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Ok got your point. I am aware dynamic hedging comes at a cost, sometimes to the extent that it wipes out the whole profit potentiel of an option trade. But "partial" delta hedging can reduce risk. You could for instance leave the position breathe a bit instead of adjusting delta every...

Ah yes I see what you mean Mav. Got a bit caught up in the greeks without having tried to understand what they stand for... Fair enough, but what if the event is unexpected (terrorist attack, bubble explosion). Then the IV rises AFTER the event and you can go short vega on high IV levels...

Which means that if there's a spike in IV, there is no need to panic if you are vega short and your risk under control, because eventually IV will deflate...? Sounds rather reassuring for delta hedged option writers/credit spread traders. Correct me if I'm wrong but this also means that the...

I agree. How about if you plan every strategy so that if vol goes against you, you will not be forced to close your position. Example : the extreme IV levels of a given index are 8% and 50% (spike) over the entire lifespan of that index. The mean is 15%. Let's say IV is at 30%. You decide...

OK terminology left apart, is my theory about having an edge when playing volatility mean-reversion via any type of fixed loss-fixed payoff (short or long vega) combination valid?

Ooops sorry I got it the wrong way round. Well you got the idea though?

Yes in theory expectancy should be the same for any kind of strategy, assuming the options are priced correctly. But I've always wondered : doesn't using the mean-reversing tendancy of implied voltility give an edge though? Say you trade condors, buying them when IV is low and selling them...

Ok, and how about trading credit spreads?

Define active traders. And don't forget that if they're that active, they are probably much more aware of the risk than individual investors who hold on to shares for years. How about all those hedgers who hand out money to the markets just so that they can reduce their risk? Isn't it them...

That's my point: nobody knows for sure, not even the market gurus who come up with that statistic. You say its close to 99%, but there is no proof Yes the idea of a retail brokerage coming up with a figure seems reasonably good, at least we'd have some kind of sample. But then again, would a...

The question would be the same. There is no proof that it could be 99%. Besides, don't forget that stock markets have a bullish bias : they mirror the country's economic evolution. As long as the economy is growing (faster than the inflation, that is), the markets will follow and investors will...

lol

Fair enough. Then are you suggesting that 90% successfull traders figure is wrong?

Well, yes it seems reasonable. Although some (Buffett, Soros) seem to still have an edge after all those years. Here's another thought : I reckon future markets are not a zero sum (or negative) game from a speculator's point of view, as many actors on the market (companies, central banks)...

Well that could make sense trade4success, I guess. That would mean there are an equal number of new successful traders than retiring ones. But if I were a retired successfull trader, I would probably keep on trading :D . If I can keep on making money, why should I stop?

I agree trade4success... But even with one in ten traders making money, you would end up with an ever-increasing number of successfull traders. That doesn't make sense either. :confused:

I've often read or been told that 70% daytraders aren't profitale, or even 90% forex traders get wiped out. While I won't deny trading is pretty tough, I've always wondered where that figure came from. I mean is it a statistic or just a figure invented just to give a general idea? And if it...

Thanks pumpanddump but would you mind being a tiny bit more explicit: what broker do you use? what are the problems you have experienced with IB? for what style of trading is IB appropriate? Cheers, Marc

Thanks for these different opinions. There are enough option markets to trade electronically at IB, it seems... (with the Liffe notably, which I think is entirely electronic-correct me if I am wrong). Looks like I will need an extra analysis tool, though. Optionwizard: may I ask which...