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ok, so an initial long option position is only 1/16th of your trading capital, about 6.25% that is still a tad high according to the conventional wisdom of 2% but a lot better than 8%.

I rank stocks according to volume and capitalization and I don't mess with the bottom third in either category at all, no matter what the story is. I figure if the stocks are that great then they will grow up into the middle third.

I think you are taking more risk than you think you are when you double down. What is your maximum position size relative to your trading capital ?

the ability to replace what you lose is a good thing, but still if you get a run of bad trades you will be screwed. You can replace 8% but I doubt you would be happy being down 40%, which could happen to you in any given month.

Don't sell florida short when it comes to babes. It doesn't hurt that lots of women come down here for vacation looking for fun. Just stay near the coast is my advice. Orlando would be the exception to that.

its interesting that you only got into trouble when you tried to daytrade. I had the same experience and I'm sure lots of other people have as well. I sometimes do an overnight trade on an index but I try to force myself to go for multiday trends.

I'm not big on daytrading in general, but I think that most daytraders in the late 90's had a bullish bias, and the ones that maintained that bias got killed since 2001. Personally I try to be in sync with the longer term trend but often go against what I call countertrend moves ( bear market...

they sell naked options, which is not a myth, but is high risk no matter how you slice it. LTCM went down because of that practice in spite of all the Phd.'s they had. The market doesn't care if you have a Phd.

you do have a point about taking risk trying to beat the treasury, I'm not advocating trying to be a yield hog. He was saying 20% returns and I think that would be too much risk. I was trying to talk him down. Oh and I love the youthfull attitude of P2. P2, when you are 5 years older ( he is a...

jaan is right about the definition of a chaotic system. The problem with chaos theory is that even though it seems to make sense and lots of phd's are into it, it is darn hard to use in real life.

since daytrading/swing trading/position trading are all high risk, the rest of the money should not be put at enough risk to return 20% in my opinion. Beating the current 30 yr. treasury every year with lowest possible risk ( the strategy of many hedge funds ) would be more appropriate.

I'm not using IB and I've had basically the same thing happen, so it is the "locked market" scenario. Basically they don't have to buy your options at the ask, even if the bid and ask are the same.

if your losses are unexpectedly large due to not getting your mental stops in, then try hard stops.

My current feeling is that there will continue to be good volatility for the rest of the year and the nasdaq and the s&p 500 will finish negative for the year. What happens more than 6 months out is up to Nostrodomus.

Buffett predicted that the market returns for the next 7 years will be much lower than was seen in the 90's and it is quite possible that stocks as an assett class will do worse than Bonds.

first you calculate what a standard deviation is for your sample. One standard deviation is 1x, 2 standard deviations is 2x. The area under the curve will be significantly different though.

not that different from being a floor trader then :)

Poker involves the randomness of the cards, but some people are able to make a living out of it. But you will never hear a proffessional poker player telling people that playing cards isn't gambling. For some reason people who gamble in the stock market can't accept that they are gambling. In...

nobody wants to believe that it is random, but when they blow up they will say they just had bad luck. Its a psychological thing. The math is real.

everyone interested in this topic should drop by a bookstore and read "fooled by randomness" written by a guy named Taleb who is an experienced options trader, Phd in mathematics, and a quantitative analyst. He also was a friend of Victor Neiderhoffer and warned him before he blew up. It is a...