Karen the Supertrader - TastyTrade Hybrid Experiment

Gotcha · Mar 21, 2017

Sweet Bobby said:
Yes, one trade is responsible for me being down. I didn't follow the mechanics of closing it at a 20% loss. I attribute this to not having my spreadsheet to guide me.

Here's some of the issues I'm having to overcome. First, tastyworks does not currently have OCO orders. In TOS, I was able to do a closing trade for my profit target and one at my acceptable loss. Also, tastyworks does not allow me to set alerts. Finally, tastyworks does not yet offer a mobile platform and I am sometimes unable to trade at my work desktop.

But, I am now dealing with the above restrictions and the account is back under control and headed in the right direction. You were not the first person to be surprised by my abandoning my discipline and spreadsheet. Since I had proven proof of concept, I truly thought I could wing it! Not so. Lesson learned.

Sucks to have to work with these technical issues. OCO orders, especially the stop part, are a huge benefit. Even the profit stop is really good too. It was an eye opener for me to go through stats, look at all my trades, and do a what if scenario under different profit target and stop combinations. Once you get this dialed in, simply leaving the trade alone to either stop out or hit profit was actually much more profitable than any micro managing I could come up with. If you had this ability, and then just left the trade alone, it also takes much of the emotional aspect out of it. I remember you saying that you just wanted to spend 5 minutes a day going over your stuff and just putting the orders in. As much as some think its a dream and trading requires more work, which it does, there is also a certain simplicity and benefit to just leaving the trade alone. It either works or it doesn't, and those OCO orders do most of the work, which is kind of nice, and smart.

Robert Modd · Mar 21, 2017

Sweet Bobby said:
I thank Karen for getting me engaged in this process. We studied Karen thoroughly and learned a lot. Most from our study group evolved into our own strategies that arguably improved upon her methods. I am pleased to announce that the experiment has gone live with real money and real risk. Best wishes to all of you as I embark on this journey. Roll Tide!

Good Luck! Simulated results looked excellent! A couple questions. Are you employing undefined risk? Are you cutting your losses on losers or just letting them run? Do you know your probability of profit on your portfolio? Average win dollar amount? Average loss dollar amount? Are you scaling up when or if you make profits?

algofy · Mar 21, 2017

Sweet Bobby said:
Yes, one trade is responsible for me being down. I didn't follow the mechanics of closing it at a 20% loss. I attribute this to not having my spreadsheet to guide me.

Here's some of the issues I'm having to overcome. First, tastyworks does not currently have OCO orders. In TOS, I was able to do a closing trade for my profit target and one at my acceptable loss. Also, tastyworks does not allow me to set alerts. Finally, tastyworks does not yet offer a mobile platform and I am sometimes unable to trade at my work desktop.

But, I am now dealing with the above restrictions and the account is back under control and headed in the right direction. You were not the first person to be surprised by my abandoning my discipline and spreadsheet. Since I had proven proof of concept, I truly thought I could wing it! Not so. Lesson learned.

Sounds like a broker change might need to be in order so you can get the execution functionality you need?

DTB2 · Mar 21, 2017

WOW, no OCO would be a deal breaker for me.

Pekelo · Mar 26, 2017

"I performed decades of back tests on the short strangle, matching Karen’s formula and tastytrade formulas as closely as possible many months ago. The systems did not perform well in the back tests. I had no idea that Karen’s fund was actually losing money when I performed the back tests, but the tests did reveal the truth of the methods, showing they would blow up an account when large amounts of margins were deployed. The public was in disbelief when I announced the results of the short strangle back tests, but now maybe they will change their opinion."

http://sjoptions.com/karen-supertrader-lost-money/

sysdevel99 · Mar 26, 2017

Pekelo said:
"I performed decades of back tests on the short strangle, matching Karen’s formula and tastytrade formulas as closely as possible many months ago. The systems did not perform well in the back tests. I had no idea that Karen’s fund was actually losing money when I performed the back tests, but the tests did reveal the truth of the methods, showing they would blow up an account when large amounts of margins were deployed. The public was in disbelief when I announced the results of the short strangle back tests, but now maybe they will change their opinion."

http://sjoptions.com/karen-supertrader-lost-money/

I'm not a Karen fanboy but this article seems quite motivated to push their own stuff without serious substance on the backtest and some pretty wild assumptions. Seems like a coin flip on who did the worse research.

Robert Modd · Mar 26, 2017

Pekelo said:
"I performed decades of back tests on the short strangle, matching Karen’s formula and tastytrade formulas as closely as possible many months ago. The systems did not perform well in the back tests. I had no idea that Karen’s fund was actually losing money when I performed the back tests, but the tests did reveal the truth of the methods, showing they would blow up an account when large amounts of margins were deployed. The public was in disbelief when I announced the results of the short strangle back tests, but now maybe they will change their opinion."

http://sjoptions.com/karen-supertrader-lost-money/

Pekelo you seem to have a firm grasp on a lot of the option trading concepts and a lot of experience. I am curious what type of trading systems do you employ? Thanks

Sweet Bobby · Mar 31, 2017

March 2017 is in the books! The real money account is down 3.12% since it began on January 19, 2017.

For the Month of March 2017, the account is up 3.65%. I began utilizing my spreadsheet again on March 6. Still not quite sure why I abandoned it. My results have improved since I began tracking the trades on the spreadsheet. I had 23 opening trades in March.

I've attached a graph of my Daily P&L, though it was only daily from 03/06/17.

I also attached my risk profile graph.

I hope we all have a great month of trading in April!

Bobby

Sweet Bobby · Apr 6, 2017

Robert Modd said:
Good Luck! Simulated results looked excellent! A couple questions. Are you employing undefined risk? Are you cutting your losses on losers or just letting them run? Do you know your probability of profit on your portfolio? Average win dollar amount? Average loss dollar amount? Are you scaling up when or if you make profits?

Mostly defined risk with a few naked positions. The portfolio currently has a 53% probability of profit. I am closing trades with a 77% win rate. Average win about $50. Not sure about the average loss, but it is considerably larger. I do not scale up when i make profits. Although, inevitably as my net low increases I will ramp up since I keep a daily target theta as a percentage of my net liq. As net liq increases, so will my required theta.

beefcaketrade · Apr 6, 2017

Doesn't matter if win percentage is higher than loss percentage, if your gains are less per win than the losses per trade loss. Have to factor in the amount of payout or loss too. What is the overall expected value? Is it positive or negative?