VIX is already in short term RTM territory. Kind of puts a damper on going long ES here. I'll look at doing a small size bull spread (March 31 2023 - 3970/3870 puts) RTH with ES around 3970 and entering a stop near yesterday's low. Not that confident with that idea and noting US equities are not leading during the recent rally. Nasdaq also not leading SP500.
Train Wreck Journal
- Thread starter BeautifulStranger
- Start date
We took out yesterday's high on ES with no meaningful correction so far, except perhaps the early test of the open. Assuming ES closes reasonably strong, I'll be looking for a correction on the 30 minute Monday with an eye for an eventual test of 4200. Would feel more comfortable being bullish if NQ was a little stronger relative to ES than it is.
Looks like ES is in consolidation mode after Friday's runup. I will be looking to go long tomorrow and perhaps Wednesday as well. Not a major commitment as I don't have a solid handle on the macro environment and have lost situational awareness on social factors.
I will look to buy a bull spread and partially hedge the delta for a more favorable RR than an outright vertical spread, at the cost of undefined risk to the upside, although I could buy a cheap call to cap that risk.
The above structure brings interesting trade management possibilities. This involves the immediacy of applying money management and whether the money management price level is progressive, flat, or regressive.
Immediate money management should apply when losses continue to accrue the further price moves adversely. Delayed money management should apply when the maximum short term loss reaches a peak then reduces as price continues to move adversely, allowing a trade more time to become profitable. The structure I am planning to trade tomorrow has this feature. Due to time decay, maximum loss will likely increase daily, eventually reaching a threshold where money management can become prudent. I will determine in advance what my maximum allowed loss will be, although the particular date or underlying price level this may apply will not be known in advance.
Progressive levels are similar to a trailing stop and seem best applied for shorter time frame trades with a specific exit price level. A flat level represents an area where a given dollar loss is nearly equal throughout the term of an option spread's life, often seen with vertical spreads. The flat level seems best applied to either a perceived support resistance area or a significant event is associated with a price level. A regressive level is where management price moves further from the entry price as time moves. This can be often seen with neutral trades or an out of the money version of the structure I'm planning to trade tomorrow.
I will look to buy a bull spread and partially hedge the delta for a more favorable RR than an outright vertical spread, at the cost of undefined risk to the upside, although I could buy a cheap call to cap that risk.
The above structure brings interesting trade management possibilities. This involves the immediacy of applying money management and whether the money management price level is progressive, flat, or regressive.
Immediate money management should apply when losses continue to accrue the further price moves adversely. Delayed money management should apply when the maximum short term loss reaches a peak then reduces as price continues to move adversely, allowing a trade more time to become profitable. The structure I am planning to trade tomorrow has this feature. Due to time decay, maximum loss will likely increase daily, eventually reaching a threshold where money management can become prudent. I will determine in advance what my maximum allowed loss will be, although the particular date or underlying price level this may apply will not be known in advance.
Progressive levels are similar to a trailing stop and seem best applied for shorter time frame trades with a specific exit price level. A flat level represents an area where a given dollar loss is nearly equal throughout the term of an option spread's life, often seen with vertical spreads. The flat level seems best applied to either a perceived support resistance area or a significant event is associated with a price level. A regressive level is where management price moves further from the entry price as time moves. This can be often seen with neutral trades or an out of the money version of the structure I'm planning to trade tomorrow.
No trades due to technical problem at open, for which I'm happy. I would have thought VIX would have risen more than it did yesterday if the market feared what Powell was going to say. I'm not going to look for a short, however. Instead, I'll be looking at OTM index put diagonals done at a small credit. These typically have 90%ish POPs, although reward to risk and vega exposure are not favorable, making trade management challenging during selloffs.
Bought a ES Mar31 3850/Mar 24 3900 Diagonal for -2.15 on improving risk environment in other account. As it turns out, the this journal account does not have trading permissions yet. Target is 0.00. Stop is near short option. Details to follow.
Screeech. Boom!
Screeech. Boom!
Closed diagonal at -3.20 for a loss of $58.18. There was a lot of flight to safety, previous day's low was in play, and had an interesting conversation with a couple of truckers who said it was becoming difficult finding decent paying loads. Last I looked, trucking spot freight availability was down about 2/3rds from its pent up demand peak. I would characterize current spot freight availability as somewhat below the average of the last few years, so no crisis.
I am going to take a much more defensive stance and will look to accumulate using my reversion to mean system on the daily.
Going to combine the trading account this journal is based on with the account in my "For another Life" journal and trade longer time frames. This account had no trades except for the long $20,000 T-note, resulting in a small open profit.
Crap. An orderly snuck down the hall to my room and discovered me on my ipad.
Hav to Gooooooi n g
tooooo g o
Sh eee s
got a neeeee dle
nottttttt theneeeeeee
Crap. An orderly snuck down the hall to my room and discovered me on my ipad.
Hav to Gooooooi n g
tooooo g o
Sh eee s
got a neeeee dle
nottttttt theneeeeeee
Not anymore. They expanded the baseline when it was confirmed I was a retail trader with a short term strategy. Massive overcrowding helped, but it was my commitment to say supportive things about the Government that did the trick.
I love my government. I am in awe at our selfless, hard working, and efficient political leaders who tirelessly ensure our best interests. God bless our political leaders!
