New options trader needs help.

An example of how I estimate risk of ruin.

All the values shown are rounded to the nearest whole number so 100% does not mean absolute certainty just greater than 99.5%

So for instance with a win rate of 60% we have a 17% chance of 6 consecutive losses within a 50 trade period.

I think the values are likely to be even higher than the ones shown in the table using normal probability distribution.

From my own experience I've found that sequences of wins or losses cluster together when the market condition is favorable or unfavorable to the system being traded.
 

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this pattern is documented in books 50 years old.
it still means the same thing though.
reading is time consuming, but sometimes worthwhile.
 
I am aware of that Ive read Steve Nison's candlestick charting techniques, he was the first guy to introduce japanese candlesticks to the west.
 
Quote from sebastionay:


when the tail is significantly larger than the real body (atleast 2/3 longer) with its eyes close to the other two candles as shown in my examples above then it has a high likelyhood of fulfilling itself.
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I cannot speak for a particular candle pattern, as that is not my cup of tea. Candlestick patterns have not done well under serious testing by more than a few individuals who have researched/published about them to see if any evidence supports them.

And "performed well in testing" leaves out a lot of serious information. Mostly, how long, what were under market behaviors, when was test performed, how many trades in sample, what metrics, what markets and mostly, was that standalone, or as part of a larger test of other patterns (if so, then one must separate out the "luck" factor).
 
Quote from TraderZones:

I cannot speak for a particular candle pattern, as that is not my cup of tea. Candlestick patterns have not done well under serious testing by more than a few individuals who have researched/published about them to see if any evidence supports them.

And "performed well in testing" leaves out a lot of serious information. Mostly, how long, what were under market behaviors, when was test performed, how many trades in sample, what metrics, what markets and mostly, was that standalone, or as part of a larger test of other patterns (if so, then one must separate out the "luck" factor).
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Could you give me a screen shot example of shorting a share using options? or point me towards one.

Something like a covered call.
 
Quote from sebastionay:

Could you give me a screen shot example of shorting a share using options? or point me towards one.

Something like a covered call.
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Do yourself a favor and read a book on options because you haven't mastered the basics yet. You don't short stock with covered call. You are just begging to lose money if you trade options without even understanding the difference between option buyer/seller, long/short, covered/naked, etc.

http://en.wikipedia.org/wiki/Covered_call
 
Quote from sebastionay:

Would a share split effect the value of an existing option?
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Hate to split hairs but value is different from premium. To wit:

Premium is linear so if you had a $50 that split 2:1, you'd end up with two $25 contracts at half the premium - all other factors remaining the same (IV, time, underlying price, etc). The premium changed but the value of your position did not since you now control twice as many shares at 1/2 the price.

100*50 = 200*25
 
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