Putzer, you have lost more in mere months than most lose in a lifetime. It's really a shame what happened to your portfolio 2 years ago, that made you so angry, bitter and resentful, of disciplined and successful investors like his me. I tried to teach you and your pals about risk management, but you just wouldn't listen. And now, you are all broke, angry, bitter and resentful former investors, who lurk here for some unknown reason. Sad. Very sad..... and pathetic! NEXXXXXXXXT !!!!
<<< Putzer, you have lost more in mere months than most lose in a lifetime. It's really a shame what happened to your portfolio 2 years ago, that made you so angry, bitter and resentful, of disciplined and successful investors like his me. >>> Gody3 is clearly one of the trolls from the Option and Futures board I discribed earlier. Just like bruce_ follick. I'll be ignoring them both, and I suggest others do the same. You won't get any civil, useful, or intelligent discussion from either of them. Put Master!
Mark, I respect your experience, and I also don't for a second believe my strategy is "dominant" or superior (in the academic sense). So, don't take this as me trying to change your mind. But I will say: your comment about the profits being "your money" is exactly the market psychology I'm talking about. Walk away from this issue for a second, and onto straight equities trading. Why is there so much emphasis on "training" rookies to let their profits run while setting stop losses? Because it's against human nature. Human nature is to be conservative when winning and gambling when losing... despite what the statistics show. I still the odds work out, even if once in five years the $1 turns into $10. I still believe the statistics would show holding on for that last $0.05 is usually the right thing to do. It's like hitting on 16 when the blackjack dealer's showing a face card. It hurts to do it, but it's the "right thing to do".
You know, I do recognize my situation is a little different from most. I'm really trying to squeeze blood out of a stone with my trades. I'm working with ATM options, and only expecting to make ~0.20 per contract on average, and that's why I take so many positions. That's why the extra 0.05-0.1 mean so much to me. For someone taking only a few positions a month and looking to make $1.00 on it, their situation is very different.
<<< I still the odds work out, even if once in five years the $1 turns into $10. I still believe the statistics would show holding on for that last $0.05 is usually the right thing to do. >>> Regarding your discussion with Mark, I think the issue is not whether one should hold for that last $0.05 or not. The issue is how deep OTM is your stock, how many days remain until expiration, how volatile a stock and/or industry are you in, how much margin are you on, are earnings pending, how concentrated is your cash in this particular trade, how much premium is still on the table, ect... If I'm deep OTM, in a non volatile stock, with just 10 days to go, not over concentrated, with $0.10 - $0.15 still on the table, ect, I have a different R/R perspective than if there was less on the table, more days til expiration, I'm on sig margin, in a volatile stock, ect.... It's all about the "context" of the trade in question. Put Master
<<< It's like hitting on 16 when the blackjack dealer's showing a face card. It hurts to do it, but it's the "right thing to do". >>> Being a vegas resident, I can tell you that you are correct about hitting that 16. However, that's based on statistics. Investing is more about common sense and risk management. Hence, depending on where your stock is currently trading relative to your strike, the trend its been in, how volatile it's history of trading, what industry it's in, how concentrated your cash is, how deep OTM, how much time remains on the contract, how much premium remains on the table, ect...... common sense and basic risk management says, there may be times its wiser to close the trade early. Or to put it in gambling terms..... there are times you should initiate the "surrender rule". Put Master
Now here I thought I had found a post with 13 pages of intelligent discussion, until I got into it enough pages. Is there some kind of ET rule that evantually these discussions have to turn to crap? Anyway, I know Mark is a conservative trader and following his advice is probably a good thing, if you are conservative. But leaving .10-.15 on the table when it was only a .20 - .25 spread to begin with, I don't know. I do know that a strategy I used to setup and follow was shorting puts that had a .5 -.10 spread one day before expiration, say on the Q's. I didn't have enough margin to do enogh contracts to make it worth while. But I hit alot more winners than I would have lost keeping the same 1000 contract size for $3000 profit. For someone with enough capital I think it is a good trade in most market situations if you have a gambling streak to your trading.
<<< Anyway, I know Mark is a conservative trader and following his advice is probably a good thing, if you are conservative. But leaving .10-.15 on the table when it was only a .20 - .25 spread to begin with, I don't know. >>> I also respect that Mark is encouraging traders, particularly rookies, to take a conservative approach to investing. To lock in those profits when you got them. Afterall, the only thing that hurts more than taking a loss, is taking a loss on a trade that was once profitable. Where I disagree, is that he recommends treating all trades the same, regardless of each ones one circumstances. He doesn't care is that put is 10 days or 3 days from expiration. Or whether its 15% OTM or 30%. He should be TEACHING those rookies he's trying to protect, when to consider closing a trade down. He should be TEACHING them to "analyze" their trades for potential closure. He should be TEACHING them the skills of "risk management". Simply saying close everything down early, once you've got most of the profit, regardless of anything,... teaches them nothing. While Mark dislikes me, he is an excellent teacher. That's why I find it so surprising that he would rather encourage investors not to think, not to analyze, not to "consider" when it's time to manage risk and close it down, and when to leave it open. Put Master