Tao you might be too smart to make money in stocks unfortunately. To make money in stocks the most important characteristics are stubbornness and patience. The end result of the trade was 60k profits and an 80% return. Those are the only numbers you need to look at. AND this is a worst case scenario...not a typical example. AND this isn't just my theory, it was backtested to entering at the worst time all the way back to the great depression and you are always better off holding and averaging down. Forget all your odds per trade, nightingale bs...it doesn't matter. BTW selling puts is for accumulating stocks at a discount, not collecting premium lol. Anyone who says selling puts is a bullish bias is an idiot. You guys really look at trading ass backwards.
Stop loss is named wrong. It doesn't stop a loss it guarantees one. I prefer to refer to it as a capital preservation exit. I get to keep most of my capital and have it available in case another opportunity presents itself. I am interested in owning good stocks. Not necessarily a good company. I am only interested in owning it if it performs the way I want it to. I treat it like an employee. As long as it contributes to growing my wealth I'll continue to own it. The minute it slacks off or starts eating into my wealth, it is time to go. Here is the problem I have with averaging down. It a stock, no matter how good a company, falls out of favor with investors, you can end up holding a non-performer for a long time. If you never sell a loser then eventually you end up with a portfolio full of stocks that you have averaged down into that have yet to come back to break-even. I kind of agree on day trading as being a lot of work for the gain that is involved. However if they are flat at the end of the day, there is no risk once they're in cash. The next day they have cash on hand to explore any opportunities that present themselves. You can bet the PDT rule was put into place to protect somebody other than the retail trader. I personally am against any rule that is put in place to protect me from myself.
So true ...a stop loss guarantees a loss. I know the PDT rule is a load of bs. My bank blocked buying crypto on credit cards and bank cards saying they are too high risk but they'd have no problem if I blew everything I had on one day trade. This tells me that they don't care if you lose money but they do care who you lose it to...which begs the question who is the broker working for? Who are they trading against? Anyway, I would never do this method with a stock...I would definitely spread it out but I would go all in with SPY.
Tao was "fortunate" to have traded equity derivatives at major IB's and a very large Hedge fund. Tao trades with a positive expectancy. You still think selling puts is a bearish trade. You are bragging about your cars that cost less than Subarus. You post trades of 2 lots on 18 dollar stocks... YAWN........
I have no dog in this fight but after reading all of the posts, it is not an honest discussion or exchange of ideas. You guys have your minds made up before you read the OP so you don't understand where OP is coming from. To me two points OP made merit your consideration: 1. OP mentioned he only traded index, no individual names. 2. He mentioned the importance of time. On the first, individual names can go bankrupt but index's chance of going under is very low. The dow has been around for over a century, SPY has been around for years. On the second, over time, for the last century, index always recovered from a drawdown. To me the odds that OP's thesis might work is actually quite high. Wall Streets and you equate volatility with risk. In real life volatility is not exactly equal to risk of ruin.
Most likely he bought China index, Kenya index .... It went down. He bought it. It went further down. He bought even more. It went further down. He bought even more. It went further down. He bought even more. It went further down. He bought even more. It went further down. He bought even more. It went further down. He bought even more .... WITH NO STOP Of course now we know there are some indices that go up and up and up.