Hi Jasonn, as comrades, I also want to give you some story of my experience. At first time, i also thinking like you - simplicity is the best ! I always think like that, I only want bother things that have relation with my trading, and other else (news/indicator/oscillator) i don't want to see, i even don't want to learn all of those garbage (that time i feel it's garbage :d) But until my brother shared his experience in his trading, i found out - we must learn all of that, we must know everything that have relationship with trading (even psychology, and others that maybe not related but you feel you need to learn). Eventhough all that won't necessary, but it must be part of our journey. At some point we will feel trading is very complicated. But after you reach the point that you already enough (not means enough to learn), we will find your own simplicity (our own mindset principle, our own very simple trading system, our own easy portfolio management,etc). That's what my feeling brings me Bottomline, YES - simplicity is the best (don't get complicated !) but before reach "simple" we must have a journey that might be very complicated
when you sell option premium in anything,you need to keep an eyeon the volatility/,u should always own a handful of cheao puts and calls for insurance,/you will make less,but your blowup days will be a lot smalller,/in this case the smaller profit would still be in your acct,/if your nervous then trade very small,but never stop working/ this business is constantly evolving and you must adapt/,it sucks taking a big hit but you said it was only 30% of your acct/ a lot of guys got wiped out on the spx opening/pros/so don't feel bad/just stay small til this mess clears a little/having small manageable positions in this market can be very profitable when we get this much movement perday/it also allows you the freedom to jump on a move/so never despair...that's my personal philosophy
Thank you for giving your view. I (of course) am more like trader A in my example. I think the real lasting money in this industry is made when you are in the big trends. The drawdowns in example A don't occur because of too much risk. I for myself never risk more than half a percent of total equity on any trade. But if you follow 20 markets and you get stopped out a couple of times in a row it can add up of course. But the largest drawdowns occur when you give back large parts of your profits. When those who scoop in regular profits like trader B, go broke the trader A's in this world get rich. Like this year for example. The banks that bought all those "safe" mortgage product got burned. On the other hand many good traders who got into the big moves on time tripled or quadrupled their money. Of course the way trader B operates appeals to many more people than the way trader A operates. Trader B probably has no difficulty in attracting a lot of money. People don't realize that when such a consistent trading record is shown there really is a big risk of complete blow-up. I recommend everybody to read "Fooled by Randomness" by Nassim Nicholas Taleb.
Trader B is pretty much the record of Buffett, Soros, or Robertson in their first decade (actually a bit lower).
Sorry Cutten. I am not sure you write this on purpose. I assume you mean to say those people you mention are more like trader A.
Nell, I empathize with your situation. The IC strategy and your trading plan you have been using seems to have served you well in the past, therefore there is no reason why you it cant work for you again. I do however, suggest you refrain from any trading till you get your mental trading game sorted out. I'm a firm believer that trading is 80% psychology & 20% methodology. Read 'Trading in the Zone' by Mark Douglas, it will put things back into perspective.
thx for the support ! I have some question for you, how i gonna trick the volatility ? If you said buy debit spread or strangle/straddle, how is it ? can you give me example for that ? in my head, i think is sell 10 IC and buy 1 straddle, is it something like that ? trade small is right, buddy ! but it still wipe my emotions. I only trade half of my capital this month, but it also blew me out
good inspiration buddy ! Appreciate it! i will read that book and hopefully i can find some light there thx
First, to make a living the most important thing is to have enough funds in your acount. Even a mediocre trader can make a living of a $million+ account. (100k/year = 10%) It would be very hard to make a living of a $10k account. (100k/year = 1000%) If you want to make money selling options forget about spreads and condors. Sell naked options or strangles. DON"T OVERPOSITION, and don't overtrade; options are medium-term strategies.
If you want to sell options, or even trade options at all, a must read: http://www.amazon.com/Complete-Guide-Option-Selling/dp/0071442081 It challenges conventional wisdom (the reason most option traders lose)