There are a lot of valuable information that can save you a lot of time and monies in some of ET people that response & reply to you. If you continue to bahave like what you are doing now, good luck and I hope I still can see you around in two years time.
nothing wrong with a bucket shop when you are learning. They allow the little guy to get started with a low initial deposit. If you can break even at a bucket shop you can make a small profit when you move up. It's just we all went through and still go through bright ideas that seem to beat old problems that have existed since the beginning of time. Thinking up new ideas is good because it furthers your understanding of just how serious and insurmountable the problems really are. You had your say and others pointed out the error of your ways. That's how it always goes. Don't take it personally. Many hedges have a brief period in their existence which offer true arbitrage opportunites and a few traders make money by indentifying those rare moments. That's why I say you are on the right track. Just don't get stuck thinking you have come up with something new. And don't confuse a profitable tool with a crutch which masks the true problem.
95% of you are failures or will be failures. Will I be one of them? Maybe. However, I will NOT simply take advice blindly from any of you. I will think and argue and debate until I reach the conclusion myself. Blindly following advice from unknown posters on ET doesn't get me anywhere. Fine. Throw whatever you can at me. There is a good chance I will still follow that advice. Not because a few of you say, no, it is a bad idea, but because I have listened and considered everything that everyone has said and finally concluded on my own.
Here is something constructive in line with your original premise: 1. Start with two closely correlated instruments: One future and one Equity. ie. YM / DIA or 6E / XDE or ES / Spy etc. 2. Normalize the instruments and calc the drift. ie. ES 1245 Spy 125 = ES is trading 1 strike (- 5 point) under. 1 ES = 5 Spy 3. Build out a table of their option chains. Calculate Buying normalized correlated option pairs. Cost to Buy ES calls and Sell Spy calls, vice versa and again for puts for each on their normalized strike pairs. You should have 4 combo prices for each strike pair. ie. C1265/C127 Buy 1 ES opt, sell 5 spy opt, Sell 1 ES opt, buy 5 spy opt and again for puts. 4. This options table will identify correlated and hedged option pairs that can generate a credit as well as the instant cost/loss to unwind. Ideally you want to book a credit to open, hold and unwind for a credit. This is a cross exchange arbitrage play with risk in unwinding the position to realize the credit. This is one form of hedging for booking a credit to enter a trade and mitigate the 50x leveraged monster from wiping you out.
Thanks, but that went right over my head. I need to spend time learning about options before i can understand this.
I been already survive for more than 7 years since I tarde with my own with average 20% return every year without any super risk trade. My return is quite consistent with only a small drawdown around 3% in one of the bad years. If you can make 4K up to approximate my current account, you will be my mentor and you are better than Buffet or anyone that I know even in the world greatest trading firm. I admit I will not be able to make 4K back to my current acount size if I loss all of them, this is why i always practice a caution good risk management. (Thanks to my early "training") Good luck for your search and all the best (My English is not good but I said it in sincere)
I understand. I'm just being playful. ... but we are talking apples and oranges here. Your trading style naturally is quite different from what I must do. If the best return I hope to achieve is 20% on $4000, I am investing far more effort than I am receiving benefit. Realize that when I was trading with a Swifttrade offshoot, the expectation was 20% in a MONTH, with a $50 daily stop and a $300 monthly stop. If I am trading XAU/USD, $4000 scales to $4000/$2 * current price of XAU. Currently: $3,490,000. If you treat the $4000 as something which is very replaceable, big wins ( big losses ), are VERY realistic. Do I trade this way? No. However, relatively speaking, I likely take significantly more risk than you do. I think the trick to realize here is that large returns can't be compounded. if you get a large win, don't trade it. Withdraw it and INVEST it.