SPX Credit Spread Trader

:-) . American King of Belize: You seem to have a very good timing model. Also, your forecast is consistent with what I have had since last Thursday, (It is posted in history of this thread), and which was still valid going to today. The SPY did however not confirm a potential up move, while the QQQQs (nasdaq-100) did. Also the bond market did not soften today. I will have to redo the analysis, but from a point of view of where the market did not go, last Thursday predictions are still holding.

If there is a market where I would take a break, it would be this market.

PS: With straddles you can also play an upside, by selling a straddle that has a strike HIGHER than the current market. For instance if I take the QQQQs it could be a straddle at 46 or 47. The delta of such straddle would be positive, which is bullish and yet theta positive.
 
Stanford and Falconview: Friday of this week, you may want to watch the market because it is expiration day. Expiration days are notoriously different days than other days.

Sir Galahad -- Name of the week coined by King Arthur of Belize.
 
TJ MAX was the name that came to mind!
Ok, so knowing what both of you know now, where would you go to either learn to develop a timing model, or use a commercial one you think has some merit? I know that it is huge question, but go for the simple answer!
Thanks for the advice.
Michael
 
Michael:

Easy to answer: No one will scratch your itch better than you own finger/nail. You have to learn the craft, probably with the help of someone whom you can pay from the earnings. If no earnings, no pay.
You can pay for basic things, but beyond that a performance based model is what I think work for both parties.

It would be good if you gave some summary of useful background. For instance do you know what a bell curve is? Why the market moves? What is a mean, what is a variance, what is a probability, etc. Things like that. I think you know these things, but I did not want to assume. From your writing, you strike me as a very intelligent person.


TJ Max ( I did not know why I did not think about that name :) )

TJ Max is also known as Sir Galahad, as named by King of Belize who seems to be fascinated by holly grails, that do not exist except for this one strategy that works if interest rates were positive, but currently they are not.:)
 
Trading Journal

At the moment I'll stick to the STRADDLE ATM idea. Not when I decide to put it on of course! Was trying to figure out STRANGLE premiums this morning and got them all bolloxed up. Think I will simply have to play with them for another week or so? Right now the STRADDLE is the important thing. Need successful practice in that for some ideas I have as to bet timing.

Both the Vertical Credit Spread and the STRADDLE credit spread are placed, at the same time, in my trading model. I'm waiting for it to happen. The TIMING moment.

Stanford

I just use the BIG CHARTS indicators for timing models. My favorite is the 10 day, 1 hour chart, backed up by re-checking the 1 month - daily chart. This Tuesday morning we have almost got a confirmed mini BULL TREND. It is not strong! Likely to be a short trend. Too short for buying Long CALLS. You probably would not make back your market maker spread and commission costs.
The give away today is that the mini-bull trend is confirmed by the AUXILLOU SIGNAL. That occurred yesterday, but was confirmed at the OPEN this morning. It is a signal, that has to be confirmed in a three day pattern. Yesterday was a lower low yesterday with a higher CLOSE signaling a BULL move. This morning the daily bar is already UP and probably will end up. That confirms the pattern when this day's low or the third day of the pattern has a higher low than the day before. This is often used by SWING TRADERS also. When it is not confirmed you will get bitten badly, usually a week or two of delay before the BULL TREND actually starts.
Other than that I just switch around in BIG CHARTS from indicator to indicator. They are for the most part three day delayed indicators. They change constantly through the next future three days. Keep readjusting. All you can get from them is a general feel for the future moves down the line, but nothing definite on which to make a decision. This morning I just switched my 10 day - 1 hour chart to DMI, Ultimate Oscillator and Momentum. The DMI is good because it tells you what the market is doing in PRESENT TIME. The other indicators only tell you what the market did historically starting three days or four days ago.
I've been playing with different TIME SCALE charts. I like the 15 minute chart, the one hour chart and the daily-1 month chart. The shorter time periods give earlier signals, which are dangerous to bet on, because they can change as the timer period progresses. The biggest ( time scale ) chart is the only one you can bet on. But if everything works out okay, the quicker time scale charts warn you of impending directional moves. Not always, but to watch for.
I alternate sometimes between RSI, Ultimate Oscillator and Williams % R indicators on the BIG CHARTS. Most of the time, the Ultimate Oscillator gives an earlier signal. Not always, but most of the time.
The MOMENTUM is not really a good indicator, or at least I have not found it so. Still trying to work it out on different time scale charts? Still in a general sense, I like it solely because in the larger time scales, when it is either ABOVE, or BELOW the neutral line it gives the TREND. I don't try to read the bars, other than a bar that is very long, is a good indicator of the strength of the trend you are watching.
The DMI is my favorite indicator. It works in the present and only is reliable on the largest 1 month -daily chart. We have for instance a cross over on the hourly chart of the faster D- and D+ lines which indicate a trend starting. Yet on the monthly bigger -daily chart that crossover has not occurred yet. So to make a bet you must wait for the bigger time frame to be effective. Don't jump the gun on betting. Things don't happen that fast in trading. You cannot get in the beginning, nor exit at the end perfectly. You can only take a secure CHUNK out of the middle of a trend.

CREDIT SPREADS and there are half a dozen of them, are apparently very finely tuned to a specific moment in time to place your bet. As they are TIME DECAY and VOLATILITY bets. ( deflating premium,) I only know the Vertical Credit Spread right now. Practicing on the STRADDLE credit Spread and I'm bungling the Short STRANGLE right now in practice.
On the other hand, BUYING either CALLS or PUTS depends on the length of the TREND you bet on. You can never tell about trends, how long they will be. Usually moving averages keep you in the trend when it is in progress and stop you from taking profits too soon. There are other nuances to know, which you can only absorb over time in practice. You are not going to learn to play the violin well quickly. Nor will you get to read charts in less than 2 years. It takes an intuitive instinctive reaction like playing a violin learned by lots of practice. You don't put in the practice you won't succeed and become a professional money maker. There is nothing automatic about the market, or sets of signals to act on. Just some regular patterns and signals that can seem good, but which your subconscious must from practice and exposure accept or reject backed by experience.
 
Huh?
Thank you I will take some time to go over that when I can. Are there any commercial services who give any decent market predictions?
Michael
 
STANFORD

NEVER heard of one!

Most commercial services brag when you win and disappear when you lose.

I'm getting two subscriptions FREE from outfits that want me to give them money. Don't believe in it myself! Sales pitches are unrelenting, described in the most glowing terms. It's all bulls**t.

There is an old saying. "You give a man a fish, he eats one meal. You teach him to fish and he eats for the rest of his life."

There are no easy automatic roads to success in money making.
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If you can learn one trade, in one moment in time that is all you need. After that you increase the size of your bet. The trouble with that is; we as humans get greedy and want more and keep trying marginal stuff and lose our winnings. Scientists and engineers are logical people, they think they can figure it out. They can't! You are dealing with mob physcology. Which is ever changing and unpredictable.
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Currently I am trading ONLY weeklies. With the presumption of trying to WIN some money each and every week. If and when I can figure out how to do that, then will go to increasing bet size.
TRADING JOURNAL has it right, in that a basket of tricks works better because they operate usually on distinctively different criteria. This spreads the RISK of LOSS and gives you an EDGE as Cache Landing would say.
At the end of the week, on Friday, I want to know if I have increased my account or not. No other criteria is of any value. No excuses, no if's and buts!
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Probably not relevant, but over the years in my other life when I used to trade in the 70's and 80's and so forth, ( straight buying ) I also learned that there is only ( for me ) one method of reading trading lore. That is what the PRICE is doing. You can even forget VOLUME, which used to be a big thing in the 80's. Whereas the credit spreads I'm learning now are mostly about volatility and theta. Not so much about price change. Though that is incidental and needed, to get the first two.
Just some thoughts on trading! Not necessarily accurate, but my own outlook. The proof has to be on FRIDAY in the account balance.
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TRADING JOURNAL

While messing around on here, I noticed that the bull run took a boost?
In checking the Implied Volatility, the CALLS shrank and the PUTS increased. What am I supposed to read in this? Is there any useful knowledge here? For a SHORT STRADDLE maybe? How do I judge when the premium is swollen?
 
Trading Journal

You mentioned you were watching the IV the other week, on the STRADDLE.

I'm looking and writing them down. As the trend advances, the SELLING Bid price totals, stay lower priced than the ASK price totals you would have to pay to buy the straddle back.
I'm wondering if this reverses when you reach a peak in the trend?
 
I was following the OEX 495 Strike, but as the index reaches 499 and nearly to OeX 500 strike, the Implied Volatility numbers reversed. The CALLS now have more IV than the PUTS slightly. I was wondering if this is just because it moved UP about a STRIKE, or 5 points, or if something more significant is happening here?

On the other hand, the OEX 500 strike hasn't quite been reached yet, but the CALLS are still trailing the PUTS in the IV numbers at 18 to 19 IV.

How do you interpret this?
 
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