Trend Trading vs Non directional and ballance

Quote from Loki:

Isn't this really why we trade for ? To maximize our most precious commodity, time.
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Absolutely! I have no desire for "stuff & things", but a big desire for time! Although I trade full time, I make plenty of time for fresh air and sunshine, lots of home cooking, live music, soccer, fun with friends, good movies. And during trading hours I find the ET community to be smart, informative and funny, making it easy to pass the "paint drying" time.

I'm curious as to why you sell options rather than buying them. Seems to me there is far less risk when buying options, and often a greater upside potential, especially on momentum stocks/ETFs. Although I do understand that when trend trading, selling options gives you the advantage of, rather than the cost of, time decay.

P.S. I am a (mostly) day trader desiring a minimum return of 100% a year.
 
Thanks to duhmentor for the link. I saw others like it and I know it works that's why I have a dilemma.

Trend Trading is about hitting home runs while non directional trading ( options selling ) is about hitting singles.


For NoDoji: If you buy options you have to be right in direction, volatility and timing. If you are wrong in just one factor you will mostly lose 100% of the money invested. It is a limited loss, true but it will end up being an "unlimited limited loss". You see no one can predict where the market goes trade after trade or year after year.

There are many many advantages in selling options as long as you understand and manage your risk. I suggest you read some books this is not the place to talk about such fascinating and complex issue, but in a few words it comes down to probabilities.

If I put down $ 1 to make $ 10 I have 90% probability to lose and 10% to win.

If I put down $9 only to make $1 I have 90% to win and 10% to lose.

If I were to trade with less than 6 figures I would like to make 100% return myself. May I ask you what is the % of your worst drawdown ?

In my case it should never be more than 5% at all times. When you trade with a capitalized accouint 20% x year is FANTASTIC !

Why bother taking huge risks to make 100%. Now some trend traders at times make such return, but not all the times. Only in trending markets. The risk management is critical no matter what strategy, and by the way, they are not daytraders.
 
Loki,

Stay with what is tried and tested - no need to be be to imaginative when things are going smoothly. If it isn't broken, don't fix it.
 
Or, maybe try it (trend trading) with maybe 10-20% of your portfolio until you are convinced it can work for you. In any case, I'd still say keep doing your options selling with no less than 50% of your money, since it usually pays to do what you know.

Strategy diversification is a good thing. :)
 
Quote from Loki:

If I put down $ 1 to make $ 10 I have 90% probability to lose and 10% to win.

If I put down $9 only to make $1 I have 90% to win and 10% to lose.
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Are you a moron or what?
 
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