Two Years of Trading Dangerously at 84% Annualized Returns

[InTheMaking]

No one ostracized you. You asked a legitimate question, got legitimate answers, and started a vibrant discussion on theta as a valid risk measurement tool.

To answer your question, you want to attract collaboration - stop humblebragging. Your 2 years of returns don't make you a good trader. Your ideas do. Spread good ideas and people will want to work with you. It you want to see a good role model, look at posts from martinghoul and sle.

I had an hour-long conversation with sle last night. It was enlightening talking to a professional about the outlook of the hedge fund industry. It gave me different points of view to scale the business. I learned that trading may not be the path to grow the business. Its a quick seed money into other things finance.

Actually, since the chest-thumping, humble-brag posting, several people PM'ed me and I talked to 2 of them over the week and we shared strategies. Not sure if they will proceed to implement it. Because its a complex series of strategies and suits to my high-adrenaline, full-time, glued-to-4-monitor setup lifestyle. And it was developed over a course of 4-6 months and somebody has to watch me over 3-4 weeks to actually do it. My trading buddy in dallas did it for one underlying and made the expected 150% profit, but he's still debating whether he wants to continue.

In fact, @newwurldmn, if you look at your inbox, I detailed the 1st incarnation of the strategy to you back in June of 2017. I had to modify the strategy because it suffered a 19% DD during the NDX correction. You had asked me detailed questions on the various greek metrics and repair mechanism which I answered to my best of ability. I had encouraged you to call me so I could better explain the mechanics of the trade. But you weren't comfortable with the phone conversation.

This is one of the challenges of spreading ideas on an open forum. I probably have 100's of self-directed rules in my head on how I hedge and manage a risk and depending on the market and account conditions, I acted appropriately. My portfolio margin account has gone down to 5.5% margin cushion over a weekend (IB does auto-liquidation below 5%). I was once assigned 2000 shares of NFLX at 185 and for 1 week in December, I was negative 1.2M in cash balance. This would freak any person out and this is not for the faint of heart. But each time, my risk metrics were offset with a comfortable delta neutrality in a positive vega situation.

Infact, I will be presenting to a handful of med/advanced traders my entire portfolio return strategy along with repairs and adjustments in our dallas meetup on 20th of February. If anybody wants to hear more about it, just PM me.

 

[InTheMaking]

If you have a strategy with annual 150% compounded, then your seed of 100K should become
100*(1+1.5)^10 = 953674.3= 953M after 10 years. If you live 50 years more (suppose you are 30 now), then your seed of current 100K should be 100*(1+1.5)^50 = 7.888609e+021 *K which might be bigger than Buffets current asset who spent 50 years already in the market.

Since no one did attain that result in the last 400 years(after Netherlands stock market appearance), I believe an average trader like you cannot do it too, of course as well as me.

Friend, I never said anything about these strategies working 100% of the time. They work for short periods of time. Most of my 100% strategies will work for 2-3 months and then they stop working. Then they will work in the opposite direction and if you can't manage, will obliterate your account. That's why a good trader needs to learn new strategies. Don't rely on somebody just giving it to you.

Case in point! Here's a 85% return strategy that has been working for the last 4 months. Sell a call calendar (7 day short Call and 12-14 day long Call) on SPX on Thursday mornings and close them at 20% profit within the next 3 days. This appears to have been working for the last 15 weeks in this raging bull market.

Simple! No repair mechanism and manageable for a part-time trader!
I'd be interested in hearing how long its been profitable and when it will stop working.

Good luck!

 

[JackRab]

If you have a strategy with annual 150% compounded, then your seed of 100K should become
100*(1+1.5)^10 = 953674.3= 953M after 10 years. If you live 50 years more (suppose you are 30 now), then your seed of current 100K should be 100*(1+1.5)^50 = 7.888609e+021 *K which might be bigger than Buffets current asset who spent 50 years already in the market.

Since no one did attain that result in the last 400 years(after Netherlands stock market appearance), I believe an average trader like you cannot do it too, of course as well as me.

That hasn't happened and will not happen, simply because you can't just keep chasing the same strategy. What worked on a 100k account, especially making high returns, probably won't work on a 10mln account. Although in index options you can get decent size...

 

[eurusdzn]

Savant comes to mind. 20 or so months trading.
Multiple timeframes on multiple low correlated instruments , managing risk, hedging and repairing trades with an understanding of options along with running a couple businesses .
Do you realize this is rare and god dammit I cant do this?
Pretty soon I will have to insult you.

 

[InTheMaking]

Savant comes to mind. 20 or so months trading.
Multiple timeframes on multiple low correlated instruments , managing risk, hedging and repairing trades with an understanding of options along with running a couple businesses .
Do you realize this is rare and god dammit I cant do this?
Pretty soon I will have to insult you.

Hmm, savant? I doubt it. But, obsessive compulsive, yes!
Unlike most people on this forum, I trade options full-time. I've been glued to the monitors since April of 2016. Fortunately, I didn't have the the distraction of a J-O-B.

And my other businesses are based on rent-generating assets. So it doesn't take much time once the paperwork is done. I just have to acquire the asset for best discounted price (cheap long calls) and sign a customer with best possible rent that the market can give (high theta) for longest possible lease cycle (low gamma and low delta risk) to a candidate that's less likely to default (low vega). Once that is done, its just collecting rent (theta), protected by insurance (long put). Asset occasionally requires maintenance and service (fees). At the end of the day, its no different from trading options. The "permanency" of my other business, affords a certain level of security and thus more risk-taking on my trading side.

But, there's also something to be said about mindset in the field of options. First 6 months of trading, I was stuck in the 10 to 20% return mindset by selling premium. Then during a cocktail conversation with another option trader who wrote credit spreads on pharma stocks revealed to me that he got a 120% return (450k, i think) for 2015. This revelation changed my mindset. Although, I don't agree with his technique of selling credit spreads on pharma companies waiting for FDA approval, it goes to show you that once you come across a real-life person who can do triple digit returns, the whole new realm of possibilities just open up.

And lets not forget this. WE'RE IN A BULL MARKET! Most of those who took risks, have been favored by luck.

 

[Pekelo]

I've started a heavy-equipment leasing business that does a monthly return of 20%.

There is your answer. Your trading performance isn't this good, so just stick to the best return, specially if it is less stress. Or keep trading while the rally is good and switch when your methods don't work anymore.

 

[ironchef]

Hmm, savant? I doubt it. But, obsessive compulsive, yes!
Unlike most people on this forum, I trade options full-time. I've been glued to the monitors since April of 2016. Fortunately, I didn't have the the distraction of a J-O-B.

And my other businesses are based on rent-generating assets. So it doesn't take much time once the paperwork is done. I just have to acquire the asset for best discounted price (cheap long calls) and sign a customer with best possible rent that the market can give (high theta) for longest possible lease cycle (low gamma and low delta risk) to a candidate that's less likely to default (low vega). Once that is done, its just collecting rent (theta), protected by insurance (long put). Asset occasionally requires maintenance and service (fees). At the end of the day, its no different from trading options. The "permanency" of my other business, affords a certain level of security and thus more risk-taking on my trading side.

But, there's also something to be said about mindset in the field of options. First 6 months of trading, I was stuck in the 10 to 20% return mindset by selling premium. Then during a cocktail conversation with another option trader who wrote credit spreads on pharma stocks revealed to me that he got a 120% return (450k, i think) for 2015. This revelation changed my mindset. Although, I don't agree with his technique of selling credit spreads on pharma companies waiting for FDA approval, it goes to show you that once you come across a real-life person who can do triple digit returns, the whole new realm of possibilities just open up.

And lets not forget this. WE'RE IN A BULL MARKET! Most of those who took risks, have been favored by luck.

Congratulations on your successes.

You are right, knowing that it can be done is tremendously helpful.

Best to you.

 

[InTheMaking]

There is your answer. Your trading performance isn't this good, so just stick to the best return, specially if it is less stress. Or keep trading while the rally is good and switch when your methods don't work anymore.

Trading gives tremendous level of liquidity that other mainstream businesses can't. I don't think I can unload 3 bobcats at the same ease as unloading 3 AMZN LEAPS. So in my head, the variables involved in the assessing the asset class are liquidity, scalability, stress and fun factor. Trading does well in 3 out of the 4.

Regarding the rally effect, only one strategy took advantage of the rally, "financed long calls on FANG/NDX stocks". Most of the strategies are designed to be independent and non-correlated. Once they correlate, i drop them. Half-life of a strategy appears to be 3 to 4 months. This week my Crude/NatGas pair hedging strategy stopped working. It was a good 4 months while it lasted. Now both seem to be correllated. Even equipment leasing is correlated with the north/west Texas building boom. Trading is supposed to diversify from that.

 

[ironchef]

Half-life of a strategy appears to be 3 to 4 months. This week my Crude/NatGas pair hedging strategy stopped working. It was a good 4 months while it lasted.

Hmmm. I trade the same way/strategy since 2014. Why do you think your strategy only works for a few months?

 

[InTheMaking]

Hmmm. I trade the same way/strategy since 2014. Why do you think your strategy only works for a few months?

I should've been more specific! I meant from a Risk/Reward perspective a strategy may work for a few months then its time to refresh. Right now, my focus is on NDX/SPX based insurance debit spreads that "decays" into small profit window.

If you have a strategy that has been profitable since 2014, more power to you, brother! You should keep doing that. No need to change something that's working!