The S&P has topped

The S&P has topped

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    59
I find it interesting that many of the people who have been around for a while now only seem to be trading options and these fancy things like spreads or all these other things I don't know much about. It makes me wonder why. From my limited understanding, it has to do with something like "creative accounting" in that you can be wrong, and yet still come out not too badly damaged if you roll things forward and open up other positions and things like this. It all sounds great of course to make money when you're right, and not lose money when you're wrong, but at the same time, I can't help but think that all this means is that when you're trading in this way, its because you really don't know what will happen next, and that you're not willing to take the risk.

This isn't in any way directed at @bone since I see this from lots of posters, but it still is intriguing to me. Like I said in my post above, if someone is so sure that 2400 isn't the top, then buying right here at 2370 should be damn well attractive, but nobody seems to want to make the call for going long right now, and nobody seems to even want to trade these futures outright. I therefore wonder what this says about people's opinion of the market in conjunction with their desire to put money where their mouth is (ie. take a position). Its like they go on and on about this not being a top in any way, but then they enter a position via a spread trade that limits their risk (and their profit) because thankfully, their risk management is better than their flapping gums online who criticize anyone for calling a top.
 
Gotcha said:
I can't help but think that all this means is that when you're trading in this way, its because you really don't know what will happen next, and that you're not willing to take the risk.
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You're correct but for possibly different reasons than you opined in your post. Any trade entails risk. If it's designed to profit then it can damn well lose money no matter it is. That's the nature of risk. Also, let it be known that there is no one way to trade any market that's "better" than the other. If a person finds a consistent way to profit over the long term and it holds up then it's "correct". To me, there's more dimensionality and therefore more opportunities in options and futures spreads than there would be in simply taking a flat price directional bet. (Again, I only teach futures spreads).

I find that most properly constructed intramarket futures spreads away from the prompt months
Model and 'behave' in a more reasonable and obvious fashion than the flat price prompt futures contract. I am trading the price convergence or divergence between two or more highly correlated instruments - I really don't have to know or care about what the broad market is doing. It's a game within a game.

I know guys that make a living buying and selling straddles and strangles. It's a game within a game.

It's not about avoiding risk as much as it is trading what some perceive to be a superior risk/reward strategy. In terms of profitability the biggest prop traders in Chicago are usually Spread traders for a reason. And they take stupid size. The bid/ask sizing on the spreads is almost always much larger than flat price, and Spread traders lever. That's my 2 cents - YMMV.
 
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You're going to have to "time" your entry no matter what you do. My only point to all of this (which I tried to explain in earlier posts) was that the R/R profile would be considerably better if you waited for the deep pockets to turn the market and then time your entry to coincide with longs liquidating and fresh shorts entering the market.

And I say this ESPECIALLY given the OP's shallow target and not in spite of it. IMHO, it's a better way to more consistently time an entry.

But hey, he's not looking for much so if he hits it then fantastic.

My concern is that there are SO many threads over the years where guys are calling macro tops and bottoms and it very very seldom comes to pass. Let's hope OP gets it - I would never wish a loss on anyone.
 
bone said:
the R/R profile would be considerably better if you waited for the deep pockets to turn the market and then time your entry to coincide with longs liquidating and fresh shorts entering the market.
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Well if only it worked as well as you describe, we'd all be rich! I'm not sure if there is any way to spot this on a chart with precision. Now maybe there are better footprints in the options world, because I do hear there are nuggets of gold here when you analyze different strike prices and expiries, etc., but strictly looking at futures, I'm not sure. Any time you get an entry with more confirmation, your price risk is going up.

Looking at your chart from this post, https://www.elitetrader.com/et/threads/the-s-p-has-topped.307293/page-19#post-4419505 , it still looks like a runaway bull trend, but if we focus on the lows in 2009, one week bar was down, next week bar was up, and then it was up all the way from there without ever looking back or being tested. Surely there had to be shorts closing, longs opening, and deep pockets moving in there are well, but how to see? In fact, even just analyzing the anatomy of intermediate tops and bottoms on this chart, there is a whole range of what can happen at a top or at a bottom, and there is no clear market structure that tells you. Sometimes you get a bull/bear reversal bar side to side, sometimes you get a test like a double top or bottom, and sometimes its a "pin" bar with a very long tail, but each instance of top or bottom is different.

If going just based on visual cues, the runup since the election in November seems to be the most acute run higher out of anything on that chart, and based on this, ready for a deeper pullback since there is no other run higher quite like this one without a pullback. (but of course going on just this would be foolish)
 
Gotcha said:
I find it interesting that many of the people who have been around for a while now only seem to be trading options and these fancy things like spreads or all these other things I don't know much about. It makes me wonder why. From my limited understanding, it has to do with something like "creative accounting" in that you can be wrong, and yet still come out not too badly damaged if you roll things forward and open up other positions and things like this. It all sounds great of course to make money when you're right, and not lose money when you're wrong, but at the same time, I can't help but think that all this means is that when you're trading in this way, its because you really don't know what will happen next, and that you're not willing to take the risk.

This isn't in any way directed at @bone since I see this from lots of posters, but it still is intriguing to me. Like I said in my post above, if someone is so sure that 2400 isn't the top, then buying right here at 2370 should be damn well attractive, but nobody seems to want to make the call for going long right now, and nobody seems to even want to trade these futures outright. I therefore wonder what this says about people's opinion of the market in conjunction with their desire to put money where their mouth is (ie. take a position). Its like they go on and on about this not being a top in any way, but then they enter a position via a spread trade that limits their risk (and their profit) because thankfully, their risk management is better than their flapping gums online who criticize anyone for calling a top.
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And the dawn cometh.....:rolleyes:
 
W.J. Feathermaker III said:
He just had supreme confidence that he could upstage Volente and rub his face in it. Psych 101.
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No one but you and your crib-mates think this -- which our psychology friends would remind you is "projection." As is,
"...Your breathless retorts prove what an unhinged loon you are."

ErrrmahGERD!

You peddle psychodrama. You invent enemies. And motives.

You be some sad-ass critters. Earns yet another :rolleyes:.

But hell! If it keeps you off the streets! Away from machinery with moving parts! Probably doing some good. Have at it.
 
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tommcginnis said:
No one but you and your crib-mates think this -- which our psychology friends would remind you is "projection." As is,
"...Your breathless retorts prove what an unhinged loon you are."

ErrrmahGERD!

You peddle psychodrama. You invent enemies. And motives.

You be some sad-ass critters. Earns yet another :rolleyes:.

But hell! If it keeps you off the streets! Away from machinery with moving parts! Probably doing some good. Have at it.
More...

Ahhh yeah, sure thing. You on the sauce right about now?
 
Volente, my sheep do very well for themselves trading futures spreads. 175 Elite Trader Members and counting. CTA's, Independent Traders, Prop Desk Traders.

Serious traders are welcome to independently contact them.

Energy and STIRS have been especially good the past several months.

Proprietary indicator package is battle tested.
 
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