Is trading Implied Vol, the real edge here? And anything directional has no edge?

qwerty11 said:
I don't see (in relation to IV trading) what disadvantages there are (nowadays) "at the retail level".

If you read some old topics here from Dest you will learn a lot (about IV trading)!
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Well, I would imagine your transaction costs would be much higher than they would be if you were at a HF or prop firm. Even if the costs are low at retail.
 
Tall Mike said:
What about selling options spreads? i.e. selling VXX Call Spreads. You can hedge your risk there. Or at least define it to what you are comfortable with.
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same concept as shorting options but with some gap exposure covered (course by paying some of that volatility risk premium you want to monetize)
 
Tall Mike said:
Well, I would imagine your transaction costs would be much higher than they would be if you were at a HF or prop firm. Even if the costs are low at retail.
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Retail js an advantage outside of information. No capacity constraints. RAES routing if it's still a thing.
 
longandshort said:
NO.
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In trading, an edge is a statistical advantage that a trader has over the market. This advantage can be derived from a variety of factors, such as the trader's knowledge of the market, their ability to identify trends, or their access to information that is not available to the public.

A trader with an edge is more likely to make profitable trades than a trader without an edge. However, it is important to note that no trading system is perfect, and even traders with an edge will experience losses from time to time.

There are many different ways to create an edge in trading. Some common methods include:

  • Technical analysis: Technical analysis is the study of historical price charts to identify patterns and trends. Traders who use technical analysis believe that past price movements can be used to predict future price movements.
  • Fundamental analysis: Fundamental analysis is the study of economic data and company financial statements to assess the value of an asset. Traders who use fundamental analysis believe that the underlying value of an asset will eventually drive its price.
  • Sentiment analysis: Sentiment analysis is the study of how people feel about an asset. Traders who use sentiment analysis believe that the sentiment of the market can be used to predict future price movements.
  • Market timing: Market timing is the practice of buying and selling assets based on the overall market trend. Traders who use market timing believe that they can identify the best times to buy and sell assets by following the market trend.
The best way to create an edge in trading will vary depending on the individual trader's skills and resources. However, any trader who wants to be successful in the long run must have some kind of edge.
 
Tall Mike said:
I've backtested a few technical patterns or indicators, and they all basically come back a mixed bag. On average.

From my own research, due to var risk premium, trading IV on options really seems like there is a true edge there.

I know I am not talking about transaction costs, and the disadvantages we have at the retail level, but Edge from IV seems like this is really the way to start teasing out an edge and what most "trading educators" don't even talk about. They are too caught up in technical patterns.
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That's because option+underlying traders price out those who just play the underlying.

It's really a matter of where you stand on the food chain. Who's money are you taking? Who is taking yours?

Playing the underlying (aka direction) is just half the game. Why miss out on the other half?
 
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