An Attempt to Learn How to Trade Consistently and Profitably
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SUMMARY:
01/21/2021
REAL TRADING SESSION
TRADES: 3(LONG) + 2(SHORT)
Winners: 3
Losers: 2
-----------------------------------------------------------------------------------------------
NEWS:25
-----------------------------------------------------------------------------------------------
GAMEPLAN:
MARKET STRUCTURE:
PERFORMANCE:
LEGEND: BLUE IS LONG & PINK IS SHORT
1st trade, bought puts when wanted to buy calls
2nd trade, entered expecting strong support upwards, failure to meet highs. Did not close early, started moving back stop,
3rd trade, possible revenge trade. No I think it is a revenge trade. I got lucky that my stop didn't get hit.
Taking a break, got to cool off. Chasing hard.
4th trade, expecting increase, slow breaks, no one wants to buy but someone is bidding up. I exited, scared of downside. Watching bid on option chains, someone is stepping up, maybe should have waited. I noticed someone reloading into the bid. I had no exit target, except that I expected a large capitulation upwards, didn't happen so I left early?
5th trade, expecting upward momentum, price moved fast in my favor. Volume came in, see semi-correlation with USD/JPY and SPY. Expecting to sell at yesterdays HOD or strong momentum break. Calls being sold, into momentum. Looking for capitulation to the highs, possible short squeeze. Sold, don't want to hold into a countertrend since ranging day.
Cutting my day off here. Actually mega behind in school work.
Notes:
I think walking away when you are overtrading/not feel the market is quite good. Gives you fresh eyes.
Also date of previous live trade is incorrect I put 01/19/2021 but it should be 01/20/2021. Can't edit but the picture should have correct date.
01/21/2021
REAL TRADING SESSION
TRADES: 3(LONG) + 2(SHORT)
Winners: 3
Losers: 2
-----------------------------------------------------------------------------------------------
NEWS:25
- TOP 5 SPY EARNINGS SOON
- VOLATILITY:
VIX: +0.28
25 Delta RR: -6.94
1-3m ATM Calendar: ?
3-6m ATM Calendar: ?
25 Delta RR: -6.94
1-3m ATM Calendar: ?
3-6m ATM Calendar: ?
- INDICES:
NIKKEI: +0.82
FTSE100: +0.18
DAX: +0.13
STOXX50: +0.12
FTSE100: +0.18
DAX: +0.13
STOXX50: +0.12
- METALS:
GOLD: +0.01
SILVER: +0.46
COPPER: +0.44
SILVER: +0.46
COPPER: +0.44
- OILS:
CRUDE OIL: -0.28
- INTEREST:
10Y TREASURY: -0.07
- CURRENCIES:
USD/JPY: +0.05
- INDEX MAKEUP(TOP 5):
AAPL: +1.35
MSFT: +0.16
AMZN: +0.91
FB: +0.62
GOOGL: +0.72
TSLA: +0.48
MSFT: +0.16
AMZN: +0.91
FB: +0.62
GOOGL: +0.72
TSLA: +0.48
GAMEPLAN:
MARKET STRUCTURE:
- Small Long Bias, expecting consolidation because of yesterday's rally, maybe a drop possibly. Potential Bounce 383.41
PERFORMANCE:
LEGEND: BLUE IS LONG & PINK IS SHORT
1st trade, bought puts when wanted to buy calls
2nd trade, entered expecting strong support upwards, failure to meet highs. Did not close early, started moving back stop,
3rd trade, possible revenge trade. No I think it is a revenge trade. I got lucky that my stop didn't get hit.
Taking a break, got to cool off. Chasing hard.
4th trade, expecting increase, slow breaks, no one wants to buy but someone is bidding up. I exited, scared of downside. Watching bid on option chains, someone is stepping up, maybe should have waited. I noticed someone reloading into the bid. I had no exit target, except that I expected a large capitulation upwards, didn't happen so I left early?
5th trade, expecting upward momentum, price moved fast in my favor. Volume came in, see semi-correlation with USD/JPY and SPY. Expecting to sell at yesterdays HOD or strong momentum break. Calls being sold, into momentum. Looking for capitulation to the highs, possible short squeeze. Sold, don't want to hold into a countertrend since ranging day.
Cutting my day off here. Actually mega behind in school work.
Notes:
I think walking away when you are overtrading/not feel the market is quite good. Gives you fresh eyes.
Also date of previous live trade is incorrect I put 01/19/2021 but it should be 01/20/2021. Can't edit but the picture should have correct date.
Last edited:
I write HOD/LOD of the previous day, along with week and monthly lows and highs. I also do intraday ones. Thanks for the tip.
SUMMARY:
01/21/2021
REAL TRADING SESSION
TRADES: 3(LONG) + 2(SHORT)
Winners: 3
Losers: 2
-----------------------------------------------------------------------------------------------
NEWS:25
CORRELATING MARKETS:
- TOP 5 SPY EARNINGS SOON
- VOLATILITY:
VIX: +0.28
25 Delta RR: -6.94
1-3m ATM Calendar: ?
3-6m ATM Calendar: ?
- INDICES:
NIKKEI: +0.82
FTSE100: +0.18
DAX: +0.13
STOXX50: +0.12
- METALS:
GOLD: +0.01
SILVER: +0.46
COPPER: +0.44
- OILS:
CRUDE OIL: -0.28
- INTEREST:
10Y TREASURY: -0.07
- CURRENCIES:
USD/JPY: +0.05
- INDEX MAKEUP(TOP 5):
-----------------------------------------------------------------------------------------------AAPL: +1.35
MSFT: +0.16
AMZN: +0.91
FB: +0.62
GOOGL: +0.72
TSLA: +0.48
GAMEPLAN:
View attachment 249640
MARKET STRUCTURE:
-----------------------------------------------------------------------------------------------
- Small Long Bias, expecting consolidation because of yesterday's rally, maybe a drop possibly. Potential Bounce 383.41
PERFORMANCE:
View attachment 249643
LEGEND: BLUE IS LONG & PINK IS SHORT
1st trade, bought puts when wanted to buy calls
2nd trade, entered expecting strong support upwards, failure to meet highs. Did not close early, started moving back stop,
3rd trade, possible revenge trade. No I think it is a revenge trade. I got lucky that my stop didn't get hit.
Taking a break, got to cool off. Chasing hard.
4th trade, expecting increase, slow breaks, no one wants to buy but someone is bidding up. I exited, scared of downside. Watching bid on option chains, someone is stepping up, maybe should have waited. I noticed someone reloading into the bid. I had no exit target, except that I expected a large capitulation upwards, didn't happen so I left early?
5th trade, expecting upward momentum, price moved fast in my favor. Volume came in, see semi-correlation with USD/JPY and SPY. Expecting to sell at yesterdays HOD or strong momentum break. Calls being sold, into momentum. Looking for capitulation to the highs, possible short squeeze. Sold, don't want to hold into a countertrend since ranging day.
Cutting my day off here. Actually mega behind in school work.
Notes:
I think walking away when you are overtrading/not feel the market is quite good. Gives you fresh eyes.
Also date of previous live trade is incorrect I put 01/19/2021 but it should be 01/20/2021. Can't edit but the picture should have correct date.
This is a good writeup. Just a footnote on these 1-3m and 3-6m ATM calendars:
You want to subtract the implied volatility of the 3m ATM put from the implied volatility of the 1m ATM put. Same for the 3m - the 6m.
This way you get a quick and dirty view over the term structure, meaning how cheap/expensive is front month optionality versus longer terms. When general volatility is low, front month is sold and when market is in panic mode, front month is bid because these options offer the most convexity for the least amount of nominal expense.
1: The 25 delta Risk Reversal compares OTM calls and OTM puts. For indices you're mainly interested in how expensive the put side is
2: The Butterfly with 25delta wings compares ATM IV and OTM IV. Wing to body relationship is a bit more complex but it shows you how much you have to pay for being vega neutral. Vega is also convex just like delta.
3. The calendars show you IV distribution over time as stated above.
With these three notes you will get an indea of the entire implied volatility surface without the need of complicated software.
For 25DRR, I compared the IV of 30 DTE(which one should I pick I think I picked, between 29 DTE vs 32DTE), is it the price of each put/call instead of the IV?
Similarly for the calendars what DTE should I pick.
Edit: my question essentially is since there are no daily expirations or there are gaps between them then what should I go for when calculating calendars and 25DRR
Edit2: Like for today I used the 29 DTE to calculate my 25DRR
Edit3: nvm I meant theta is increased after 45 DTE not IV
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For the RR around 30DTE makes sense...I mean in the end it's up to you but I always start with the lowest DTE and go longer in terms until the ATM open interest doesn't increase anymore.
You basically want the option month with the most action.
For calendars you can pick 30dte vs 90dte and 90dte vs 180dte.
You ALWAYS want to calculate in IV, NEVER in absolute prices. How else would you want to compare options with different strikes and maturities? That's why IV was "invented"
You basically want the option month with the most action.
For calendars you can pick 30dte vs 90dte and 90dte vs 180dte.
You ALWAYS want to calculate in IV, NEVER in absolute prices. How else would you want to compare options with different strikes and maturities? That's why IV was "invented"
Just remember Robinhood gives you less than optimal execution.
(hey it worrrks! the password to this account is 123456)
(hey it worrrks! the password to this account is 123456)
Alright I understand, still a beginner at options so might take some time to take in. Also I appreciate the help you are giving me. Another question is...
For now I know that VIX, is a measure of implied volatility, meaning forward looking instead of historical volatility. Given that I also know that VIX is a measure of SPX's IV which is represented in annual percentages. To find the daily IV we do division by 16, or sqrt(252) . VIX looks 23-37 days into the future.
Given that, option IV on a single contract, is calculated based on all the other components of the black scholes model. I haven't gotten into the math of BSM but...
My question is, are option's IV shown at an annual basis like VIX. Meaning lets say an IV of 17 for a single PUT contract will mean a move of around 17/sqrt(252) standard deviations per day? Or is this on the lifetime of the contract, if so then I think it would be 17/DTE of the contract.
My question is essentially are all Implied Volatility in annual terms?
Also I may be wrong on some of this information.
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VIX is NOT a measure of SPX's IV.
VIX is a weigthed portfolio of ATM and OTM options which makes is kinda like an ETF.
Due to the fact that it's averaged, you already can see what skew effects can do to it (hint: When OTM options become more expensive VIX goes up although ATM stays the same).
So it's a mashup of option IVs which is why I prefer the 25d RR, 25d fly and the calendars.
Option IVs are shown as annualized percentage basis like VIX, so it's 17/squrt252.
Also, the BSM model is ONLY for comparing prices of different options of the same underlying. It has NO predictive power and looking at an option to gauge either expected range of the underlying or the probability of the option of being in the money is pure retail BS.
Options are bought and sold thus their prices are supply and demand driven. You overlay mathematical concepts so you can compare apples to apples (compare the price of a 30dte 100 put option to a 60dte 50 put option of the same underlying).
Do not fall into the noob trap that option IV means something.
VIX is a weigthed portfolio of ATM and OTM options which makes is kinda like an ETF.
Due to the fact that it's averaged, you already can see what skew effects can do to it (hint: When OTM options become more expensive VIX goes up although ATM stays the same).
So it's a mashup of option IVs which is why I prefer the 25d RR, 25d fly and the calendars.
Option IVs are shown as annualized percentage basis like VIX, so it's 17/squrt252.
Also, the BSM model is ONLY for comparing prices of different options of the same underlying. It has NO predictive power and looking at an option to gauge either expected range of the underlying or the probability of the option of being in the money is pure retail BS.
Options are bought and sold thus their prices are supply and demand driven. You overlay mathematical concepts so you can compare apples to apples (compare the price of a 30dte 100 put option to a 60dte 50 put option of the same underlying).
Do not fall into the noob trap that option IV means something.
SUMMARY:
01/22/2021
REAL TRADING SESSION
TRADES: 5(LONG) + 4(SHORT)
Winners: 5
Losers: 4
-----------------------------------------------------------------------------------------------
NEWS:
-----------------------------------------------------------------------------------------------
GAMEPLAN:
INSTRUMENTS:
PERFORMANCE:
LEGEND: BLUE IS LONG & PINK IS SHORT
Trade 1: Thought of my yesterday's low touch trade and planned to execute on it
Trade 2: Sold the low bought the high, CHASED HARD. I remembered yesterday. Payed HEAVILY on slippage .
Trade 3: USD/JPY, SPY Correlation, interesting market mechanics. Holding till YLOD(Yesterday's Low of Day), possibly trend support so riding it out. Volume coming in near YLOD, waiting for 2ndary test of YLOD. Someone is selling into YLOD, USD/JPY trending down still. 2nd test came, but low being found again and again, stunted selling pressure. USD/JPY still engaging lower. Weak initial pop, never the less it is a pop upwards. Exited, strong move down 3rd test failed. Crazy call selling pressure, at the point I sold a few minutes ago it was worth $0.10 more, I waited for the move to consolidate then sell but it never returned to the pre selloff levels. Is it the option greek gamma in work? or is it just sellers?
Trade 4: Expecting down move, possibly one of my game plans. Depending on strength of sell expecting strong move lower, unless stunted. Dislike PA(price action) sold.
Trade 5: Sold, potential continued down move into today's low tight stop, chase and go or fast exit. I just sold for some reason. Nvm my instincts might have picked up on something.
Going to take a 20m break, kind of cold so gunna get some hot water and I don't want euphoria to take over.
Range of bars Increasing.
Trade 6, selling expecting lows. Moved stop multiple times, probably should get out if I do that and if it doesn't act the way I want.
Into the negative PnL(including commisions).
Potentially Overtrading. Going to continue, I want to understand USD/JPY-SPY. Not sure why I am happy, but I want to thank @MrMuppet and @maxinger for telling me to look at multiple markets. First I believed in it blindly but with some skepticisms, but today is different, I really do see the value. Even if its intuition for now.
Low stunted, potential range day now, if sell side isn't going to defend top.
Trade 7, bought expecting increase. Sold near stop.
Trade 8, bought similar to trade 7 thesis, sold dislike PA
Trade 9, rebought in last trade had to go to pee so I exited early not sure if that was the main reason or PA. Heavy volume, sold not going to lie I think I dislike to be in a counter trend based on my position, but then again who likes losing money.
Currently above break even. FAT(Funds Available to Trade) getting low may stop trading soon.
USD/JPY weird PA. Trend continuing successfully in SPY. Wanted to jump into 2nd move upward, but chose not to something is not allowing me to click the button. I think I'm expecting slow trend upwards, into fast upside capitulation. Possibly a engulfing daily candle may form today. Large selling, potential top today.
Alright, I'm going to just stop today, I have low FAT, don't expect upside move with that downside volume but I may be wrong. May just consolidate up here until tomorrow.
My emotions took a rollercoaster today, but half way through I started consolidating the volatility of my emotions.
Got a econ test next week may or may not trade Mon-Wed, test is on Wednesday.
01/22/2021
REAL TRADING SESSION
TRADES: 5(LONG) + 4(SHORT)
Winners: 5
Losers: 4
-----------------------------------------------------------------------------------------------
NEWS:
- TOP 5 SPY EARNINGS SOON
- UK TRAVEL CURB
- VOLATILITY:
VIX: +7.22
25 Delta RR:
3-6m ATM Calendar: 1.61
25 Delta RR:
- DTE(0): 12.77(IVs after premarket open, falls back in line at open around 3)
- DTE(7): 1.09
- DTE(14): - 1.81
- DTE(21): -2.75
- DTE(28): -2.84
3-6m ATM Calendar: 1.61
- INDICES:
NIKKEI: -0.51
FTSE100: -0.49
DAX: -0.33
STOXX50: -0.64
FTSE100: -0.49
DAX: -0.33
STOXX50: -0.64
- METALS:
GOLD: -1.30
SILVER: -2.08
COPPER: -1.27
SILVER: -2.08
COPPER: -1.27
- OILS:
CRUDE OIL: -2.58
- INTEREST:
10Y TREASURY: +0.07
- CURRENCIES:
USD/JPY: +0.35
- INDEX MAKEUP(TOP 5):
AAPL: -0.57
MSFT: +1.85
AMZN: -0.22
FB: -0.39
GOOGL: -0.24
TSLA: -1.25
MSFT: +1.85
AMZN: -0.22
FB: -0.39
GOOGL: -0.24
TSLA: -1.25
GAMEPLAN:
INSTRUMENTS:
- Correlated to the downside
- 25d RR
- DTE(0) calls are expensive(premarket)
- DTE(7-28) tapers off slowly, but don't know how they normally taper off?
- Calendars
- Front month still being bought? not sure if these values go negative. Have to view market more.
- Probably will try to test last week's high. If it can hold and show proper support I will be long bias.
- If not expecting a downturn to the previous months high, if it has more power probably to last week's consolidation low, if even more to last weeks low.
- Another way it may play out is a initial move higher to yesterdays low followed by stunted growth to the downside, or no stunt at all and a heavy rally through.
PERFORMANCE:
LEGEND: BLUE IS LONG & PINK IS SHORT
Trade 1: Thought of my yesterday's low touch trade and planned to execute on it
Trade 2: Sold the low bought the high
, CHASED HARD. I remembered yesterday. Payed HEAVILY on slippage .Trade 3: USD/JPY, SPY Correlation, interesting market mechanics. Holding till YLOD(Yesterday's Low of Day), possibly trend support so riding it out. Volume coming in near YLOD, waiting for 2ndary test of YLOD. Someone is selling into YLOD, USD/JPY trending down still. 2nd test came, but low being found again and again, stunted selling pressure. USD/JPY still engaging lower. Weak initial pop, never the less it is a pop upwards. Exited, strong move down 3rd test failed. Crazy call selling pressure, at the point I sold a few minutes ago it was worth $0.10 more, I waited for the move to consolidate then sell but it never returned to the pre selloff levels. Is it the option greek gamma in work? or is it just sellers?
Trade 4: Expecting down move, possibly one of my game plans. Depending on strength of sell expecting strong move lower, unless stunted. Dislike PA(price action) sold.
Trade 5: Sold, potential continued down move into today's low tight stop, chase and go or fast exit. I just sold for some reason. Nvm my instincts might have picked up on something.
Going to take a 20m break, kind of cold so gunna get some hot water and I don't want euphoria to take over.
Range of bars Increasing.
Trade 6, selling expecting lows. Moved stop multiple times, probably should get out if I do that and if it doesn't act the way I want.
Into the negative PnL(including commisions).
Potentially Overtrading. Going to continue, I want to understand USD/JPY-SPY. Not sure why I am happy, but I want to thank @MrMuppet and @maxinger for telling me to look at multiple markets. First I believed in it blindly but with some skepticisms, but today is different, I really do see the value. Even if its intuition for now.
Low stunted, potential range day now, if sell side isn't going to defend top.
Trade 7, bought expecting increase. Sold near stop.
Trade 8, bought similar to trade 7 thesis, sold dislike PA
Trade 9, rebought in last trade had to go to pee so I exited early not sure if that was the main reason or PA. Heavy volume, sold not going to lie I think I dislike to be in a counter trend based on my position, but then again who likes losing money.
Currently above break even. FAT(Funds Available to Trade) getting low may stop trading soon.
USD/JPY weird PA. Trend continuing successfully in SPY. Wanted to jump into 2nd move upward, but chose not to something is not allowing me to click the button. I think I'm expecting slow trend upwards, into fast upside capitulation. Possibly a engulfing daily candle may form today. Large selling, potential top today.
Alright, I'm going to just stop today, I have low FAT, don't expect upside move with that downside volume but I may be wrong. May just consolidate up here until tomorrow.
My emotions took a rollercoaster today, but half way through I started consolidating the volatility of my emotions.
Got a econ test next week may or may not trade Mon-Wed, test is on Wednesday.