I don't really follow Sweet Bobby's thread and therefore, I won't make any comment about his trading method. Those who trade this market successful for decades always keep big pictures in mind while trading smaller pictures. Doing so will help these traders trade along with market direction. I know you will keep question that it's impossible to figure out market direction and I'll leave that to you to do your homework because a sentence or two won't be enough to elaborate this complicated topic. Since you are wondering how some traders able to generate >100% return in a very short time frame, I'm going to show you below screenshot of my trades within last week from two trading accounts (I do this for the purpose of avoiding paying more taxes in Canada). Since I've paid off for my house and set aside a sufficient amount of money for living, I tend to use 1/3 to 2/3 of capital in each portfolio to trade from two trading systems that offers between 80% and 90% of winning rate. I'm done with explanation, which is unnecessary for me as I don't expect anyone to follow me as well as bothering me with PMs about how to make money in the market.
Thanks for the explanation. But I am still puzzled. You show a few trades that have netted you some nice profits, but its as if to say you are all in for these trades. If the 70% gain on this one trade is only 1% of your account, then how does this add up to doubling your money in a short time frame? Since you sound like your account is at least $100,000 (and this is just your trading account I assume), then are you telling me you're buying tens of thousands of puts and calls? Its like a guy day trading with $1000 in his account, using a $500 margin broker who just happens to catch a 10 point trade, hence makes $500 dollars, and says his account went up 50% in one day. Will this also happen the next day... and the day after that? I'm never quite sure how to evaluate performance from options, vs. performance from futures. Percentages are very funny because it is all based on the base value of course. If you're saying your account is making 100% per year, and you trade a 100k account, then this means you made 100k. If this 100k is broke up across 250 trading days, then this means you're making $400 per day. So lets say you made 80 cents on one of these options, which would mean that you had 500 options. This is of course all nice, but there are so many ways to work the numbers. Also, in this example, you aren't selling premium, to the best of my understanding, but simply buying and selling puts. So this example isn't exactly illustrating what you said about selling premium. Don't get me wrong, you still have 3 profitable trades in a row, but given that you're almost always right, I would expect to see 20 profitable trades in a row, or at least 19 out of 20. Anyway... you did say you don't want to go further so I respect that, but this still isn't a clear example of your long term win rate that is over 80%.
What do you call a win? If I make one cent on a trade is that a win to you? If that the case I win 95% plus on Scalping trades Commodities. I be a piss poor Scalper if I lost more than 5% and why I can average down. But the reality of it all, some weeks I am making less than ten bucks a trade and after fees based on original entry and why for me breakeven is plus one tick and why I can risk 12 ticks to end up averaging less than a tick in ES. But it comes down to 45-55% of my trades are plus one tick, and 40-50% are 2-13 ticks and the 5% is , minus fees to minus 13 ticks. I stopped recommending to many on learning how to scalp because each tick means so much and you do have to watch and study how to read the Dome. Extremely few weeks in a year are 0% losing trades for the week and it is getting tougher and tougher to scalp, but not cause the HFTs but my thoughts of less retail traders coming into the markets to lose. One of twelve signals I use is a momentum move of going with the trend and half of those I don't take cause they are too often where other trades I have on are getting out where the "mom" trade being place by many, so other eleven trades are generally going against the retail trader, and most of my signals are based on opposite of the books. I know why retail is taking their trades most of the time and I am betting they are going to fail so signals are generally based on failures. I know where they are not going to get in, so I get in based on some indicator many are using, and I know within a tick of where retail will be getting in for me to get out, so I provide liquid markets for others to play. I know where most are placing their stops so I am often waiting for HFTs to kick in to "hook" is all the weak players to trigger their protective stops where I am there to take other side, now believe it or not, most retail had the right direction, but didn't have a wide stop, and market resumes in the original direction of the newbs, many get courage to jump in again which is near where I am getting out. I play this game 20-40 times in first hour. Took me long time to figure this out and I am still learning. But once you stop thinking about reward and concentrate on risk, you might be able to turn your life in trading around. Long term and short term overall positions, and when I speak of overall, that is including hedging. Now when you speak of those who trade for funds or hedge accounts for banks and brokerages, there is many stocks and ETFs they can never trade cause lack of volume on the options, so one time being smaller actually helps. There are many ETFs and stocks that have many gaps, more of what money managers can't handle. I get the direction right mostly trading stocks commodities and options, but what is your definition of "right", when I buy a stock/commodity then use options as my hedge, if both sides nets between penny to over hundred thousand dollars 90% of then time, you will think it is impossible. On long term I average 4% to 15% wins on instruments of commodities per year by selling new highs/buying new lows, I am going to lose often, have the hedge well to recover. And hedging, you have to learn on your own, I doubt anyone of site is going to share how to do well as so much time is spent on how to do, not much books on this material, it is like Spreading Commodities, there are ZERO books on this subject as I have never found on how to make an incredible living Spreading, just ask Bones how well he trades them. If I was starting to trade, I would learn Spreading and Selling Options. It is very possible of seldom having losses doing options, I now spend over 75% of my free time studying risk, and what do I have to do to hardly ever have a loss. You won't be hearing me talk about profits and making most of those, if you not losing often.... Yea, their are some pretty smart members on this forum that I once over looked cause I was believing in other concepts than them, so I am rereading much now of earlier posts from prior of 2005, but there are some newer members who are sharing now as well. Yea, many can't understand what I am blabbering about, just finding more ways to get better at the game. I am just trading 100% of my 401k and Roth now, so don't have taxes to pay right now or none by trading Roth, wish they increase what can be placed into that. Until you do the numbers and learn by doing about selling Prem, humbletrader2016 has it right. I have found you might not make money on each trade, but that does not mean you have to always lose either. And keeping open mind can lead one to totally different way that has possibilities.
hmm, seems you are one of the people who breed money whores. (no disrespect to your gf) Since when do gfs need to be supported FOR YEARS? Does she not have a job or education? And, why not getting married? Spent all that money on that house in the "upper class neighborhood" so that there wasn't money left for an engagement ring? Joke aside, stating how successful one is on an anonymous internet forum is like me stating I have worked and made millions in my 15 years as bank and hedge fund trader. Do you believe me? Whats the point of me stating it? It does not make a point. P.S. The above was not a joke. Marry that broad if you love her ;-)
Hi Handle... thanks for your post. You're absolutely right that it all depends on how you define things. I'm going with what he initially said about how he gets the direction right almost all the time. This to me means that he isn't scalping, and it also means that he isn't getting out for +1 tick and calling this a win. Based on the 3 trades he shows, he really was playing for general market direction. On one, where he bought a put to short, he got out with just a small profit, but still, these were all held for at least a day it seems so its certainly different than what you are doing. In regards to options, as you mention, your win rate for selling premium can be high, as he states, but he is showing example of buying options, not selling them. Also, if he was getting market direction right most of the time, there would be no need to hedge. Since you talk so much about hedging, it means that you aren't going to say that you're getting it right most of the time. Heck, if you were getting market direction right most of the time, you probably wouldn't even need to focus on risk so much. I mean no disrespect to @humbletrader2016 , but it was obvious to me that the vague initial statement of getting market direction right most of the time and having a 100% profit in a short time needed some definition. It's very easy to assume it means one thing when it really means something else, and this something else might be completely a different than what many would assume. I could say something as simple as "I win most of my trades", but if my R:R is messed up, I could still be net negative in terms of PnL. Anyway, I do appreciate him posting the chart because it at least gave something to talk about, but the details are still vague and saying that he is getting market direction right almost every time, especially for swing trades, is a very bold statement to be making which I think needs further clarification.
Few things that I want to address you from my posts: 1) You could see both of my trades shown from my screenshot were held overnight and therefore, using the term "scalping" here to describe my trading method is incorrect. Since time decay cost cuts into my trades quickly, especially for those overnight positions where the cost for each overnight holding is few extra ticks before realizing gain, any scalping or day trading position that carries into the next day is a dumb move; 2) Like I said before, I use 1/3 to 2/3 of capital in my portfolio to trade. That means I use ~33% to 70% of whole portfolio from each account for each trade, which is equivalent to few hundred contracts per each transaction. Yes, it's risky but this is what I've been doing for years and guess what, I'm still here alive. Besides, I don't hedge my trades and I don't trade on margin since I'm sticking to buy calls and puts these days. Again, there is no need to tell me about risk stuff because I know it very well and been through it much longer than most of you. The fact is I already spent enough time on risk mgmt 101 lesson many years ago for a guy who worked at a prop firm with buying power of > $1million, where only a small size of outstanding floor traders were granted such high buying power. Lastly, EliteTrader is place for a group of financial traders that help each other work through the tough and lonely journey of trading profitably. So, I'll stop bragging myself from now on. All I'll do is to drop by and leave some opinions to novice traders whenever I feel like to. By the way, this is not the only forum that I come here for a visit because I've been quite active in some other forums for many years. So, time is precious for me to spend on other things and I hate to convince myself to anyone for anything on the internet, like in the old days to convince those who didn't know what technical analysis was and etc.... CIAO
Wow! This thread went off topic REALLY fast! I'm happy to spark some lively debate anyway..lol. As we are going off topic, I'll post this: http://blog.topsteptrader.com/funded-trader-jamesem-fano-italy
"JamesEM takes his time and identifies what he is good at. To cut his losses" You need an Edge. This job ain't only about cutting your loss. Your performance is a bit better than Average (Due to luck) ? I mean ... Max (Mean) losing day approximately equals Max (Mean) winning day ... P(G) almost flat. It's a bit too fragile for my tastes (Bell Curve). You better experience no issues at all otherwise all this hard earned "Ca$h" could easily disappear in the blink of an eye. To be more Quantitative : Your current advantage is exactly 3%. So you shouldn't bet more than 1.5% per trade.
I didn't say that. TST did! Re: Edge- I have one. NOBODY can do much better than "a bit better than Average". EVERYONE is subject to luck in the long run. If it's too fragile for you, that's fair enough. But it's ROCK solid for me! I've had all life and the markets could throw at me while collecting that data (17 losing trades in a row, two deaths on the same day, mental illness...the list goes on) so I have no fear of what the future may hold and I'm just enjoying the ride. If (when!) I fall off the proverbial trading/life horse, while people like you (I don't mean that to be derogatory) pick apart my performance and find things to be down about, I'll be busy dusting myself off...ready to get right back on again. Good luck!
"After years and years (10 to be precise) of struggle and fleeting success, it would appear that I have now become consistently profitable over the long haul." I understand that after 10 years and an Nth succeeded combine... you've come up with a ROCK solid strategy. Now it's time for you to finally make some bucks. Since whatever's said about your strategy, time is the only judge. However I believe that you're biased... The industry is taking your money while ET Members are only allowed to strike your little johnson. Good Luck.