Iron Condor - Is this the best?

[dryfly]

I trade RUT IC for monthly income. I enter the trade around .10 delta. They key to trading IC is having a plan of when to enter, exit, and most important when to adjust and that’s key because you can lose way more than the premium you collect. On IC trades I like to receive at least 10% on risk. The trade I have on now
Nov RUT
1175/1195 Calls Credit 1.37
1010/990 Puts Credit 1.17
Total credit 2.54

I will exit if I can capture 80% of profit.

Having a predefined plan and sticking to it is most important, it also takes the emotions out of trading. If you follow the plan you’ll be more successful than not. It's not as diffucult as people make it out be even the adjustment strategies. It's not rocket science. I like to keep things simple so I use the KISS approach (keep it simple stupid).

I'm new here and I joined to learn as well. I was surprised at the negative comments. I don't have all the answewrs but I'll try an answer any other question you might have on income trades.

 

[galvinlee888]

is everyone who is replying to this thread posting phenomenal returns like 50+ %?

Non of the institutional trader ever aim for 50% (don't think any risk manager will allow someone to take this kind of risk), however, a 20 to 30% return is good enough due to their account size.

I posted here before to remind for retail traders to trade full time, you need at least 250 to 350K account just to sustain your normal life style (assume you need about 60 to 80K a year to sustain your life style). This is still high risk and you may blow up your account eventually in your life time (assume probability work in the way that it supposed to work).

With 10K account ? No hope, but your broker (and some of the broker "sponsors" troll in here) don't want to let you know about this. Keep trading (with the "hope" that you think you get in ET) and paying them commission.. iron condor with 4 legs ? This is even better !!

 

[vanv0029]

No positive expectancy in plain iron condor. Indeed, you are in worst situation after taking into accout your commission and slippage.

Just a hint, institutional never trade iron condor.

The drivel on ET is amazing. See Cottle's proof that buying strangles is equilvalent 0.66 size straddles.
I see the light. Only rational reponse is using the Price Driver system.

 

[crayon851]

you maybe right, but what separates the people who have managed to generate monthly returns from everyone else?

im not looking to trade full time, just to earn a decent return.

Non of the institutional trader ever aim for 50% (don't think any risk manager will allow someone to take this kind of risk), however, a 20 to 30% return is good enough due to their account size.

I posted here before to remind for retail traders to trade full time, you need at least 250 to 350K account just to sustain your normal life style (assume you need about 60 to 80K a year to sustain your life style). This is still high risk and you may blow up your account eventually in your life time (assume probability work in the way that it supposed to work).

With 10K account ? No hope, but your broker (and some of the broker "sponsors" troll in here) don't want to let you know about this. Keep trading (with the "hope" that you think you get in ET) and paying them commission.. iron condor with 4 legs ? This is even better !!

 

[AdrianHagh81]

you maybe right, but what separates the people who have managed to generate monthly returns from everyone else?

im not looking to trade full time, just to earn a decent return.

well i believe randomness and luck is a factor. aside from hard work and having a trading plan.

 

[galvinlee888]

well i believe randomness and luck is a factor. aside from hard work and having a trading plan.

To me, "luck" is too generic, it is more on if you are in the right time with the right strategies.

For example, if you are bullish in nature, you will be most likely become a profitable trader if you begin to trade from 2009 to present, and you will go south if you begin to trade in 2007/8. Buffet is a classic example, he is bull and he get into the market in the right time (1970+) and ride all the way up, compound his gain. Another good example is the "Karen the Supertrader", she seemed only begin to trade after 2008.

Same rule apply for bear or side-way trader.

It is always easy to say I will change my trading style (bear, bull, side way) based on market conditions or some BS indicator (MA, RSI and etc). This is all in hint side that you can tell for sure it is bull / bear / side way. No one can even tell what the market will look like in the coming two weeks.

 

[convexx]

I've seen and traded with a lot of successful vol-traders. Some made markets upstairs; some traded RAES and penny-wide markets; some traded rate-arb; some traded direction in vol; some trade vol as D1 (swaps). The most successful traded first-gen exotics. The vast majority of the trades either expired or were knocked-out. To be successful required the guy to be incredibly selective -- he would model and stress test 7/8 of the day-session.

The common trait(s) among them was that they initiate each position with an outlook on spot and/or volatility and then choose a position which achieves their goals with the least risk. Coupled with an ability to sit on their hands. Probably the most important trait of all.

There is nothing more destructive in trading than these ill-conceived "income trades."

 

[galvinlee888]

There is nothing more destructive in trading than these ill-conceived "income trades."

"income trades" is always the best seller for the mentor and guru
The catching part is they even promote that you can adjust the loser so that it eventually become profit. This is music to the novice. The truth for this strategy is you just risk more dollar, and digging bigger hole by kicking the can down the road. You may get away for a few times with this approach even with small win, but eventually this will catch you and blow up your account.

 

[convexx]

"income trades" is always the best seller for the mentor and guru
The catching part is they even promote that you can adjust the loser so that it eventually become profit. This is music to the novice. The truth for this strategy is you just risk more dollar, and digging bigger hole by kicking the can down the road. You may get away for a few times with this approach even with small win, but eventually this will catch you and blow up your account.

Right, adjust a 2.50 credit. With what? Underlying? 2.50 in risk becomes an $8.00 debit at the strike. I'd like to see one of these people defy gravity.

 

[convexx]

do you hold the same view for credit spreads?

I have no problem with condors or verticals. This explicit tail-risk shorts are shit. I consider ANY trade not a bet on price or vol as a poor trade. Set and forget and pray that the tail isn't reached.