On paper, that's good advice. But in reality, it's not likely to happen. Compounding for 30-40 years is great but those that attempt to achieve it are generally long term mostly buy and hold investors who participate in the bear markets as well. And then along comes a verrry "special" year like last year that brings them all the joy of Pepto Bismol and a 201K plan. Staying out of bear markets is good advice for investors but a dubious reality, for most. However, for traders, it''s the "bestest" time ever because markets don't melt up and they sure go down a lot faster than up.
honestly dudes...the best thing for me to do is daytrade QQQQ, SPY, AAPL or NDX options...offers WAAAAAYYYY MORE leverage...this 'credit spread' stuff is crazy!!
Capital preservation can manifest itself in many ways..like simply reducing a portfolio's beta, or staying defensive, or having a consevative asset allocation that may not outperform during powerful bull markets but will not sent your portfolio down the drain during the bear market. Portfolio rebalancing, too. I know these are bad words in a trading forum but the average investor ignores them at great hazard, and seems to do the wrong thing at the wrong time. Compare a chart of XLP vs XLF or XLE going back 10 years. Even though XLF and XLE outperformed, the investor had better have gotten in at the bottom end of the range to make any material gains, and how often does that happen. Simple things like being able to throw an additional 50K in during a selloff will give investors a bonus during any subsequent rise. So can buying the ETF that sold off the most and selling the sector that trades +5X its 10 year trading range. Reversion to the mean is a concept that most average investors cannot or will not comprehend. Bottom line is sheeple ain't wired for this game. Even this poster has had some material drawdowns..then I dixcovered options. Take care Tom
A large part of trading is finding what suits your personality/ trading style. Some folks do very well day trading but being in front of the screen all day might not be for them or other time constraints rule this out. I believe not getting greedy and sticking to a good trading plan you can make respectable returns in most trading strategies. Respectable in my opinion is in the 30% yearly rangeâgive or take. I agree with the other posters that yes it would be nice to start out having a huge account but if you consistently make decent returns and have discipline the account will take care of itself - over time. I have been doing credit spreads for a number of years with success and have documented my trades over at collective2.com with a trading system named: Index Spreads, for almost 2 years now. Returns are: 2008 +62.60% ROI and +31.30% on entire account and so far in 2009 +64.80% ROI and + 32.40% on entire account (I only use half of my trading account per month) I do have a website that has a much easier to read track record than the Collective2 site etfcreditspreads.com. So even in this wildly volatile environment, of the past couple years, this strategy I believe is still viable. Dave
Was there ever a time when you could make easy money selling premium? People have been blowing up short gamma for as long as I have been in the business (25 yrs).
I completely agree the strategy is viable. I looked at your plays and find them quite interesting. Closer than what I play, but interesting. Though I moved from playing the SPY to ES, CL, etc... How come you have not?
Very interesting post coffee898. I must say I tend to agree. Besides, one must respect a guy who's been here 4 years and only 2 posts. Guess it means when he says something it's gonna make sense