I´m ahead right now at 11.20 a.m. here. But closing down the computer. I´m going for a swim. The breeze is light, the water green, blue and warm. Just took an hours nap. Not sure whether I´m going to sell out today, or tomorrow or the next day.
As a matter of fact, I did get in twice on Friday and surprised that the first try on my SECRET MAGIC BUY INDICATOR actually worked? Got in before there was a move. Of course this only confirms it will work in a BULL trend. Still some markets to go, range bound and bear trends for real live testing.
In the mean time ôve been reading another trading book. Interesting about money management. I don´t agree with the rules though. For instance, you are ahead a lot. If you took out your original stake and put it back in your credit union, you would be free and clear working with the icing on the cake. The casinos money. I do understand GREED makes that a difficult thing to do though. In theory I believe you should clear any profit from an account at some level. Say $10,000 was your starting point and end of the month, take off any profit and start again with $10,000 first of the next month. Something like that.
I had restarted back on Jan. 1st, at $7300 thereabouts, and now I´m up to about $7500, or $7600, I forget; but because of losses last year for one reason and another, I had gone back to trading in one contract. Last week I was in 3 contracts and this week I´m now in 5 contracts. I will start to make money when I get to 10 contracts. It is sort of going by gambling rules. When you are hot, increase bet size and when you go cold, drop back to one contract. At any rate, those are my rules of money management for this year, which may be adjusted as we go along.
In the meantime, my money management rules are ; have a minimum of $5000 I will not touch. Anything above that, is game for trading short term on volatility. Bet that whole hog. something like you have been doing. Though once I clear the $10,000 mark, roughly 5 months I figure or less, I will start to divide the total in HALF, and trade everything above the half way mark. At some point I am just now thinking of when and how to pull something out of the account, in the future. 2% of an account is ridiculous for a short term volatility trader to trade. That is the death of a thousand cuts.
I´ve tried all the stuff the grumpy old men pass on as cliches on these forums and it does not work. I mean it works, but I´m 75 years, I don´t want to spend 20 years diddling around for 3% a week, or month, or more returns, in their complicated exotic trading strategies. You can take butterflies, spreads, verticals, diagonals and other stuff and shove it. They risk too much and earn too little for that risk. If there was any factual evidence behind those exotic strategies that it was safer to bet their way, I would agree with them maybe. But I´ve tried those things and they are as dangerous and you are going to lose just the same when things go wrong. The only difference is they lose more slowly. Over a year or two, with wild swings in equity balance. The name of the game in my amateurs opinion, is having an edge to trade straight, on betting the one in three game of chance. Going for short term volatility. Though it does pay to trade a 2 year contract for a three month trade. Did that successfully and made 80% of the account on that, but it was paper trading and I don´t have enough cash to do it right now again.
I think your right. I was reading the chapter on stops. Maybe it works in stocks, but sure as heck it doesn´t work in short term trading options where you are trading volatility spikes. I use either a trend line, or a volatility curve to exit. Most of the time, you get out losing just commissions. If there is no volatility to swell the premiums the meat of the trade is all over. One trend in a volatility spike will pay for two losses or more in which you exit losing only a piece of your commissions and no loss to your equity. Even a small loss of equity cannot compare to a good bunch of money from a trending volatility spike. It is all in the TIMING and bite of calculated luck in getting the direction right. Knowing how the market is going to go, more or less.
You have that system and luck to you.
