Timing Market Turns

thx WB / cnms - not long ago i put together some numbers looking at - the greeks, individual option strip liquidity / bid-ask spread, ultimate risk exposure (i.e. option premium), effect of commissions, choice of option expiry dates, expected duration of a trade, among others - there seemed to be too many variables to come up with a definitive algorithm selecting the most effective option to trade - in the end, i ran a few simplified scenarios and concluded that in general, for trades with duration of several days, ATM and/or slightly ITM options looked most effective in terms of replicating the performance of the underlying (S&P index) while limiting max risk exposure to the option premium.. - thx again for the feedback and all the best.
 
Quote from W. B. Busin:

Now to your objective versus subjective issue. Its answer lies in the study of the philosophy of your study of market psychology. :)

My view is that little has ever been done that is not subjective in some slice of the loaf. If a human being is associated with a concept or principle, it contains some certain amount of subjectivity, doesn't it?

I carefully following a strict but subjective money managemnt plan that reduces the effects of my own subjectivity when I am trading. I trade my plan thoroughly and devotedly.

I so like this topic. It is boring to someone who has not devoted time to it. It is the most important make or break issue in trading. How do you control the emotional side of your trading?

Thank you Chris for bringing it up.

WBB [/B]
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Dear WBB,

Interesting answer, and thank you for making me even more confused :) just kidding!

How do I control the emotional side of my trading? Well, I am still learning too, but one way I do it was by rigorously taking action upon each signal being generated by the trading system(s) that have proven itself to be great performer in the past. By not letting my emotion (greed/fear) interfere my action in applying each signal, I reduce my subjectivity when I am trading, similar to what you did by following a strict money management plan. If the trade turns out to be a loser, I am not going to kick myself in the butt because I know I was just following a trading plan that has proven to be successful in the long run.

WB, I have a question with the today's trade. Regarding money management plan, if you categorized the today's trade as very ultra high risk trade, how come you went with 100% of your fund to trade? Isn't it too risky?

Another question, you mentioned a couple of time in your posts about the time locus of April 11, 2006, so I assume this must be one of the major turning points. At this time you think it is a high point, from which time the market will drop significantly for the rest of 2006. My question is, is it possible that the 04/11/06 time locus turns out to be a low point, and thus the market will in fact rally after that point?

Best Regards,
Chris W.
 
Quote from cwijaya:

Dear WBB,

Interesting answer, and thank you for making me even more confused :) just kidding!

How do I control the emotional side of my trading? Well, I am still learning too, but one way I do it was by rigorously taking action upon each signal being generated by the trading system(s) that have proven itself to be great performer in the past. By not letting my emotion (greed/fear) interfere my action in applying each signal, I reduce my subjectivity when I am trading, similar to what you did by following a strict money management plan. If the trade turns out to be a loser, I am not going to kick myself in the butt because I know I was just following a trading plan that has proven to be successful in the long run.

WB, I have a question with the today's trade. Regarding money management plan, if you categorized the today's trade as very ultra high risk trade, how come you went with 100% of your fund to trade? Isn't it too risky?

Another question, you mentioned a couple of time in your posts about the time locus of April 11, 2006, so I assume this must be one of the major turning points. At this time you think it is a high point, from which time the market will drop significantly for the rest of 2006. My question is, is it possible that the 04/11/06 time locus turns out to be a low point, and thus the market will in fact rally after that point?

Best Regards,
Chris W.
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Chris,
Brief response - good answer to my rhetorical question about emotions.

I took the trade for various reasons. It was still within the margin of error of 1 period. Power used to move the indexes 1 point increased as momentum was diverging - and still is.

If we open down tomorrow or get above SPX 1310, I will probably go back to cash. You may check back at previous blog posts that SPX 1303 has been major extreme resistance. At this option, the OEX is almost too close by its parabolic threshold of 595, or the rough equivalent to SPX 1310. Above that level, a massive move upward could occur into the close on Friday.

Cresting above SPX 1312 in my view will eventually push the index beyond 1335 to a higher target of 1400.

Yes, April 11th could be a low, but not likely.

I must leave it there, but good question. The euro and cable will open soon.

Good Trading and God bless

W. B. Busin
 
I always wondered why somebody who has a successful trading system would charge a fee to share it with others. If it is successful he doesn't need the money. If he thinks that sharing it, his system will become obsolete, why share it at all?
Quote from bgp:

w.b. when will you start charging a fee ?

thank you,
barry
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Quote from W. B. Busin:

I hope never. :)

WBB
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