If you guys are doing better numbers, would you care to share? I have never seen something literally designed to go down this fast, and would have no clue how to replicate it otherwise.
Need 900% in 3 years- what would you do?
- Thread starter wekilishorts147
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The option decay is ridiculous for the amount actually at risk, the fact that it is practically guaranteed to be worthless is just icing on the cake.
You are counting on UVXY keeps going down?
May I ask, did you algorithm work (or did you back tested) in 2015 and early 2016?
You actually can on the UVXY too. @wekilishorts147 this is relevant - the UVXY options will qualify as Section 1256 non-equity options/straddles. File them on Form 6781 then you can carry back losses from those positions three years. The cash inflow could materially increase your starting position and dramatically decrease the required return to achieve your target.
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Thank you for your post. You have helped inspire me to improve my trading with a sense of urgency.
Although I am very analytical, my performance in short term trading has been held back by my character flaws. Although these flaws are hard-wired in, they can be mitigated. In my case, starting a public trading journal will be that vehicle, as I tend to feel a greater obligation to others than myself, a single man.
I will use your goal as my goal. I need 900% in three years in order to fulfill on voluntarily taken obligation.
Now, how to achieve that goal? One area of short-term trading I have had modest success is reversion to mean setups. I look for a well-established trend on the daily chart, and either a gap in the direction of that trend, or a continued intraday move in the direction of the underlying trend, and frenzied tick action in the level two. Once this frenzied tick action starts to subside, I enter a trade in the opposite direction of the underlying trend. My target is the intraday inflection point where the accelerated price move took place. I use two stops, one is a time stop of 2 periods until profitability. The other stop is equal to my expected profit. My win rate is about 80%, my profit to loss ratio is about 1:1. This is an optimum trading method to blow up an account for the undisplined. This is an attempt to trade a possible change in short-term sentiment, nothing more.
As a part-time hobby trader with a retail account, my money management level has been set at a meager .1% of account size. I use actively traded futures contracts for this method. I will bump my level to .8% of account size, and as trading performance warrants, will increase to 1.2% and perhaps beyond should my statistics support it.
Very busy with my seasonal business now, but will post here when my trading journal is up and running, should anyone be interested.
Thanks again for your post and best wishes to you.
You are counting on UVXY keeps going down?
May I ask, did you algorithm work (or did you back tested) in 2015 and early 2016?
Yeah, it's mathematically designed to keep doing so lol. If there's any safe bets here it's that vix futures go down over time. If you mean whether I'm prepared to deal with it when it goes up over a hundred percent I'd say either yes or I'd take losses of a minor variety depending on certain circumstances. I couldn't possibly backtest my own personal trading habits as it's not set in stone.
This is all my available info so far. This includes both a major loss I took at the start of the year that I can avoid happening again as well as the margin lockdown I've been dealing with for the last few months from IB on these products. I've switched to equivalent Canadian instruments with no new margin restrictions and these numbers should be way up next year. I trade multiple accounts of course but this one has the most history.
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Care to explain further? If you have auto algo, you should be able to at least approximate the result by using 2015 and early 2016 data when the volatility increased by over 100%, to simulate how much profit/loss that would generate? And I am interested to know the outcome.
Best wishes.
It's a mental algorithm versus automated. In truth I have been exploring the idea of automation, but I couldn't feasibly trust anything except myself for trading decisions at this current moment. There may be certain things I use it for such as alerts or position size or price suggestions.
Following what was written would likely yield similar results, but it's more of a guide on the maximum/minimum positions in each category that I trade in and when to use them. As for major losses, the calls are of course the only ones to be concerned about, as the 4-5 month out puts would be quite difficult to not realize a gain on. The calls can be protected against by buying calls of a higher strike price and shorter time out that would sufficiently protect your short call positions. Generally any move above 40 percent would trigger me to do this, but if you are more exposed you would have to trigger this sooner. I find that GENERALLY news and markets have indicators ahead of time of when volatility might increase, and it's at these times or when volatility is very low that positions should be kept very small.
Sure they make "those returns" and then they blow up. They only tell you about those 1-2 years they had 200% returns. They fail to mention their -80% years.