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?

 

 

 

 

[Kim 7,943]

@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.

 

[gf58 771]

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.