Yip, Thank you for your response. I promiseâI will not learn from you. However, if you plan for your âstrategyâ to exploit some temporary market inefficiencies, please remember that there are literally thousands of professional traders, well equipped with power computing, who are seeking these as well. These âinefficienciesâ if lead to arbs, will only last seconds if not less. So take this into account when you invest energy and efforts in further developing your strategy. Your best bet I guess, is to invest in trading skills and minding your risks. Regards, Ben
Jeff, while one shouldnt separate risk/reward from the probability of winning, it always amazes me how people tend to use a low probability of a loss as some kind of a defense. If there is a 1:9 chance of a loss, that doesnt mean you will only have 2 losses out of the next 18 runs. You can easily get 3 or 5 or even 10. Doesn't anybody care how long it takes to simply come back from such a distro even if you manage to survive?
so mav, if i sell a high probability trade for 3 pts 11% outside the market and then the next day the market takes an 8% move against my position....won't a buy stop for 6pts(of which i have) save me from catastrophe? isn't that 2:1 risk reward similar to the trading that rallymode has discussed as one way he trades? i ask you, can i get out with those buy stops in a fast moving market? if you say that it may not work, then i must look at things. how about (assuming one is quick enough) go short or long on the underlying with stops there too? is any of this possible to save ruin? i would think the credit spreaders would also be similarly inclined to protect themselves this way. i must ask you (mo too), is much of what you say here derived from cottle? i ask because some parts of your responses sound like they were taken verbatim from his book. anyway, that is how i trade at the moment. if i make it to december 31 intact, i will reassess my short premium trades.
Oh Jesus! Now short gamma traders are drug dealers! Maverick's been banging his shoe so hard it must have bounced back and hit him in the head I hear Max Ansbacher is a sheep molester... No a bad, ridiculously leveraged short gamma trader can be wiped out by a 1/2 sigma event. Any fool can get themselves wiped out in 1 easy trade if they set themselves up for it. There are a million ways for bad traders to lose. We're back to the 95% metric. You always fall back to your subtle insults and superiority complex jabs. Your posts are much better without them.
You are correct. We have been talking r/r and w/l%, but we have totally ignored position sizing. If 2 or 3 consecutive losses puts me out of the game, then I was overleveraged and I will take my place among the pantheon of losers. However, that is a mistake of money management, not strategy. Anyone who bets too much is setting themselves up for a fall. Doesn't matter what method they trade. One of the short premium traps is that the high w/l rate suckers people into larger and larger relative position sizes. Then when the ugly trade does come along...oof! Plus, they are so used to the easy money, they will refuse to take the ugly loss while it grows into a murderous loss. There is a reason the 95% loser number is so damn big Lots of ways to end up with the disappointed majority. The failure mechanism varies with the different trading styles, but the end result is the same.
I'm done for tonight. I'm a fan of civil discourse. You are not. I'll move on and let you crap on someone else's shoes.
Listen, I know the SP vols forward and back because I price them all day. I'll tell you what. You give me a trade in the SPX or ES you would do as your "short gamma trade" and the size and I will tell you how much you would lose on that position on a 5% move. Also how much you would actually earn on a 100k account lets say selling that cheap gamma. If you earn double digit returns without exceeding a 30% drawdown on that 5% move, I will issue an apology. How is that? Let everyone on this thread benefit from your claim to see what the real numbers are. The ball is in your court. I'm sure Dr. Phil would be interested in seeing this too. Anyone else want to see this?