ES Journal Archive (2006 - 2008)

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Yes, these are options equalling the same value of my long contracts. It's a different type of stop order and will allow me to have the market make a quick shakeout move, but I don't get shaken out because it's an option and not an executed stop. I would typically only do this or sell calls, once I have profit in a trade. I don't usually worry about trying to hedge when I first get in because the signals I use to get it are very very good on daily weekly and monthly charts. The idea is to spend a little bit of the winnings as insurance in order to benefit from continuation in a trending market. I should also mention here that I could basically do the same thing by selling my long positions outright and buying calls. Again, this is only when I have a decent profit in a trade.

An argument could be made as well , that since my signals on entry are very good, why not just buy calls/puts then? --Not certain I have an answer except to say that it has always been policy to only buy options when I want to hedge using money that I have already earned.

Quote from Allen3:

Hello B1S2

Maybe stupid question, but haven't done anything with options yet. Would these be options on the futures contracts, so that the value of the option is the same as the value of the contract you bought? Thanks.

JIM
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Quote from mbusch:

S 1512.25
BS 1516.25
PT 1508.25
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This is 1 to 1 risk /reward. In all seriousness, I don't like it. I like extended gains. If it is working for you though, Great!
 
By shakeout move, I mean something like what happened overnight when the London Bombing happened or recently when the North Koreans launched a missile and in the space of five minutes, the Yen futures moved down and back up about 200 pips (I think). This is why I prefer using a mental stop for longer trades. It may be better intraday where your positions might be larger, to use hard stops. :)
 
Here is a current Monthly SP futures continuation chart. I wanted to show this chart to indicate the current strength of the market on the big picture time frame. Don't get me wrong, we still have to watch the daily and weekly for clues, but as you can see, my chart method has been very strong when applied to this chart.
 

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Quote from JimmyJam:

for anyone who's wondering, i hard to move my PS above 1508 (moved it to 1510). i still think i get paid from this one, here's why.



jj
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FWIW, this trade was exited at -2pts yesterday before running off to work, took a scalpe for 2pts on the breakout, and just watching charts right now ...

JJ
 
Quote from Buy1Sell2:

The next question would be then--How could we avoid this? (See chart)
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And the answer is that we would look at the daily and weekly. Here is the weekly chart. Anyone familiar with my methods can instantly recognize the weakness in the market at that time.
 

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Quote from Buy1Sell2:

Here is a current Monthly SP futures continuation chart. I wanted to show this chart to indicate the current strength of the market on the big picture time frame. Don't get me wrong, we still have to watch the daily and weekly for clues, but as you can see, my chart method has been very strong when applied to this chart.
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Um, I remember this arguement being made by a perma-bear about 5 years ago for the downside cause.

If I remeber correctly he kept playing the downside while it was good, missed the beginning of the rally and then was totally clueless about this huge upmove.

JJ
 
And now the daily from that time period--1987. Easy to see that market was not exactly of the strongest variety.

In summary, by using at least three time frames, you can generally ferret out the proper direction in the market.
 

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