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…

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