Okay trying to figure out how to play this. One of my system signaled. Now I have tested this system both on futures and binary options, and it does great on both but on the binaries it doesn't have the hairy moments nor the big winners and this system has both of those. The problem with the binaries is that I don't get as much leverage. And I felt like binaries were my best bet given the extensive downside risk. However, I found a 1290 to 1330 spread. I pay about 2 points of premium and with a $300 max risk then I have $894 of upside potential. This is would be the same as paying 2-3 points of premium and getting a stop with no knockout. I could use the master spread I wanted too. Given the environment, I felt I'd rather pay a slight premium and have more limited loss. Considering it, playing with the spread versus the binary does give me some potential to hit something big while also limiting my maximum risk. First, I believe we will close above 1295. I do feel there is a higher then normal probability that we may touch 1285. Scenarios 1. The market closes at 1285. My loss $330. 2. Market closes at 1296. My max loss $150. 3. Market closes at 1317. My profit $480 4. Market closes at 1315. My profit $420 5. Market goes to 1289 and bounced back to close at 1305. My profit $120. What would happen with binaries.. best price I can get is 1296. I go long > 1296 @ 50/50. If market closes at 1297 I profit 100%. If market closes at 1295 then I lose 100%. The binary is not bad because it does take away all the spike risk. However, it also limits my upside potential. While I am risking $330, if we assume price stays exactly where it is then the probability of that happening is not nearly 50%. Right the 1290 binaries are basically saying that its a 75% probability that we will close above 1290. Therefore there is a 75% raw probability, whatever you want call it, instant probability or efficient probability that I'll not lose the maximum amount. I don't know. If I were at max risk then I might take binary off too just to start to track my system using the binaries. But, I'm at max risk. The other way to play this would be to buy a binary strike > 1314 which gives me $430 profit with only $72 risk. hmm
Here I something I just figured out that I didn't even know! Even though I pay the premium, I also get the premium. What I mean is that my spread should be down about $90. But, they don't want to drop the price because the risk is so great. interesting In terms of getting futures like behavior the spread is better. I've traded this system on futures for sometime now. But, in terms of the best system the binaries are hypothetically better. The decision whether to use futures, binaries.. basically if you have a very high win % system then the binaries probably will be best. Perhaps binaries are the best bet for this system. It is difficult to say. This is a good system for binaries. But, it does limit that possibility of getting the big win. The only problem with binaries on this system is that this system isn't all that frequent. I feel like I could a bit more work with it and maybe have something really strong. I don't to give up the potential of getting a big win. I mean especially when I think I'd have no problem trading this with futures with much greater max risk. So why not risk $300 max risk for potential.
What's the problem with the current market story. A lot of people saying oil was the reason for this down turn. But, what I seen was the programs hitting the oil were hitting the futures. And, you seen that today. I mentioned this before. The programs maybe are wrong. This is the problem with the bear story is that oil prices have went down now. And, whether right nor wrong it makes it hard to tell a convincing story when you change the plot line. That oil today was the whole reason why we didn't see 1290 and lower prices. It may be the reason that we get a huge rally tomorrow. And today on the news they were saying that oil was going to $200. But,it can't get there going down.
The real scenario that bothers me is say we open down at 1285 and rally to 1300. This would be one possibility. However, so far it looks like that is not the one we are going to see. I like to keep it real simple and call direction. But interesting what I could would be to sell the 1290 binary and then if I lose $300 on my spread then my binary would cover it. If we just don't do anything it'd be another $100 thrown away.
I thought this might be interesting. This is one of my systems. The top chart is the system using binaries with my best estimate of all fees, the second is based on futures with a fair of estimate of all fees, and the last one is based on the assumption one could always find a 10 point floor and payed the current premium. I feel the binaries look best. However, I imagine the spread premium is higher during more volatile periods, like we have now. The futures chart also doesn't show the intraday draw down. The left axis is irrelevant. Perhaps, I can infer something from these charts that is not immediate. This system has performed CONSISTENTLY when adjusted for volatility. But during low volatility period, it could only was able to break even of the futures commissions. Those periods hurt it even worse with spreads which may be partially an artifact that I'm using today's premium which would likely be higher. Very interesting and there are some important implications. Trading systems that perform poorly during lower volatility may benefit from the all or nothing payout of binaries. But during higher volatility, like now, I may be justified in choosing a spread. * Update. I believe I had the wrong data in the previous graph for the spreads. These look more similar. We can see that the spreads do limit the spikes and the max profit which is what insurance would be expected to do.
woke myself because of an odd dream of a number.. woke up to see an EQ in Japan and my account down $170. Was this related I dunno? We did touch 1285 as my one of my models suggested suggesting to me that perhaps my plan could use adjusting. Regardless, I had considered if were to touch 1285 what I might do. My thesis was to buy the binary. On the hypothesis that we are likely to rally but maybe not very much.. I'm at max risk and added $150 risk on a bet we close above 1290. My max risk is around $300. So, I'm over that. Not sure if that was the best play. Kinda treating it like insurance but maybe shorting it would be better for insurance. total I've $480 risk.. a bit beyond my comfort..
Here is the setup with and without the binary.. kinda interesting. I could have got that 1285 fill if I had been a bit more patient. with my binaries strike, loss at/below 1290, -480 1290.25, -172 1295, -30 appx break even 1297, 30 appx break even 1301, 150 1310, 420 1315, 570 1317, 630 1340, 1320 without the binary and just the spread, at/below 1290, -330 1290.25, -322.5 1295, -180 1297, -120 1301, break even 1310, 270 1315, 420 1317, 480 1340, 1170
Available Capital:4447 Well, I learned some ways to improve my game plan. The trade went in my favor. My positioning was poor which ultimately limited my profit. I also added to my position late in the day and not sure fully how that affected my profit. I was able to observe I added to my discretionary account when I didn't add to my real money account and once I thought about it, I went back and corrected it. Yes, I've found some new patterns tendencies as well by comparing myself to my systems and I've seen something unusual and will take note of it and try to improve. Today was fruitful in terms of getting creative inspiration and thinking about ways to improve and my strategies. I'm not much of one for waiting or using limit orders. But, maybe there is a place for them as part of a more complete strategy, in order to try take out more profit on days like these. I'll be switching my account to IGMarkets which should help because I've probably payed and I'm just estimating but over $100 commissions. Wow. I will be saving about 50 cent per order and in addition I'll be capped at $3.75/side which should help somewhat too. The spreads came in handy. One of my computer models and I have several systems and models that I use to guide my discretionary, I like to think as kinda my all guiding hand. But, my systems to do help to form relevant opinions about the market and sure enough my project low level was very accurate. I take note of that. The spreads came in handy because on my futures account, I was knocked out at a bit below 1285 of a partial position. And, the spread protected me and kept in the trade. Opening the binary as well, increased max loss but not hugely and gave me a much better break even point. I've been trying to hit the home run because I can make just so much money if I'm in the right trade. I can make $1,000 or $1200 with only a few hundreds of risk. But, also one realizing too is that breaking even is important too. Sometimes I think about part of the game is to take those smaller winners and take some calculated risk to make a decent return. Trading with a small account is not the same as trading with a large account. At least, I feel that you need to hit something of some size to overcome all the higher fees and costs. I may be wrong. Thinking about that binary fixed bet equity curve, if I could develop strategies that are more active then I may be able to do it with smaller bets. Overall, I feel pretty good because I've identified several areas where I can either improve or are worth my exploring. I've surpassed my estimated return this week. And, I didn't lose $500 today. All-in-all pretty good. I would have liked to have made $800 or $1000. I could have traded more patiently and scaled in better. One thing that bothers is not just about winning but about winning with the right attitude. I have to examine and attitude and just make sure that service mentality is in the right check because I'm getting into this money centric mentality which is not market centric. I have to credit and not just feel okay yeah I should made 2x as much because for over a year I've been winning and getting zilch. I can make more money trading then I can selling calls or ebooks or whatever else. And, even if I just make a call and get $100 then that is more then I got before. So, I don't have anything in the world to be upset about. Yes, my goal is to grow this account as fast as SAFELY possible while also protecting my DEVELOPING trading PSYCHE and my capital. I don't have any definite timelines or whatnot. I'm just trading to be best I can and do what I've did for years. That's my goal is to be as good as the best I've been.
Available Capital: $4605 Took some short trades this morning. Identified some worthwhile ways to improve my trading last night too. I feel like I've lost operational context and must make time for some other priorities this week. I also want to work on and improve some of my trading strategies. But, that will have to wait too.
Available Capital: 4388 I traded like a stupid idiot tonight. I had told myself I wouldn't take any long trades because the fundamental picture didn't support it. Any idiot knows the Asian market trends, right? This is how I make my money day-in-day out. But, I read a some bullish bs about Nikkei maybe could bounce. My plan was to trade it based on the opening drive. However, I couldn't really get any decent quotes for it. I didn't have a good operational knowledge of what was happening. My plan was to buy near to a price floor and only risk about $60-$70 TOTAL. I ended up losing $200 on a bad play -- that is unless the nikkei can bounce back above 9200 before the close. My plan was just to profit from any volatility. However, my quotes didn't work well. I didn't know the market. I had no fundamental wind at my back. That was stupid and it cost me. I wont do it again. It wasn't the brightest if I had risk maybe $80 on it but for an experiment that wouldn't be too bad. Hopefully this market will bounce back but even if I manage to break even on this trade or make a bit then it wasn't because of any skill on my part. There is absolutely no buy in. Somehow I managed to buy at the very top of the 2nd drive down.