It's been a dot-shot since November and you've barely traded for a quarter. It's the market.
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Trying to Gauge Options Trading Strategy Success
- Thread starter highonoptions
- Start date
It's been a dot-shot since November and you've barely traded for a quarter. It's the market.
Just because I have been trading for 10 years, does not mean that I have been doing it like I have been over the past year. I traded here and there.. nothing major, but have been watching the markets the whole time as well as individual equities. I recently got heavily into trading last January where I am actually considered a day trader in the IRS eyes.You've been trading for 10 years. You should know the answer to these questions. if you don't then you have your answer right there.
Great advice. Thank you!For selling covered calls, you'll need to calculate your opportunity cost of losing your upside. 95% success rate may be misleading.
In a bull market, selling puts may just mask your risk.
"Trend (Market) is your best friend". So if you believe the current trend is to continue, you can continue to do the same.
S&P 500 6 month return is almost 9%. My 6th month return is about 46%. How do you gauge if the differential is luck or strategy? That is what I am trying to figure out.For selling covered calls, you'll need to calculate your opportunity cost of losing your upside. 95% success rate may be misleading.
In a bull market, selling puts may just mask your risk.
"Trend (Market) is your best friend". So if you believe the current trend is to continue, you can continue to do the same.
S&P 500 6 month return is almost 9%. My 6th month return is about 46%. How do you gauge if the differential is luck or strategy? That is what I am trying to figure out.
Hard to say. Folks who long cyclicals with leveraged positions have even higher returns. Look at the financials, energy and travel leveraged ETFs.... Some are more than 100%.
Yes. This is where I am having trouble. I really want to do this full time, but am having a hard time making the jump because I have no way of telling luck versus strategy. Nothing I am doing is extremely insane in terms of leverage, and most of what I am doing I would save is a 5 out of 10 in terms of risk taking..Hard to say. Folks who long cyclicals with leveraged positions have even higher returns. Look at the financials, energy and travel leveraged ETFs.... Some are more than 100%.
Congrats.whether to trade full time?
" . . . whether to trade full time?"
That's one question.
As for When to start trading Live for Money?
With proper money management in place and a
setup that produces a satisfactory track record, my advice would be
"Make Hay While The Sun Shines and Keep Your Eyes On Your Fries"
" . . . whether to trade full time?"
Keep your day job until you can no longer afford to miss the trading opportunities
by working for the man.
Don't burn any bridges, lol.
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I have been trading live with real money since JAN of last year. Advice makes perfect sense. Thanks!Congrats.
" . . . whether to trade full time?"
That's one question.
As for When to start trading Live for Money?
With proper money management in place and a
setup that produces a satisfactory track record, my advice would be
"Make Hay While The Sun Shines and Keep Your Eyes On Your Fries"
Yes. This is where I am having trouble. I really want to do this full time, but am having a hard time making the jump because I have no way of telling luck versus strategy. Nothing I am doing is extremely insane in terms of leverage, and most of what I am doing I would save is a 5 out of 10 in terms of risk taking..
You need to do more backtesting to test your strategy in all market scenarios to see how it would pan out. The most vulnerable part of your strategy is its inability to hedge against huge price crashes whether it's from the market or the stock itself. When facing a huge price downfall, neither the writing of the call nor the writing of the put will give you any protection. In fact the writing of the put will expose you to even more risk. So if I were you, I would pick a stock when it was in a downtrend or when it was experiencing a sudden price fall, try to find its option price history and then test your strategy using the option price history and to see how your strategy will pan out during these scenarios. If your strategy would not work out in these scenarios, then you know your current lucrative return is due to a bull market. And you shouldn't quit you day job to go into trading full time yet.