I’m still around…

I claimed a while back that I’ll be “revamping” this blog… and I really intended to do so… unfortunately, things cropped up… and my blog is still the same old one…

but I’m still around… and I’m still doing options trading… In fact, I just closed two Iron Condor positions these two days… made about 10% profit on each of them… was a bit upset, because they were doing perfectly well last week and I was close to 20% in profit… especially for Goldman Sachs… I sold the 140/145/180/185 Iron Condor for $125 each… yesterday I could have gotten it back at $24, but I was greedy and bid $20… never got filled.. today GS went up $4+, in the end, I gotta buy it back at $75 each…. but still, these results are significantly better than when I was BUYING options…. at least now I am consistently profitable…

New ideas

I signed up for the Tradingology options trading course last week and has been spending my nights watching the videos… It’s great so far… exactly what I’m looking for… as in, it matches my trading style perfectly…. low risks, good odds and statistically sound…. the only complaint I have about the course is that it is too long winded…. It takes perseverence to complete some modules, especially those introductory modules that teach concepts I’m familiar with….  Nonetheless, I’m at Module 9 currently, and have already started paper trading with the concepts I learnt….  I’m pretty excited about some of the techniques I learnt in the Tradingology videos… but I’ll keep my cool and paper trade them first…. let’s see how it goes….

In addition to the videos, I’m also reading “The Options Course” by George A. Fontanills… Another long winded book, but I read fast, so that’s ok for me….

Anyway, as a by-product of the videos and books, a forex idea (exit strategy) suddenly struck me… I’ll modify my trend-following EA as soon as I finish the options course….

Exit after two consecutive lower lows (if previously in an up-trend)… To prevent giving up too much profits, after the first lower low, hedge the position. Exit the hedge position when price moves back above the first lower low…. (Update: Consider doing this at the close of the bar)

Hope that will not be too troublesome to programme….

For those who are interested in the tradingology course, you can check it out here: Tradingology Options Course….. Now, in case you’re wondering, ya, this is an affiliate link…. Contrary to some common mis-conceptions, buying through an affiliate link will not cost you more…. In fact, if you buy through this link that I’ve posted, you’ll actually get the course at $137…. instead of the usual $197… (just google “tradingology options course” to check the usual rates)… cool… a whoooppppping $60 savings….

but if you are like me, you’ll probably wonder what’s the catch… well, the catch is… you will have to pay $10 for the “30-Day Free Trial to Tradeologist Daily Market Review and Commentary”… that’s totally optional, and being an egoist as I am, I don’t believe in getting trading ‘tips’ from others… so I did not sign up…

anyway, that’s all for now…. let me end with a ‘quote’ from Tradingology… Trade with Confidence….

Another of those “I’ve not blogged for a long time” posts…

Well, I’m back again… 4 months since the previous post… Most bloggers are typical; they start a blog enthusiastically, and then eventually get tired of updating the blog… reminds me of a logarithmic graph… starts off with a steep gradient and after a while, the graph eventually “flattens out”… ok, never mind my nonsense, must be my erratic sleep cycle creating havoc… But I’m planning to revamp this blog soon…

Anyway, I’ve not bust my account nor have I withdrew from trading… quite the contrary, ever since I started selling options, I’m growing  my account at a steady, albeit, slow rate… Hit some losses last month due to the sharp reversal… so currently taking a break from real options trading… but I’m ready to get back very soon….

I’m constantly working on perfecting my trading skills… now busy with developing more EAs… have 2 in progress that’s doing pretty well…. need more testing… and then I’ll launch them on a forward test… if all goes well, I’ll probably post some indicators that I use on this blog soon… and if USD weakens a bit more, I’ll start trading forex with a real account….

ya, and if USD further weakens to my target level, I’ll sign up for this options trading course … I’m pretty addicted to the mathematical way of trading… so, trading options by the numbers is perfect for me… My philosophy is this: “If even Warren Buffett does not try to predict market direction, why should I?” Unless I can travel to the future and back, I believe the only way to trade the market is to trade only when u can be sure the odds are in your favor… I’m only interested in trading strategies where I know where my edge is… just like what I mentioned a few months back, I’ll trade like a professional gambler… and professional gamblers do not gamble… ;-p

Btw, I’ve just bought a HTC Dream, waiting for it to be delivered tomorrow… well, actually today… a few hours later… quite excited about this new gadget… fought a long mental battle before I finally bit the bullet and bought the phone… It’s not an expensive phone, but it is real fugly… I’m really worried about being stuck with an ugly phone and a two years contract… so eventually, I decided not to trade in my current phone… and spend a 100 bucks more to buy the Dream… I think all geeks would love to play with the HTC Dream… The phone seem to have an unexplanable attraction force on me (yeah, alrite, that officially makes me a geek…)… so much so that I finally bought it against all my logical sense… despite the fact that HTC magic is coming soon… despite it being an ugly phone… never mind that Android is too new and may not be stable… Or that the phone is too heavy, bulky…and totally uncooool… I JUST WANT THE PHONE….!!!! But anyway, not sure what I can do with the phone tomorrow, with my mobile broadband account not set up yet… dun wan to delve into details here… but pretty pissed off with my telcom company… what to do… just got to wait for them to get back to me…

I’m back…

Wow, I’ve not blogged for a long time… but that doesn’t mean I’ve given up trading…. on the contrary, I’m spending more time trading and less time surfing the net, blogging etc etc… In fact, I’ve also significantly reduced my tuition hours so that… well, I believe I reduced my work hours so that I can spend more time learning how to trade… but maybe I am just lazy… :-p

Anyway, I was pleasantly surprise to see that this blog still has readers… hmmm… must say a big thanks to those who stop by….

Here’s an update of what I’ve been doing since my disappearance from cyberspace… Like I mentioned in my previous post, I’m starting to sell options spreads… results have been ok so far…

I thought options selling would be almost ‘emotionless’ for me, as I can sell with a buffer and do not need to decide when to close my positions, which was and IS STILL my greatest weakness. I always used to close my positions out of fear, for instance when the stock moved merely $1 away from me, or when I had only a small profit.

Options selling is definitely a lot easier for me, because I am mathematically trained, and I love the statistical advantage I get by selling. However, occasionally, I still managed to let my fear grip me and ended up losing a portion of my profits….Nonetheless, because the odds are strongly in my favor, I can still easily make money even with some wrong trades….

I’m also doing lots of research in forex trading… After programming numerous EAs, I’ve become increasingly disappointed with indicators-based systems… these systems tend to be less robust… highly dependent on market conditions and the parameters used….

Recently I’m exploring grid trading… like options selling, it’s mathematically based and thus clicks with me…. I’ve become convinced that trading should not be about predicting market direction… rather, it is just a statistical and psychological game…. after all, even the sage of ohama does not attempt to predict market direction… of course, that is my personal perception of the market… others may or may not agree with it… There is no need to argue if I’m right or wrong… what matters is just that it works for me…

Hope I can work out a statistically sound way to trade forex soon… will definitely update my ‘findings’ when that happens….

Good luck to all….

The Professional Gambler

I’ve not been blogging for a long time, but I’ve not stopped learning how to trade… not for a single moment….

I’ve been reading the book “The complete guide to options selling” and have been very attracted to the idea of options selling… The fact that 80% of all options expire worthless is not something new for me… I’ve heard of it years ago…. but somehow, it seems extremely appealling now…. maybe it’s because I know of someone who has been doing it successfully…. and more importantly, I recall that in the past, I always do better when selling options… vs buying options….

Pros of Options Selling

1) High Probability of Winning
2) No need to worry about closing the position
3) Only need to think of stop loss

My past weakness has always been my exit strategy… I always exit too soon, settling for a small profit, which at times, is not enough to cover my losses…..

Cons of Naked Options Selling (and how I plan to overcome them)

1) High margin requirements (Sell naked options only for stocks < $50)
2) Stocks tend to gap (never sell before earnings date/ sell spreads instead of naked options / sell options of ETF, which tends to gap less)
3) Limited Profit (but high probability)

Cons of Spread Selling

1) High commission (sell spreads only for stocks > $100, so that the credit received can be > $1)
2) Difficult to find suitable candidates (I guess if I am not solely dependent on options trading, this should be ok… a bit of profit is better than no profit)

So, in short, I’ve decided to change my options trading approach to a statistical approach… pretty much like a professional gambler, like the guy in “Bringing Down the House”….

TRADING IS A STATISTICAL AND PSYCHOLOGICAL GAME

MA is indeed still the best

After repeated testing and trying out various strategies, I think MA is still the best. Furthermore, there’s lots of free websites that allow us to screen using MA.

However, since I am using options, I cannot afford to follow the trend for too long. I decided to try testing the following:

1) Do not buy if either of the MACD lines is +ve
2) Sell when MACD histogram turns +ve

Test of MA is still the best

After doing a few backtests, I realise that a test of MA still presents the best opportunities. Now I just need to fine tune it… but it getting late, gotta go lalaland now….

What really really suck is that I seem to be having some problems with Amibroker. If I download data from Yahoo!, the volume is 100 times lower than the actual volume. It happens only on this laptop, not on my other 2 laptops. Weird, oh well….

Suggested Strategy

I’ve decided to re-program Trader Vic’s 2B strategy and test if it is profitable. Here’s the system I’m going to test:

1) Stock is below 200 MA (?)
2) Stock makes a higher high (based on Zig Zag 8%)
3) Stock breaks below the low of the highest bar (which may or may not be the bar that first breaks the previous high)

Can’t do any programming now, since my Acer laptop decided to die on me. Oh well, maybe it’s time to get a new one and to take a break for tonight.

But over the past few months, I realize I love trading, not just for the profit. No matter how tired I am, I would turn on my laptop to do my stock analysis. In fact, it has almost become a form of relaxation for me at the close of the day.

Btw, since I’ve not being blogging for some time. I think I should update my trading results.

Last month was a breakeven month, but I’ve pick some pretty good stocks.

MAR (Sold it when it was around $36).
ARTC (Actually I missed this, but I almost sold it at about $46… well, almost)

There are other stocks, but not as successful.. e.g. ENDP…

Difficult to execute order

I realize it is very difficult for my orders to be filled when it involves a spread… this is completely different from virtual trading, when orders were executed almost instantaneously.

Selling spreads has lots of limitations… I guess I may go on to just directly buying puts… I remember orders were executed a lot faster when I bought options… Now I am waiting to close my GLBL order…. had been trying to close it for the past few days… is it because the open interest (< 1000) and volume is too low?

Anyway, I’m proud to say I’ve been pretty accurate in spotting some good stocks…. like UAUA, BARE, MAR,SUN….. I guess I should just go to buying puts…. don’t have to worry about strike price, 20% profit target etc…..

Closed out ALL at a loss

Results so far:

MAR $60

PGR ($45)

ALL ($10)

GLBL $60 (Not closed yet)