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Daily forecast for leisurely Index trading 50:50 chance

  • #41
  • Edited 11:54am May 12, 2021 11:00am | Edited 11:54am
Bought Put Option liquidated with 10 pips nett profit. Investment : 38 pips (includes commission). Because I bought the option, so no margin deposit is needed by the broker.

A contract value of GBP62,500 - (10,000 pips each with a value of GBP 6.25) 38 pips means 10,000/38 means = 263 times leverage given by the Exchange without asking for any margin deposit or me borrowing any money from the broker.

Buying options helps you learn trading without stress and fear of margin call or fear of Stop Loss being hit frequently.
It is as simple as buying it outright and liquidating with profit or loss without waiting too long. It is a quick bet that has to be in profit or loss within 3 or 4 weeks.

As long as you avoid terminology which is mostly used for SELLING of options, you have no reason to get intimidated.

Before turning momentum futures trader, I spent 7 years only Buying Options.

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Practice makes a person perfect
  • #42
  • Edited 9:57pm May 13, 2021 9:41pm | Edited 9:57pm
OPTION BUYER LEARNERS: PLEASE SKIP READING THIS STRATEGY UNTIL YOU BECOME AN INTERMEDIATE LEVEL LEARNER. THANK YOU.

Last evening I bought a combination of options involving both buying and selling - a technique for advanced options traders.

My view was: SPX has gone enough correction and should bounce back.
My objective: Bet on fast recovery and continuation of SPX trend. Look for a short-duration option of not more than 2 weeks expiration.
My choice
(a) Buy Call Option for $2925. Involves outright investment and the risk is capped. Limited risk. Unlimited profit if bulls take over.
(b) Sell Put Option for $3562, assume risk, and put up margin deposit. Unlimited risk. Limited profit. Limited profit of $3562, Unlimited risk.
(c) Buy combo of long Call and Short Put to finance Buy Call option from the premium received by selling Put. Involves putting up margin deposit as Selling of Puts is involved. Unlimited high risk if price drops. Limited Profit if price stays flat. Huge profit if the strong bounce back happens because you will be making a profit at both ends. Limited profit from the selling of Put Options. Unlimited Profit from Buying of Call options.

My choice is for (c) because of my firm view on QUICK recovery. I was expecting the recovery later after a few hours.

How the trade went on:

(a) I received $3562 by selling ES (EW) May 28 expiry for PUT strike of 4120 out of which I invested $2925 in buying of a call option same expiry and same strike, leaving me a surplus of $637 which I can keep if the price remains flat around 4120 on May 28.

(b) It so happened the market favoured my view and the index jumped with a speed I was guessing at. I bought the combo option trade at 11: 41 and exited at 3.29 pm. My desired bounce back happened in four hours.

Pay off
I bought back Put option at $3225 with a profit of $340
I sold Bought Call option at $3215 with a profit of $290

Total Profit: $630 in 4 hours of trading.

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Margin deposit requirements for Put option selling:

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  • #43
  • Edited May 16, 2021 1:40am May 15, 2021 10:35pm | Edited May 16, 2021 1:40am
Quoting simnz
Bought Put Option liquidated with 10 pips nett profit. Investment : 38 pips (includes commission). Because I bought the option, so no margin deposit is needed by the broker. A contract value of GBP62,500 - (10,000 pips each with a value of GBP 6.25) 38 pips means 10,000/38 means = 263 times leverage given by the Exchange without asking for any margin deposit or me borrowing any money from the broker. Buying options helps you learn trading without stress and fear of margin call or fear of Stop Loss being hit frequently. It is as simple as buying...
Alarm bells for GBP
https://www.forexfactory.com/simnz
This time I want to buy put option with a deep in the money strike price because I am not sure of how fast the plunge will happen and that I don't want to invest in time premium.
DTM option is close to the market price of the underlying. Almost by 90% or more. I am now waiting for the open of London market to place the order.
In a way, I am following up on the GBP drop idea executed through buying of a 40% or near ATM price. Now it will be a Deep In the Money (D) option play because I don't see any immediate triggers on the economic calendar, so I am not sure how volatile will the momentum be.
Practice makes a person perfect
  • #44
  • May 16, 2021 8:07pm May 16, 2021 8:07pm
Quoting simnz
OPTION BUYER LEARNERS: PLEASE SKIP READING THIS STRATEGY UNTIL YOU BECOME AN INTERMEDIATE LEVEL LEARNER. THANK YOU. Last evening I bought a combination of options involving both buying and selling - a technique for advanced options traders. My view was: SPX has gone enough correction and should bounce back. My objective: Bet on fast recovery and continuation of SPX trend. Look for a short-duration option of not more than 2 weeks expiration. My choice (a) Buy Call Option for $2925. Involves outright investment and the risk is capped. Limited risk....
Why this idea occurred?

https://www.forexfactory.com/thread/...5#post13537095
Practice makes a person perfect
  • #45
  • Edited 3:37am May 17, 2021 3:21am | Edited 3:37am
Why this idea occurred? It could be motivated market noise. My view GBP will drop by 200 pips in next two weeks.

https://www.forexfactory.com/thread/...5#post13537095

I took a look at MT4 platform for forming a quick view about a possible trade.

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Checked the margin requirement and possible payoff.

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Practice makes a person perfect
  • #46
  • Edited 5:41am May 17, 2021 3:39am | Edited 5:41am
USING MARKET MONEY TO BUY OPTIONS...a new example for GBPUSD (for Advanced learners)

SOLD GBP In the money (more than the existing market price) and used the proceed to finance in buying of Put Option.

My view: GBP will go down and hit 1.38 before bouncing back.
Speed: It should happen before June 1.
Risk: I assume unlimited risk by selling Call option to get premium income
Why buy Put ?
So that I can have two streams of income. One from the declining value of Call options. Another will be increasing value of Put options.
Insurance: None
Breakeven: 1.41
Maximum profit: 1.38
Keep door open for adding third steam of income: Short futures when volatility is high.
HIGH RISK: It is like putting all eggs in one basket. Makes no sense to someone who has no view of the market.



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  • #47
  • May 18, 2021 11:33pm May 18, 2021 11:33pm
Options play prompted this combo options trade (for Advanced learners)

https://www.forexfactory.com/thread/...2#post13542482

https://www.forexfactory.com/thread/...0#post13542400

https://www.forexfactory.com/thread/...4#post13542424

I have sold call at my futures TP target of 15350. May 21 expiry.
I have bought Put with a 15500 strike from the proceeds of the call sold. So using just single margin deposit.
I got to keep 68 points.
If both call and put hit 15350 on Friday expiry then I will keep 68 points plus whatever comes from PUT proceeds.
I will try to get out today. Had I sold calls at 15525 and bought Puts at 15000 my investment would have been zero as against an income of 68 points now.
But I could have got out within an hour if I had sold calls at 15525.
Now it will be tough meeting my target of 15350 before US open.
It will be my first DAX option trade.
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Options is as good as thinking in terms of Bull (Call) and Bear (Put).
Strike Price is forecast price.

Buying Call or Put caps the risk. That's an advantage. The disadvantage is you start with a minus balance in your account.
It is like buying car insurance. You lose premium if you don't have an accident. You get multiple times of premium if you put up a claim.

I have never looked at Greeks because I am speculating and not hedging.

Selling involves placing a good-faith margin deposit with the broker.
I sell only when I have a firm view.
The trade I did was based on my view of 15500 and 15350.
No technical jargon is known to me except 8 terms. Buy call, Buy Put, Strike Price, Sell call, sell put . Combos meaning a combination of buy and sell. Buy involves no margin, outright purchase, capping the risk to purchase price paid. Unlimited profit and limited risk.
Selling involves unlimited risk and limited profit.

I sold call for 182 pips and put pending order to buy it back at 80 pips. Sell high buy low. 102 pips is TP target.

From 208 pips that I received from selling the option I invested 116 in buying Put option with pending order to sell at 80 pips. Buy low sell high. 36 pips is TP target.

Total TP 102 + 36 pips = 138 pips.
Investment: Margin deposit of around E 9000 or 1800 pips.
Risk unlimited. Profit Unlimited

I have avoided all technical jargon including the name of strategy so that traders are not intimidated. Honestly, it takes a few hours for a spot/futures trader to know it as another mode of speculative trading.

To hell with the option Greeks!
Practice makes a person perfect
  • #48
  • May 19, 2021 12:53am May 19, 2021 12:53am
Quoting simnz
Options play prompted this combo options trade (for Advanced learners) https://www.forexfactory.com/thread/...2#post13542482 https://www.forexfactory.com/thread/...0#post13542400 https://www.forexfactory.com/thread/...4#post13542424 I have sold call at my futures TP target of 15350. May 21 expiry. I have bought Put with a 15500 strike from the proceeds of the call sold. So using just single margin deposit. I got to keep 68 points. If both call and put hit 15350 on Friday expiry then I will...
If the price keeps dropping then my sold Call will lose value and benefit me.
And my bought Put Option will keep increasing in the value.
So I have made a combo of limited profit (by selling) and unlimited profit (by buying) and using One margin deposit of around US$10,500.
Now I am waiting for the options market to open to know where I stand. I may liquidate Sell call and sell another call that has value depending on my view at that time.
But premiums will be low because of the expiry on Friday. So I may liquidate Sold call position to cut the risk totally.
Put options will carry my profit generated by me by taking a risk involved in selling of options and investing more money than what a Buy of options requires.
Practice makes a person perfect
  • #49
  • May 19, 2021 3:30am May 19, 2021 3:30am
Quoting simnz
{quote} If the price keeps dropping then my sold Call will lose value and benefit me. And my bought Put Option will keep increasing in the value. So I have made a combo of limited profit (by selling) and unlimited profit (by buying) and using One margin deposit of around US$10,500. Now I am waiting for the options market to open to know where I stand. I may liquidate Sell call and sell another call that has value depending on my view at that time. But premiums will be low because of the expiry on Friday. So I may liquidate Sold call position to...
I bought back calls at 40 pips. Profit from call premium 22 pips.
I sold put option for 315 pips. Its all total profit. Call premium was invested . Nothing from my.pocket except a margin capital to broker.
Total profit in one day 337 pips.
Practice makes a person perfect
  • #50
  • May 29, 2021 11:30pm May 29, 2021 11:30pm
Quoting simnz
{quote}
I am not oppsing the practice of reading the tape . Neither of reading palm leaves. I do that myself.
It has taken me 36 years in gaining proficiency in tape reading using my brain to understand bidding antics.. My montly return is 25% of the margin capital. Since I have no agenda, I dont share my trading records. I can share with you not to impress you but to encourage your journey.
My ojection is to calling of the market makers and cartels as conspirators and persuading non- suspecting people to make feel as if trading is like any other...
Hi, Simnz.

Do you scalp a-la "market making style", just with limit orders, for 1-4 ticks wins and 1-2 ticks losses, with around 80% win-ratio?

Salu2...
  • #51
  • Dec 21, 2021 7:52am Dec 21, 2021 7:52am
Quoting simnz
{quote} Myths vs Reality A widespread myth among the newbies: just find a “magical” algo strategy and then sit down and wait for profits. You could beat the market easily and without any effort. Myth#1 – It is "set and forget" kind of work Once you install the strategy code into the trading platform you could go to the beach waiting for your profits to accumulate. Reality: Auto systems save you time for everyday trading routines, but they need supervision. First, you should monitor all trades for errors in the code. Some of the trades would not...
Recently, I have been working on a neutral Grid Strategy that perfectly suits a manual trader like me.
Designing an indicator for trading grids EA I realised using algorithm trading for systematic trading was a misnomer. EA is not an algorithm nor it faciitates ML (machine reading learning). It is basically systematic trading. I found EA good vehicle for executing grids trading while using brain power to decide on direction bias.
Grids on both sides of Buy and Sell work very well if you can trade it after Breakout happens and consolidation happens for a period. Consolidation, Range Trending and Moderate trending is VERY good for grid trading to work.
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  • #52
  • Last Post: Aug 23, 2022 8:13pm Aug 23, 2022 8:13pm
Quoting simnz
LEARN TRADING FROM A MACHINE BASED ON MY ACTUAL TRADING EXPERIENCE {image} I have no control over the market forces. I accept what is served to me by way of random trading. That kind of thinking gave birth to the idea of random trader EA. EA is designed by me based on my real trading experience. It is programmed in such a way you can trade without knowing any strategy or trading tactic. Just follow instructions. And gain the first-hand experience by forward-testing or demo practice without any coach holding your hand. The logic is to take part in...
Thank you for sharing, i have tried your ea, i have 1 question is that when ea automatically closes all open orders when those orders reach its TP/SL, ea did not enter any new orders.
For example, last night when using your ea, it automatically entered 5 orders, after those 5 orders closed, from yesterday until now (11 hours) ea did not enter any new orders.
tks
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