It is easy to find a better risk/reward. Just entering randomly will be already better than +90% losing trades. Pity that your suggestions are not serious. It could work, but throwing darts could work too. What is the use for the OP?
your assumptions are wrong. It takes 201 points for max profit--- however, as stated, the options can be traded out of at any point during their life--- perhaps just a random long entry would work also-- there's not much more the guy can do with $150 so i tried to add some structure.
No, he enters 200 points out of the money. So with 200 points profit he is at the execution price of his option (at the money) , which will have not much value. To make real money he should get far enough in the money. 200 points is not enough.
It's a lottery ticket type play. Why bother when 92% of the time the trade fails. Having a great risk reward is nice, but when you have that kind of failure rate it's really just a waste of time. In all honesty trading a forex account with 500 bucks is nuts. He should take the other guy's advice and go to the track. Put it on a horse. Yes. Made the donation that week. Made it a few hundred. The dogs thank you Surf. Which one is Atticus. Is he the same as Drownpruf? What ever happened to him ?
Trading when you cant trade with anything more than 500 is nuts...starting with 500 for many is a reality, not every one can swan around for a few years refining their plan whilst saving tens of thousands to start...
Do yoy understand how digitals work? He can be one point in the money and make 15x his initial bet minus commissions. surf
If one has the discipline to trade real small (1....maybe 2 lots) then maybe starting with 500 bucks isn't the worst idea in the world. See if your strategy works. In my opinion trading 1 lots is MUCH better than paper trading. To me paper trading/sim trading is good to learn how to use software, but that's about it. Seen a ton of guys who were All Stars paper trading, but couldn't do a thing once they were trading real money. Problem with forex though is a lot of those "firms" offer crazy insane leverage (FXCM offered 500-1). Guys can put in 500 bucks, and if they aren't smart/responsible can blow that out in a few trades.....
Don't thank me. You won the bet fair and square. Cool of you to let me choose the place. All good. Years ago I traded for a fund manager who did all those studies/correlations. We tested the hell out of every combination. Dow up/down 3,4,5,6 etc days, what did that mean for other markets. Tested vs metals, currencies, energies, interest rates. Tested what it meant for the Dow after numerous days in a row going one way. What did it mean the following week.....month.....3 months. We had a lot of success with it. I think one of the big differences was how we handled the risk. I was/am a big fan of having a hard stop in the market, knowing your "out". Also having some kind of game plan when to take profit, or at least take something off of the table. He wasn't. He believed in letting the trade play out no matter what. If the test said that if Copper was up 8% this week it meant that the Yen would be down 6% the following week then under no circumstances was the position to be closed before the end of the following week. To me was a crazy way to think. With his thinking sure, you can hit the occasional home run. But can also take a tremendous hit. We had a big position on the night of the London bus bombing. Were short SP's and long Bunds going into that night. I was in charge of managing that trade. Because I had profit targets out there (based on the risk we were taking and some technical levels) we had a monster winning trade and took a big profit during the SP crash/Bund rally. I was questioned on "why would I take profits" about 5 minutes after I covered the position. I argued that at some point you have to take profit. Funny how 2 hours later when the Sp's bounced 30 handles and The Bunds sold off 150 ticks I was told "great job". Man I am blabbing. Anyways....while I give you shit on here about trading at times, I do agree with your beliefs in testing. It does work. But that's only part of a successful trade. Without a solid risk management plan/plan to take profits it really means nothing. The plan also has to make sense. I think it's great that you are saying short the dow here at 18000, but to say your cover is at 15000 ? With the vix at 12 your target is really .....how do I put this nicely......insane. It's going to take 10 years for your target to be hit. If ever.