Makes sense so I'm really better off seeing a chart drawn by some widely regarded/read technician than drawing it myself. The chartist I follow will often say "gee I wonder why no one has see or commented on this blah blah H & S or other pattern. " To me it seems like picking out quotes from the Bible or Quran to support your belief. Very subjective. Of course all analysis is subjective as we will emphasize what substantiates our point and de-emphasize points that contradict our opinion. ah human behavior...
This is why most of my charting involves horizontal (read "demonstrated") s/r. Horizontal s/r has been proven before. You are now operating on the assumption that the buyers/sellers that caused it the first time will still be there and hopefully will have called some of their friends to join them.
No, your success rate will probably be just as good/poor. I wouldnt look for anything beyond simple lines and channels. When you are not sure which tail to touch with your drawing pen just increase the size to 10pt and now you can touch them all. Seriously, my point is that you only need a general idea to base a directional call on(hopefully you've researched/backtested/simulated it before), its not like you are going to be right anywhere close to all the time anyway so why stress the small details. As i said before, all this assumes you dont use 1 tick stops.
that was funny......read my mind. i do not want to ruin riskarb reponses; but if they can be less prolific(if time is an issue) and more understandable.....that would be great imo.
References or links would help. Risk must have learned this stuff somewhere. Or did it appear on golden plates in the backyard?
Which bits in particular: There are some abbreviations: Vol or Vols = Volatility/Implied Volatility Corr = Correlation Vol-swap = Volatility swap There are some common financial/quant/trading terms: Term Structure, specifically in this example the Volatility Term Structure Intermarket - should be obvious. Volatility Swap AND More than you ever wanted to know about volatility swaps (PDF) Some other random jargon: Strips Then there are some adjectives: Sharp Funky Magnitude To summarize/clarify for my benefit: To realize a position with both long THETA and long GAMMA you require an implied volatility term structure where the slope between two expirations is steep. In simple terms, implied volatilities for different months differing by a large amount. It is the cross-section of the volatility surface. Two cases where this steep term structure is found in the wild are: 1) On an instrument with an event e.g. earnings, FDA decision etc. The implied volatility in the event month will normally be higher than that in other months. 2) In intermarket term structures where the instruments have different implied volatilities e.g. given by Riskarb - RUT/NDX With the instruments in the first category, you are exposed to the event risk i.e. the cause of the steep term structure but presumably you wouldn't trade through the event. With those in the second category, you are exposed to correlation risk, because they are different instruments. It seems hard to justify taking on the correlation risk in order to be long THETA and long GAMMA unless you were playing the correlation in it's own right? 2 cents. General reference sites: http://www.riskglossary.com/ http://www.investopedia.com/ You should visit the Wilmott forums some time. Riskarb is downright intelligible compared to some of the folks there. In fact, I believe Riskarb was booted from those forums for not obfuscating the content of his posts enough: http://www.wilmott.com/index.cfm?NoCookies=Yes&forumid=1 Oh, and this little know tool is your friend MoMoney.
"....What I hear : "The noise the teacher would make on Charlie Brown when she spoke....." Thank you, Coach! Three great big cheers for plain English.