What is the edge in your trade?

[qlai]

During certain months of the year I trade a lot of earnings calendars on various stocks, and it's been working out pretty good for around 3 years.

See, this was kinda my point in the other thread. During certain months, for selected stocks, I do specific things if some conditions are met. You have developed an edge using options as a tool. The time decay in itself is not an edge. I feel like what I hear from educators is - sell premium when vol is elevated, the probabilities are on your side, but play small in case that unlikely freak event happens.
I don't hear anything even hinting that they have an edge beyond that. Play small!? Why am I doing it then, for amusement?

 

[Seaweed]

Then that big exhaustive bar. How do I know it is exhaustive? Basically, I could detect no follow-through that would make me think this channel is continuing up. So, I take a chance and start shorting at what appears to be the top of the range. As price drops I just keep adding. Why? Well LARGER context bullish (all night channel up). We got a good support level at that 41 bar range below. Chances are when the slide down stops I will be positioned for a move back up to the top of the range or at least for enough to get out with a good profit even if I BE on 1 contract (second entry) and lose on the original contract (first entry).

I think in this post you meant to say you were going long. But since you knew it was an exhaustion bar, then you are essentially saying that you know price will drop, but I will keep adding to my long. Granted, we don't know how low it will drop, so maybe your first long entry would be as low as it goes, but its still counter-intuitive to go long but knowing price will drop.

And then when you say you favor price breaking out the bottom of the range, its even more scary to be long. It just sounds so funny to want to go long at the top of the range, but not want to go long at the bottom of the range because you say that price is more likely to break out the bottom. Going long at the top but not going long at the bottom is the exact opposite of "buy low and sell high". LOL

But I see its well thought out and you clearly know what you are doing.

 

[SPX Blaster]

Here is my edge. The markets are not random, and can be predicted using past historical charts to determine future price movement with respect to time. I do not know how to predict how far a market will move. The attachment is expected timing and movement of the SP500 for the near future.

 

[destriero]

Now why did I take these trades and why did I average into losing positions? Why was I willing? Two words: PRICE ACTION. Here is a marked up chart that maybe explains my rationale if you can read my writing LOL.

WHAT I am betting on is that the channel is weakening and turn into a range near the open of RTH’s. But I need to see a little more confirmation besides the 41 bar range below. So, we get a final push up then a little more sideways action. Then that big exhaustive bar. How do I know it is exhaustive? Basically, I could detect no follow-through that would make me think this channel is continuing up. So, I take a chance and start shorting at what appears to be the top of the range. As price drops I just keep adding. Why? Well LARGER context bullish (all night channel up). We got a good support level at that 41 bar range below. Chances are when the slide down stops I will be positioned for a move back up to the top of the range or at least for enough to get out with a good profit even if I BE on 1 contract (second entry) and lose on the original contract (first entry). Once I take my profit I don’t care what happens. Might even short again and probably would do so but then I gotta take snapshots and type and write of all this explanation for the first 7 contract trade so I just stopped trading.

If I were wrong and my stop loss gets hit then I am out and and looking to double or triple up in the new direction and swiftly get my loss back and find myself in the money again. In such a case my original premise and bet was wrong and I gotta take the loss and get it back on another opportunity.

One final note: Remember this is a long bull channel that has morphed into that yellow range at the top. Bull channels function as BEAR FLAGS if you were to look at this on a larger time frame. So....when a BO of the yellow range does come 70% chance it will be south. So, the longer the range goes on I gotta be careful taking long positions at the bottom of the range betting price will go back up to the top. The safer bet as the range extends further and further sideways is to be shorting at the top of the yellow range. Expected successful BO of yellow range when it happens IS SOUTH. By successful I mean a BO with follow through.

However, if the opposite happens..i.e. the unexpected and the successful BO is out of the top of the range then odds are very high I will see two legs up in the form of a Measured move. Different ways to take this measured move. It can be the height of the yellow range up above the top of the yellow range for aggressive early long entries. Or, I can wait for the first PB of the BO of the top of the range and measure that distance from the top of the range to the PB and extrapolate that measurement up from the top of the PB for the second leg up. Thus I would enter long on the BO Pb betting on the second leg up.

View attachment 207503

1) 2885 characters. Zero substance.

2) People on here showing where shit has been are the red flags. 100% this guy isn't successful.

 

[SPX Blaster]

I will do my cycle solutions on requests. I can do most any currency pair. I can do individual stocks also.

 

[RedDuke]

Trade management. It allows you to be wrong and still make money.
I used to just set static targets and stops based on market state at entry, but my results improved significantly when I started dynamically moving my targets and stops around based on the most current information.

No trade management will help if model has no expectancy. The best trade management in the world will not help you in roulette.

 

[nooby_mcnoob]

1) 2885 characters. Zero substance.

2) People on here showing where shit has been are the red flags. 100% this guy isn't successful.

I called Netflix, tho u took the trade as I was busy, respect. Still in the trade?

No trade management will help if model has no expectancy. The best trade management in the world will not help you in roulette.

Wrong. I'll code an example later.

 

[volpri]

Here is another way to look at this Price Action from RTH to RTH’s. Look at the two charts. First is the open from yesterday’s to today’s open RTH’s. All channels morph into ranges. If I can get in early on the range, at the top, or while I perceive the range is in the beginning stages, then I can add long and long feeling quite confident that the extreme previous bullish context will pull me out of any hole I bury myself in as I seek to buy cheaper and cheaper setting myself up for at least a probable move back up to test the high right after the open. Of course if I missed calculated on a range starting I would have to exit any shorts I made and MUY PRONTO if the channel resumed up and then double up in that more bullish move.

Now the contexts supports my action. It would not in another type of context. But in this is one I could comfortably keep adding and adding to a loser. A proper setup (range top going long in exhaustion top or even shorting) is important but WAY MORE IMPORTANT is the larger context in which that setup takes place. Remember...CONTEXT...CONTEXT...CONTEXT. Same trade in another context could fail miserably. In this case I felt I could go long and keep adding because context was so strong. If I did not feel that way I woukd have been shorting the top of the range. Hope this clarifies. My brain is tired. Lol


View attachment 207506

 

[volpri]

What on earth made you start going long at the top there? Yes, the trend clearly looks up, but you're going long at essentially the previous swing high?

Edit: I think I can answer my own question. There is that big bull bar you like to point out, and I know you like your bull bars favoring more upside.

I think in this post you meant to say you were going long. But since you knew it was an exhaustion bar, then you are essentially saying that you know price will drop, but I will keep adding to my long. Granted, we don't know how low it will drop, so maybe your first long entry would be as low as it goes, but its still counter-intuitive to go long but knowing price will drop.

And then when you say you favor price breaking out the bottom of the range, its even more scary to be long. It just sounds so funny to want to go long at the top of the range, but not want to go long at the bottom of the range because you say that price is more likely to break out the bottom. Going long at the top but not going long at the bottom is the exact opposite of "buy low and sell high". LOL

But I see its well thought out and you clearly know what you are doing.

yes i meant to say long. Will try to correct that on a later marked up chart after this post and on this post you tagged. My sugar must be up and my mind is tired. Sorry. Thanks for catching that. Don’t want to confuse people.

 

[ironchef]

The best trade management in the world will not help you in roulette.

Not true. Read Ed Thorp:

http://www.edwardothorp.com/wp-content/uploads/2016/11/SystemsForRoulette_l.pdf