Difficult Markets Anonymous.... thats what we should have here. 12 steps to quiting the market or ill that kills you. First off *they* (whoever they is.. maybe other people on ET - who knows, it sounds like it makes sense) say find something to specialize in. So for me I decided to make a concerted effort to learn the NG market. No matter what, I lose money in this market it seems. Furthermore, its as if I am attracted to trading it due to its extra difficulty and perhaps my lousy recent track record - but it all started with a killing I made in my first major trades in this market. I've long since given back that killing to this market. Deep in my personality I don't like to quit things that I make an extra effort to excel in. And for some reason I picked this market. I'm out flat right now, but compelled for some reason by this market. I literally have trouble staying out... Like a gambler's addiction. Compulsion is a better word. It gets to the point where I'm so obsessed with my position I have trouble focusing on things I know I'm much better at trading. Curious enough, my best trading is of Asian time zone markets ... I'm a consistent winner. I can honestly also say that my knowledge of those markets vs. US markets is probably comparable. Who knows why...?? maybe I just trade better late in the day at night - I'm starting to wonder. I've tried position trading, scalping, design and trade automated systems (to take the emotion out) all around NG ... and no progress. Just continued losses that drain away all of my wins entirely. Anyone else have a 'bad habit' they need to kick? I think mine is NG. (just gave up on trying to be long or even in this market... hurricanes probably coming tommorow)
Frankly, I'm uncomfortable with relationships where I doing all the giving. I have absolutely no compulsion to follow a market that only seems to take, take, take no matter how understanding I try to be. I had a look at NG some years ago. Just a look, you understand. That is one high-maintenance missy. I had the impression that she had someone on the side, and was only batting her eyelashes at me and using her feminine wiles to enrich her undisclosed significant other at my expense. But, hey, maybe it's true love in your case.
heheh.. i thought more about this, and i've tried a lot of other markets and lost and had no problem moving on (ie soft ags, gold, oil). it occured to me perhaps i was seduced by great trades with big wins when i first started trading it. She gave me love, now she hates me. I need a divorce.
Take a directional or vol-bet in the NG options. I haven't personally traded NG in a few years, but I have a friend who is a local at NYMEX in the futures. He earns his living filling paper on the futures, but makes a multiple of that in the options. He makes a directional bet via a bull or bear short straddle. Taking 20-30 deltas offers a premium of 20% or more over the atm straddle. He holds for 5-10 trading days or a touch of neutrality. 60-70% of the time neutrality is hit and he walks away with a quick 20-30% on premium.
in all fairness i'm not completely out. have a few calls left that expire in 2 weeks... i need to distance myself. but you are right - especially considering vols are relatively low right now, lots of upside on straddling here.
Man, I wish I knew what you were talking about. It's posts like these that give me an inferiority complex. Some time ago, I asked you for a good book on options, and you suggested Natenberg. I didn't really have the intention of jumping into options, but I wanted to know what you guys were talking about. So when Mr. Natenberg recently wrote his kiddy version, pop-up book introduction to options (I think it was probably just a transcript of a live presentation), I decided to dip my toe in that puddle. All kidding aside, I have no idea how you guys make money with options, although I have no doubt that you do. I just can't understand how you can deal with so many moving parts. And so, I guess I'll just stick to my knitting. As Clint Eastwood said to Hal Holbrook in Dirty Harry's 1973 Magnum Force, "A man's got to know his limitations." (I'm grimacing with clenched teeth as I write this.)
at the money straddle = buy a put and a call with strikes at 6 if the price of NG is 6 taking 20-30 deltas: define delta as the amount an option changes in price in relation to the underlying's actual movement. If I buy a call with 50 deltas, that means that a 1.00 price movement up will change the option value by .50. so he means the delta of the straddle goes from ie 100 to 130. ie (these numbers are arbitrary off the top of my head, so please don't pick it apart atticus): put delta.. call delta.. underlying position initiated 50 50 6.00 position closed 30 90 6.75 so you don't need a giant move to make a straddle slightly profitable if you don't let it expire quickly and/or the volatility even expands.
Thanks for the clarification. I do understand a few of the most rudimentary concepts. However, having a nodding acquaintance with how juggling is done is not quite the same as the act of juggling. As I mentioned, there are far too many moving parts for me, so I just tune out and stare out the schoolroom window. That's OK, though. The basic stuff I do with outright positions in the indexes keeps me sufficiently engaged and occasionally entertained.
I have determined that I absolutely suck at the futures markets. After this last beating I got, I made the wife promise to not let me daytrade futures for 2 years. Maybe I'll try again then. I haven't lost a crippling amount of money by any means, but it has been enough to hurt. My stock trading is on track for over a 100% gain this year. I hold everything for at least a week, and barely even look at my positions during the week. This is apparently the way I was meant to trade. I've tried some longer term trades with futures too and they haven't worked out either, so I guess it is a combination of the market and the timeframe that has made me successful with my stock system.