Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
hi wahz, i assume this is the VERY FIRST time in the last 3 years you feel the bear market is over, no?...<ggg>
those prior dozen or so bear market rallies obviously wouldn't fool ya, no?...<ggg>
i feel your hope...i feel your emotion...yes, i do...
just kiddin' ya...i do like your style though...
as for me, i don't predict, i don't even care, i just follow my system signals...improving my system is a lot more fun
than gazing at the fuzzy crystal ball...but that's me...<ggg>
peace (er...war) <ggg>
george
Marc, does this sequence fairly represent your trading results
3/02-10/02 100 -> 20 ( 80% loss)
10/02-11/02 20 -> 41.7 (108.5% gain)
11/02-3/03 41.7-> 46.8 ( 12.2% gain)
Steve, a few thoughts on your options trading designed to improve the results of aggressive traders aiming for 100% annual gains (like you and me):
you said your options account went
from 100 to 616 (516% profit)
....and then.....
from 616 to 123 (80% loss)
here is an approximate stat/math model of what happened to you
(simplifying assumptions yet the result is mathematically still valid):
*assume that your win probability is 60%
*assume that you are always 100% invested for each trade
*assume that average profit per trade is 40%
*assume that average loss per trade is 40%
*assume that you had 6 profitable and 4 losing trades
start..#1..#2...#3...#4...#5...#6...#7...#8...#9..#10
100->140->196->274->384->538->753->452->271->163->98
the above trades represent a winning streak of 6 trades (with 40% profit each) and then a losing streak of 4 trades (with 40% loss each)...
what happens is that one probably has at best 60-70% win probability with options...percentage gains of both wins and losses for options are large, approx. 20-50% for each trade...
due to the math properties of compounding 3-4 large losses will completely erase 6-7 large profits as shown above..
the only apparent solution is to
either
(1) trade smaller positions but more frequently
or
(2) trade large positions but use strict and reasonably small stop losses...
given the typical stats of 60% win probability and the math of compounding, large losses will almost always lead to a wipeout
(i will analyze your profunds trading later on after i observe it for a longer period of time based on your daily trading log on this thread)
good luck
george
ajtj, are you still in USPIX since feb entered at ndx 1005?
if so, what's your plan?
tia...george
hi wahz, you are either very lucky or very smart...you are not allowed to be both, right?...<ggg>
george (still watching your trades ... and being entertained by your posts as well)
ZEEV, were you EVER emotional about the market? If so, how did you achieve a transition to "unemotional system-based trading"?
ZEEV, so you think we don't exceed QQQ 25/NAZ 1315/NDX 1000 before next fri?
BTW, i find it interesting how some of my good friends on iHub are so giddy about Naz 1400+ coming soon that they can barely contain themselves (no names, please <ggg>) while you continue to adhere to systematic, rational, logical, unemotional trading based on your system...why can't EVERYONE be like you?
george
(i'm long equities but unemotional about the market, just following my system)
if possible, please check your entry date and post it...tia
did you enter uspix on 2/28? is it a 100% position?
hi paul...please post your daily trades in profunds, will ya? maybe options trades as well?...
now that i have gotten my system developed for trading ndx using profunds i would like to see if anyone anywhere can do better than my system...
so far only systems of wahz and wld look impressive to me...
i imagine your results should be comparable to theirs but i would like to see your trades posted to verify that...
good luck
george
steve, a few comments:
(1) it's quite rare for spx to go down and non-tech sectors to go up and even rarer to be able to predict this in advance
(2) spx normally goes up more than non-tech sectors since spx is pulled up by normally much larger gains in its tech component while non-tech components typically perform on par with spx (bkx may be an exception)
(3) spx 2 vs 1.5 advantage over sectors and the fact that non-tech sector dow jones indices are market cap weighted make it hard to beat spx with non-tech sectors
(4) cutoff point at 3.30 for sector funds vs 3.55 for index funds adds to difficulty of entering/exiting profitable trades in non-tech sector funds
(5) tech sector funds such as semis, telcos, and wireless and also japan 2x fund may be of more interest than non-tech sector funds
anyhow, i'll be watching with interest your profunds trades..
good trading
george
Larry,
(1) very few people seem to have methodological systems
(2) even fewer post trades based on their systems
(3) even fewer have their own boards
(4) i follow trades by those few that meet criteria (1)+(2)+(3)
(5) i post on the threads of traders in (4) so i can get focused feedback from them and perhaps generate some discussions re their systems
(6) i have already gotten a good idea of the systems of traders in (4) so i don't expect to post much from now on
except perhaps on off topics
steve, Happy Birthday!...
a few questions:
(1) why would you ever trade non-tech sector funds using profunds instead of just trading an spx fund?
(2) do you ever see non-tech sector funds go up while spx goes down (even if this occasionally happens can you predict such as divergence between spx and individual sectors)?
(3) since sector funds are traded at 1.5x index while spx can be traded at 2x index, is there ever an advantage in % gain trading sector funds vs the spx fund?
any answers would be great...tia...
george
steve, it would be great if you posted some trades on your new thread so one could draw a correlation between your market views and actual trades...this way one could discern what system you are using for trades (even if the system is implicit and not fully mechanical)
steve, will you post any TRADES on this TRADING thread?...
or should we rename it "Steve's Multiple Professional Opinions on Every Facet of Worldwide Stock Markets" thread...<ggg>
..just kiddin' ya...while still making a point...<ggg>
Hul, thnx for great info...a few points:
(0) it was NOT me who did work with fractals...also i never had any website...so, whose work are you referring to here?
(1) i wonder if being in the market every day is optimal since on many days the probabilities of up/down are very close to 50/50 (unless your signals are quite definite or you are riding a trend)
(2) position size as % of acct is really key imo...a very very difficult math/stat problem though...any more info from you would be great as it often determines the level of trading success
(3) this "smoothed-out" cash flow model closely corresponds to your results:
aug1 sep1 oct1 nov1 dec1 jan1 feb1 mar1
gain 10 12 12 12 12 12 10
before 100 110 122 122 122 122 122 120
cashout
--------------------------------------------------------
cashout - 0 - 0 -12 -12 -12 -12 -12
=================================================
after 100 110 110 110 110 110 110 120
cashout
Hul, a few questions if i may:
(1) does your system give you a signal every day, i.e. do you trade every day?
(2) do you invest 100% of your acct every time you trade?
(3) was your total gain 100% or more in 2001 or 2002 using your system?
feel free NOT to answer any of my questions (esp. no (3)) or answer them by PM...
btw i trade profunds (2 xNDX and -2 xNDX) using my own system where i also effectively make statistical predictions for next day based on certain ndx patterns with accuracy similar to yours...
i hope to exchange some mutually useful info with you in the future as you seem to have a very similar conceptual approach to effective trading...
tia...
good luck
george
i just bookmarked you...will study your posts soon...
will ask HARD questions afterwards...<ggg>
good luck
george
so.......DON'T trade.......
Steve, don't think...don't comment...don't predict...
JUST FOLLOW A METHODICAL SYSTEM imo
my best answer is this: you have to adjust your trade position size so that
max trade loss=(max stop loss %)x(position size as % of acct)
is acceptably small...for example if your
max stop loss %= 80% of position
position size= 50% of acct
then you are facing a potential loss of 40% of acct on a single trade...if that's too high then either you adjust stop loss or you adjust position size (or both)...otherwise you face a near wipeout if you get three bad trades in a row...
an exaggerated example perhaps?...well, it has happened to many traders unfortunately...
Larry, yes, i could try to program my system trades using wealthlab for example with a bit of patience on my part but the problem is that
(1) my system is not totally automatic (i decide on trades using a visual evaluation of the setups so there is a bit of wiggle room and it's hard to completely program these setups)
(2) my system is still (and probably always will be) evolving
(3) i find excel spreadsheets sufficient to get a rough idea on the results of my system trading over time
...as far as the trade size i decided to utilize only single position trades at either 100% of acct (more reliable ones) or 50% of acct (less reliable ones) when trading in my profunds acct...the reason is that i normally intend to trade for 1 day at a time and i have high confidence in the reliability of my signals..
wld, imo the trading system and the position size are two linked issues that cannot be easily separated...
i am trying to find a mathematically optimal answer for the position size given the following trading system characteristics: win probability, stop loss percentage, average gain/loss...
so i am interested in how top traders approach this issue both conceptually and in actual practice...
my goal is to distill best theoretical approaches used in actual trading into a semi-automated trading system...
and, surprisingly (to me), i find this goal to be eminently achievable despite the seemingly idiosyncratic and individualistic nature of the trading approaches employed by top traders..
(1) you have a backtested system...
(2) you trade using system signals in a disciplined fashion...
(3) you trade in the direction of the intermediate trend...
(4) you have incorporated a "stop loss"...
..based on all the above, imo your approach to trading appears superior to those used by 95% of other traders and should serve as a model of a successful trading system..
good luck..
george
Larry, trade size as a percentage of the total trading acct is imo a KEY and very difficult money mgmt question...the issue is risk/reward and more basically avoiding wipeout...
...let's forget for the moment all other assets and focus just on the trading acct...
imo qqq positions equal to minimum 25%-50% of total acct with perhaps up to two simultaneous positions are needed to achieve satisfactory gains in swing trading...
yet some protective mechanism (either stop loss or hedging) is also necessary...
Larry, you can't get off that easily...<gg> i never got the email that answered my question about your trade size...<gg>
so the ball is back in your court...<ggg>
steve, what's the strike?
Larry, while your 5.6% return over 2 months appears very satisfactory, i have to ask the KEY question: what % of the total acct is invested in each trade..
there are two complementary reasons for this question:
(1) if each trade is a large % of acct, then how do you handle being down 3-4% at some point (which occurred in a few trades)
(2) if each trade is a small % of acct, then the 5.6% return has to be multiplied by that small % resulting in an overall rather low return year to date
...feel free to ignore my question as i am perhaps prying too deeply here...otoh any info here would be very useful to all of us following your trades
..good luck with your system...i like it a lot..
..tia..george
hi wahz, statistically speaking you should NOT average down and double up with your current win ratio (90%)...please keep this in mind and do "the right thing" when you have the next chance to short/hedge...
statistical odds are VERY much against you at this point...
let's hope you break even on this trade and THEN trade "lite"..
...good luck...george
hi wahz, statistically speaking your win ratio (currently 9 out of 10 trades=90%) will ALMOST certainly decline soon...
so, PLEASE trade smaller positions for the next few trades..
...i'm rooting for ya...
george
hi wahz, how soon do you think will the Fed CUT interest rates again?.. April or a bit later?..tia
george
steve, are you 100% long in both ira and two 401k's so that these two accounts contain 84% of your assets and the trading account contains 16% of your assets?...
tia..george
steve, did you close the puts you bought today?...what was the t/a reason?..are you still long asia in ira/401 since yest?...
please ask Larry Dudash for info on low success rate for options traders (those who buy calls/puts and then sell them).. he seems to be knowledgeable about that while i am not
steve, apparently very, very few (if any) are making money consistently over a longer time period by buying calls/puts and then selling them later...
possible reasons:
(1) need to have a very reliable trading system with a high win probability
(2) need to have extreme discipline in trading to avoid large losses
(3) need to trade only certain types of options (likely ITM) with adequately distant expiration dates
(4) need to factor in premium dissipation in addition to price moves by watching vix/vxn/qqv moves
(5) need to be very conscious of high leverage provided by options relative to equities
...having said all that i personally have not traded options...just observed those that trade them and the movement in index prices and premiums vs options prices (for qqq/spx)
steve, what's the strike of your spx puts? i noticed your calls were OTM and was wondering why you bought them instead of MUCH less risky ITM calls?
tia...george
Steve: Important Question for you: why exactly did you sell your calls..was it because:
(a) your system indicated change of trend to down
(b) you reached your stop loss
(c) you just felt like doing it
(d) none of the above
same question re puts purchase..
tia..george
hey wahz, you are even better than i thought...i'm impressed...yet if you profit on your latest trades this will be 10th win in a row..even if you win, on average, 80% of the time, winning 10 in a row has the probability of
.8 x .8 x .8 x .8 x .8 x .8 x .8 x .8 x .8 x .8 = never mind <ggg>
so, maybe you should REDUCE trade size for some time?
options work in a fundamentally different way than stocks/indexes due to expiration dates and extreme leverage...
so one needs much more risk control with options imo..
for example, a single 50% (of total portfolio) option position may easily expire worthless within several days/weeks...
have you actually traded options?...if so what risk controls did you use?...