Why Is The Obvious Not So Obvious?

[MrScalper]

Totally agree. Whatever I read at ET I tried them out. Most did not work for me but I did find some very very good advices, like yours here, that made me a much better trader.

To those interested, here are some of my lessons learned: As an amateur retail option trader, I could not trade complicated instruments (e.g., complex combinations), compete trading indices, compete trading volume and be profitable... As a small trader, I needed to keep things simple, to make directional bets vs hedging, delta neutral, volatility.... As a small retail trader, I was unable to day trade options profitably, the MM and professionals killed me with bid/ask and.... As a small retail trader, I needed to get my entry right to be profitable.....

But in spite of all that, I think a small amateur option trader can make a good living.

I appreciate the coaching and enjoyed reading your comments.

Regards,

I don't know why you can't daytrade AAPL stock options..last time I looked at near ATM strikes intraday, the spread was only a couple cent?

There are only a handful that have these tight spreads though..most stock options are not very good for fast trades..but can be OK for several hours holding if you get your timing right.

Options are a different ball game to daytrading stocks..but can be very useful on ES if you wait for the low risk setups..I find the model price handy for a quick guide if the price has gone way off with volatility changing..if the last price is way above the model price..I will not be buying

Thing I found with options is that it requires a lot of time to keep on top of trades..adjusting strikes when required..much prefer the simple in and out based on underlying move..you either win..or loose..better you get the less you lose..the less you lose..the better the chances of winning!

 

[MrScalper]

I have no idea what I am doing yet just absorbing everything I can and what makes the most sense to me. From observations I think orderflow and s/r are the route for me in the markets. Just have not been able to put it all together into a winning method. I think the missing link is experience / psychological factors like taking losses when wrong and letting winners run and being able to act on what I see. Or maybe I just need to stumble on to the "obvious".

Personally I dont get the value in backtesting stats. The market is people making decisions. Why should there be any significance to a candle stick pattern or chart pattern, doest make sense in my head. Even if there was a small statistical significance in your backtest it can still be totally random. If you flip a coin 100 times doesnt mean you will get 50 heads and 50 tails. If you got 40 heads and 60 tails you be mislead to believe you have an edge when you dont.

For me personally id rather trade live paper or real money and collect stats based on my own real time market reads.

I'm just a rambling loser at this point tho.

I know you won't listen..but if I was starting out again I would pick just one low priced stock with high institutional ownership and adequate daily volume..your chances of winning are far greater for swing trading..due to the low price and corresponding low risk..

5000 shares of a stock at $1.50 is only $7.5 k..and the right stock can have an ADR of 10 to 15 cent..you don't need to be a math genius to work it out

 

[ironchef]

I have no idea what I am doing yet just absorbing everything I can and what makes the most sense to me. From observations I think orderflow and s/r are the route for me in the markets. Just have not been able to put it all together into a winning method. I think the missing link is experience / psychological factors like taking losses when wrong and letting winners run and being able to act on what I see. Or maybe I just need to stumble on to the "obvious".

Personally I dont get the value in backtesting stats. The market is people making decisions. Why should there be any significance to a candle stick pattern or chart pattern, doest make sense in my head. Even if there was a small statistical significance in your backtest it can still be totally random. If you flip a coin 100 times doesnt mean you will get 50 heads and 50 tails. If you got 40 heads and 60 tails you be mislead to believe you have an edge when you dont.

For me personally id rather trade live paper or real money and collect stats based on my own real time market reads.

I'm just a rambling loser at this point tho.

I am not smart enough to give advice but let me give you a suggestion:

Be patient and wait for the right time to enter a trade. I don't think it is the obvious but I think both nysestocks and MrScalper said entry is very important, if not the most important.

Good luck.

 

[ironchef]

I don't know why you can't daytrade AAPL stock options..last time I looked at near ATM strikes intraday, the spread was only a couple cent?

Funny you mentioned AAPL. Been there done that with AAPL options and I couldn't find an edge. Netted slightly less than breakeven after commissions (i.e., returns were less than buy and hold). It is a playground for the professional and institution option traders.

 

[MrScalper]

Funny you mentioned AAPL. Been there done that with AAPL options and I couldn't find an edge. Netted slightly less than breakeven after commissions (i.e., returns were less than buy and hold). It is a playground for the professional and institution option traders.

I would expect the returns to be less..but the main advantage is you don't need as much money to daytrade the options..I will have to take a look at an AAPL option chart..as I find it hard to believe that it is not viable for the retail trader..been a while since I looked at AAPL options..so you might well be right..or you could also be wrong of course

 

[MrScalper]

To be honest,I don't see anything wrong with these charts for daytrading the options..spread on the options is 2 to 4 cent max!

 

[ironchef]

To be honest,I don't see anything wrong with these charts for daytrading the options..spread on the options is 2 to 4 cent max!

View attachment 175166 View attachment 175167

Very interesting. Wonder how it performs in real time. I am going to take a look at real time data.

Thanks.

 

[MrScalper]

Very interesting. Wonder how it performs in real time. I am going to take a look at real time data.

Thanks.

I would pick a few strikes with tight spreads..have them setup with limit orders and quick order change buttons..use the underlying chart for timing entry and exits..but would lock in profits with take profit limit orders..AAPL can get very volatile at any time..so unless you take profits they might disappear very fast..let us know how you get on?

 

[MrScalper]

I am not smart enough to give advice but let me give you a suggestion:

Be patient and wait for the right time to enter a trade. I don't think it is the obvious but I think both nysestocks and MrScalper said entry is very important, if not the most important.

Good luck.

There are 3 main things that affect your trading results.

1. Direction
2. Timing
3. Money Management

You can guess 1. all you like..it really will not make one little bit of difference.

The better you get at 2. the quicker the trade moves in your favor..and the better you get at realising profits.

Without 3. you really have no chance of staying in the game to get better at 2. and thus become good at reading 1.

Of course, the biggest obstacle you will face, is yourself

 

[Mysteron]

Here is something to think about

View attachment 174991

Green line is 2 highs back and red line is 2 lows back. Bars turn green when price hits the green line, bars turn red when price hits the red line otherwise color is blue. Clearly a short exit based on price exceeding 2 highs back, or a long exit based on price falling below 2 lows back will result in steady losses if entries are taken without some means of determining when a sequence of rising or falling bars is likley to occur.