Are you too anxious to win?

Amahrix said:
Next time take your f*ckboi sarcasm out of your response.
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Ok, it's coming from all these high end concepts an big words you are using. I'm sure you are not explaining things to @destriero here. So can you please step down a level or two and explain what am I(and perhaps others) to make of your post? What heuristics are necessary to win on average? How do you build conviction? How do you know you have an edge? How long does it take? It's not that I'm anxious to win, it's that I'm anxious to know if what I'm doing has an edge. Thanks!
 
qlai said:
Ok, it's coming from all these high end concepts an big words you are using. I'm sure you are not explaining things to @destriero here. So can you please step down a level or two and explain what am I(and perhaps others) to make of your post? What heuristics are necessary to win on average? How do you build conviction? How do you know you have an edge? How long does it take? It's not that I'm anxious to win, it's that I'm anxious to know if what I'm doing has an edge. Thanks!
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I believe oversimplification is dangerous, especially when it comes to something like options trading, but I will reiterate that my point is that (bad) option traders focus too much on "frequency of wins" versus "payoff function". But then if you focus on payoff function, the argument is that a person will "bleed their account" before a payoff occurs because the probabilities are low. This is true, so then you must deploy heuristics to survive in this environment. One is the way you bet, there is a process called Kelly Criterion, you can google search to learn more about that. Another way is to be locally concave, globally convex; an example of this is that you place highly probable winning trades to fund your high payoff, low probability trades and makes you last longer in the game versus simply creating and funding an account and buying deep otm options. There are other heuristics/tricks/rules of thumb you can come up with or find online and deploy in your strategy.

As far as building conviction goes... I don't know, I simply emphasize survivability over profits and place bets. I don't care about conviction. If an option strike is deemed expensive by me, I sell it, if an option is deemed cheap, I buy it. I make sure to survive and if it works great, and if not, I move on, I don't consider it a bad trade even if I lose on it.

As far as knowing you have an edge; I believe you'll know when you know. It can take long or not long at all. You can tinker(trial and error) in the marketplace to find an edge. It is difficult.

I don't know your specific strategy, but if you openly tell me, then I believe you don't have an edge, or maybe are unaware of it. Surely when one has an edge, they don't share it, otherwise the edge will go away. Kind've like technical analysis indicators, they're so widespread that everyone uses the same indicators... there is no edge. But if I discovered an indicator first, and never shared with anyone and it worked for me.. that is my edge, the moment I share.. my edge goes away or becomes a self-fulfilling prophecy.

I suggest re-reading my original post and maybe google search the terms if you're stuck. I also suggest reading books written by Nassim Taleb, Martin P. O'Connell, and Ed Thorp to learn more.

TLDR: Newbies focus toooo much on frequency of winning versus payoff function, unknowingly take hidden risks and eventually blow up with time. Good traders don't do this.

Also watch this:

https://www.bloomberg.com/news/videos/2016-05-12/nassim-taleb-on-the-importance-of-probability
 
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ETJ said:
O'Connell and Piper probably did more than any other group to create the modern CBOE. Probably trained 30 - 40% of the floor "back in the day". If you can ever obtain a copy of their original VHS tapes on trading options - beg, borrow or steal to get them.
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Tried searching, can't find :(. Someone needs to get a hold of it, copy to a computer and post online!
 
Tried for years - folks who may have them aren't parting. We have one in our shop and it ain't going anywhere. Digitizers wouldn't touch VHS last time we tried, but I'd bet they may exist. Our copies came from the First Options library which has to make it +30 years.
 
ETJ said:
Tried for years - folks who may have them aren't parting. We have one in our shop and it ain't going anywhere. Digitizers wouldn't touch VHS last time we tried, but I'd bet they may exist. Our copies came from the First Options library which has to make it +30 years.
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pppplllleeeasssseeeeee record it with a camera or device and post! priceless!
 
If you're coming to Chicago im me and we'll see what my boss says. No guarantees - I'm not even sure we a VHS player in the shop.
 
i like what you are saying on the whole in principle.

i am not sure if the folllowing is what you are saying but i think it is true nevertheless:

in trading you can buy and sell in random and make money on a one off....but as you trade for
the longer time and make more trades, you will lose because you have no edge....

the longer you gamble in casino the more chance of losing because you do not have the edge...the house does.

the edge in trading comes from a strategy or a method based on experience.....

for example trading with the trend.....the edge is there but you may not make money every time
 
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