Dude, your telepathy is working overtime. I was going to respond to you - with a pic of Jack Nicholson and a caption of "here's a man selling a call spread" - but decided not to at the last moment.
In this video, I am innocent Danny and you are Mr. Hallorann explaining options to me. And then I ask you to explain call spreads. In an alternate universe, I am Mr. Hallorann explaining to you, Danny, what futures are. And then I explain to you directional bias. Dude, we should both go visit room 237. It is, after all, Halloween week. Spooky!
I find myself very much in simpatico with the above reaction to the above statement. It would be nice if it could be demonstrated, but my experience is that you can often show something to others who disagree with you, and they will simply refuse to believe it. What would really be nice is if someone who is not a liar actually taught them how. If you are doing this, then you are rare indeed. But knowing squat about options, I have no idea whether this is the case. I wouldn’t dream of disagreeing with this. But here I do differ. I find this statement akin to the one above (i.e., “there is no profitable system”). That a series of losses is absolutely normal to the best of traders and best of trading methodologies does not automatically mean that developing such an approach is necessarily and unavoidably futile. I didn’t read much else of the white paper except that I did notice something about there being a ton of studies proving the above statement, or something similar to it, to be true. That’s something else I would not question at all since, again, “a series of losses is absolutely normal to the best of traders and best of trading methodologies.” But before anyone can say it is true of ALL methodologies…well actually, they probably shouldn’t. The closest they can get to stating something like this legitimately is to say it is true of every methodology tested thus far, suggesting a high probability it is true of all those that have not been tested as well. But until they test them all, they don’t really know what all is out there...not for sure.
Well, you might find me even more weird. We do both. Directionally trade. Trade with hedges. Trade Inverse Correlation positions. Sprinkle options all around all of the positions. With this though, I'm going to attempt to make this insanely simple. I won't be getting into short gamma risk near expirations, or IV, or any of it. I think people can get into that later. But at first, I'll be keeping it to model where I think new option traders should begin? Spreads. And then, keeping even that simple, without getting near all the other stuff.
Indeed. This is why we set this example models up the way we did. I tried to build in a way, so that when (not if) they do that, because "they can tweek it and make it 'better'" ... they look back, and this dual model is still kicking out results ... and their own stupid is sorta highlighted. Like ya say ... I can't stop them from doing something stupid. All I can do is show them their stupid, against the backdrop of a Grid that is working ...
It's why that statement followed the one that proceeded it. "One of the worst things a new and aspiring trader can do, is try to discard a perfectly viable trading method that encountered a series of statistically normal losses in order to “hunt up a 'new method'” to avoid such discomfiture. This leads to an endless cycle and futile search for a method that avoids a series of trading losses." One statement follows the other. IF you try to hunt up a new method to avoid discomfiture, by definition, the trader is "method hunting" ... and searching for a new method for all of the wrong reasons.
I disagree. The second Johnny went into that maze I would have went back to the hotel and been chilling with his 19 year old Eastern European nanny, while he froze to death.
So, to begin. There will be posts, as moves are made ... live. The track record will be built, live, with my comments. This is not a 'revolutionary model'. Not by any means. This follows the point in the white-paper. In fact, I think some have mentioned that in certain Geographic areas ... (Chicago, etc.), it's pretty common. There will be links, linking back to key concepts and posts, and to a spreadsheet (I'm not against spreadsheets for keeping recods, per my post in another thread. Just spreadsheet guru's who think trading can be broken down into some spreadsheet fomula) To start a model out right? We're going to start November 1st. Then, we'll have a full month, and can build a grid, that will be accessible at any time, as the performance moves into the future. I figure to demonstrate something that new retail traders could attempt? I'll start it out with $5,000.00 It could really be run on any amount, down to $3,000 ... and is probably scaleable up to ... maybe $10 M. You'd just have to adjust the instruments being used. November 1st will be the go-date ... As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below! _______________________________ Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437 Spreadsheet: This is Coming November 1st