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Do you realize how many people would KILL YOU to get that money?!? It is right there, in your grasp. All you gotta' do is take it.
Overnight offers a good point for discussion.
After all, we are here to explain what we are doing, even against what other traders might consider counterintuitive. And it's not following the
herd that one can accomplish what the herd does not.
If it were "good" to run as soon as you see a profit, that would often mean that what we are doing is essential "gambling". And we would not go far with that.
There are various aspects.
One aspect is the "stop-loss-order recovery mechanism". What does that mean?
Consider for instance the following picture:
This price curve represents the following "information transfers" (rollovers):
ES FOP 20220916 2850 P GLOBEX 50
→ ES FOP 20221031 2880 P GLOBEX 50
→ ES FOP 20221230 2700 P GLOBEX 50
Look at the blue circles with a white border, pointed by the yellow arrows.
Those denote
buy orders, which cannot be matched (
yet) with profitable sell orders (in my approach these "unmatched" entities are called "
players").
Now, the point is that the algorithm does not ever "
forget" about them ("
trading information").
Think about a person you have unwisely "wronged". He may be saying nothing. But at the first chance, he will get, the goodfella will make you pay the bill.
Given enough time, keeping this trading information, we can revert
any "stop order" into a profitable match (buy, sell). This happens with
probability 1, due to the fact that this price curve, through the rolls,
will always converge to 0, and we will be always, in turn, able to "rise" it as high as we need, choosing suitable options in the options matrix.
Another aspect is due to the particular "shape" of the dynamic
payoff that the bot is
building up and maintaining, which can be imagined as building up a sort of lottery where
we do not even pay the ticket as the "decay" pays for it but
given enough time, we will eventually cash it.
This will require a bit more explanation and will be clearer when you understand the shape of the
option payoff that is being created through these many layers and how it is made to
slide along with the
underlying so that we
remain perpetually in a profitable zone.
In the next episodes.
