My first attempt at trading options
-
I never traded options - just too damned complicated for me to want to mess with them. But I have traded regular stocks on the Nasdaq quite a bit. I did it exclusively for a year because I was unemployed. I made money, not a lot, but enough to barely scrape by. I found it extremely stressful, and it had other negative effects on me - I smoked incessently the whole time the market was open, for one. After an intensive study of the market I have determined that there is at least one very reliable way to make money on the Nasdaq at least, and it is the one and only method I firmly believe in: Trade the QQQQ only. Here are the reasons why I say this: Technical indicators DO work, but ONLY in the absence of significant external perturbations. That makes technical analysis a very shaky endeavor for any given individual stock, but it conversely means that TA works very well for an index stock where individual perturbations of the constituent stocks are averaged over a large number of diverse stocks. You also don't have the nightmares of morning gaps that can be devastating. Not to say that the QQQQ never gaps, but it rarely gaps significantly. Also, since it is an index, it responds very smoothly and predictably to simpler technical indicators like MACD crossovers. The QQQQ moves slow and steady in most cases, so you can easily ride the trends, and if a trend looks like it is going to fizzle, you usually have plenty of time to decide to get out before your losses mount too much. Not every year, but in most average years, the QQQQ shows pretty regular periodic cycles maybe 8-10 times or so. The weakest cycles often represent at least a dollar move or more with easily observed entry and exits. That means most of the time you are keeping your money where it really should be - out of the market. And you can trade only longs with very little risk. In short (no pun, LOL) the QQQQ really represents the way the average individual can and should participate in the market - not to get rich, but rather to accumulate wealth over a period of years, while protecting one's principle. Of course, there is one drawback - with a stock trading in the roughly $40 range you have to be pretty well capitalized to take large enough positions to make money. But still ... A typical starter trading account is 50K and you may have up to as much as another 50K in margin. Now most people who try to trade individual stocks on this typical sort of "starter account" are living pretty dange
-
Anyone else here trade stock options actively? I just started on Monday. I think I've been quite fortunate, as I've easily made 80% on my money on my first trade and it's still rising. I'm finding that the experience is much more stressful than the average day of coding. Anyone else have a lot of options experience?
Actually, I write options. I tend to view it as somebody giving me a $20 bill. This is because something on the order of 75% of all options are left to expire. The stock that I've written the option for must be one that I've purchased for lower than the current market value so as to mitigate opportunity loss if the option is actually exercised. In addition, I make sure that it is a stock that I am can afford to part with. For example, say I have 1000 shares of IBM and I write options for 100 shares and they are actually exercised it doesn’t really damage my position. Conversely, if I wrote options for 500 shares and they are exercised, my position is damaged severely (that is assuming I was not attempting to cash out my position in the specific stock). As far as long term market investing goes, I tend to be a bit of a maverick. I don't want to own and investment if it does not put money in my pocket in a regular basis. So, I tend look at non dividend paying stocks as little more than trading cards. Hey don't worry, I can handle it. I took something. I can see things no one else can see. Why are you dressed like that? - Jack Burton
-
I never traded options - just too damned complicated for me to want to mess with them. But I have traded regular stocks on the Nasdaq quite a bit. I did it exclusively for a year because I was unemployed. I made money, not a lot, but enough to barely scrape by. I found it extremely stressful, and it had other negative effects on me - I smoked incessently the whole time the market was open, for one. After an intensive study of the market I have determined that there is at least one very reliable way to make money on the Nasdaq at least, and it is the one and only method I firmly believe in: Trade the QQQQ only. Here are the reasons why I say this: Technical indicators DO work, but ONLY in the absence of significant external perturbations. That makes technical analysis a very shaky endeavor for any given individual stock, but it conversely means that TA works very well for an index stock where individual perturbations of the constituent stocks are averaged over a large number of diverse stocks. You also don't have the nightmares of morning gaps that can be devastating. Not to say that the QQQQ never gaps, but it rarely gaps significantly. Also, since it is an index, it responds very smoothly and predictably to simpler technical indicators like MACD crossovers. The QQQQ moves slow and steady in most cases, so you can easily ride the trends, and if a trend looks like it is going to fizzle, you usually have plenty of time to decide to get out before your losses mount too much. Not every year, but in most average years, the QQQQ shows pretty regular periodic cycles maybe 8-10 times or so. The weakest cycles often represent at least a dollar move or more with easily observed entry and exits. That means most of the time you are keeping your money where it really should be - out of the market. And you can trade only longs with very little risk. In short (no pun, LOL) the QQQQ really represents the way the average individual can and should participate in the market - not to get rich, but rather to accumulate wealth over a period of years, while protecting one's principle. Of course, there is one drawback - with a stock trading in the roughly $40 range you have to be pretty well capitalized to take large enough positions to make money. But still ... A typical starter trading account is 50K and you may have up to as much as another 50K in margin. Now most people who try to trade individual stocks on this typical sort of "starter account" are living pretty dange
So, given you're experience with trading the Q's where would you say it is going now and why?
-
Anyone else here trade stock options actively? I just started on Monday. I think I've been quite fortunate, as I've easily made 80% on my money on my first trade and it's still rising. I'm finding that the experience is much more stressful than the average day of coding. Anyone else have a lot of options experience?
-
I never traded options - just too damned complicated for me to want to mess with them. But I have traded regular stocks on the Nasdaq quite a bit. I did it exclusively for a year because I was unemployed. I made money, not a lot, but enough to barely scrape by. I found it extremely stressful, and it had other negative effects on me - I smoked incessently the whole time the market was open, for one. After an intensive study of the market I have determined that there is at least one very reliable way to make money on the Nasdaq at least, and it is the one and only method I firmly believe in: Trade the QQQQ only. Here are the reasons why I say this: Technical indicators DO work, but ONLY in the absence of significant external perturbations. That makes technical analysis a very shaky endeavor for any given individual stock, but it conversely means that TA works very well for an index stock where individual perturbations of the constituent stocks are averaged over a large number of diverse stocks. You also don't have the nightmares of morning gaps that can be devastating. Not to say that the QQQQ never gaps, but it rarely gaps significantly. Also, since it is an index, it responds very smoothly and predictably to simpler technical indicators like MACD crossovers. The QQQQ moves slow and steady in most cases, so you can easily ride the trends, and if a trend looks like it is going to fizzle, you usually have plenty of time to decide to get out before your losses mount too much. Not every year, but in most average years, the QQQQ shows pretty regular periodic cycles maybe 8-10 times or so. The weakest cycles often represent at least a dollar move or more with easily observed entry and exits. That means most of the time you are keeping your money where it really should be - out of the market. And you can trade only longs with very little risk. In short (no pun, LOL) the QQQQ really represents the way the average individual can and should participate in the market - not to get rich, but rather to accumulate wealth over a period of years, while protecting one's principle. Of course, there is one drawback - with a stock trading in the roughly $40 range you have to be pretty well capitalized to take large enough positions to make money. But still ... A typical starter trading account is 50K and you may have up to as much as another 50K in margin. Now most people who try to trade individual stocks on this typical sort of "starter account" are living pretty dange
rwestgraham wrote: but one with the protection of diversification like a mutual fund, and one that gives you the ability to participate in the market, not with maybe one or two big boys and some individuals, but rather ALL of the big boys, floor traders, and literally thousands of other individuals. I am not an option trader ( I think that unless you are a professional options are not an option ) but am a big ( for me anyway ) mutual fund investor. With some homework and a little luck - and I mean just a little - one can average between 8-13% APR a year. If you roll the profits back into the fund you can make signifigent gains with not a whole lot of risk. You need to do some homework and understand the ins and outs of mutual fund investing but I have several funds that I put 5-10 K in that are now worth 30-35 K. You can even shelter a lot of the taxes in many cases. I just do not have the intestinal fortitude to do options or buy on margins or derivitives or even commodities. I just plod along with my portfolio of no load mutuals and put at least 35% of my pretax income in each year. 25% in a tax deferred SEP account and 10-15% with my Vanguard account. If I had had enough sense to start doing this 20 years ago I would be able to retire now instead of 5 years from now. Each fund has its ups and downs but the average will beat CD's and saving accounts silly. Richard Suppose you were an idiot... And suppose you were a member of Congress... But I repeat myself. --Mark Twain
-
rwestgraham wrote: but one with the protection of diversification like a mutual fund, and one that gives you the ability to participate in the market, not with maybe one or two big boys and some individuals, but rather ALL of the big boys, floor traders, and literally thousands of other individuals. I am not an option trader ( I think that unless you are a professional options are not an option ) but am a big ( for me anyway ) mutual fund investor. With some homework and a little luck - and I mean just a little - one can average between 8-13% APR a year. If you roll the profits back into the fund you can make signifigent gains with not a whole lot of risk. You need to do some homework and understand the ins and outs of mutual fund investing but I have several funds that I put 5-10 K in that are now worth 30-35 K. You can even shelter a lot of the taxes in many cases. I just do not have the intestinal fortitude to do options or buy on margins or derivitives or even commodities. I just plod along with my portfolio of no load mutuals and put at least 35% of my pretax income in each year. 25% in a tax deferred SEP account and 10-15% with my Vanguard account. If I had had enough sense to start doing this 20 years ago I would be able to retire now instead of 5 years from now. Each fund has its ups and downs but the average will beat CD's and saving accounts silly. Richard Suppose you were an idiot... And suppose you were a member of Congress... But I repeat myself. --Mark Twain
I'm just starting with this whole options thing. I'm fairly certain that my portfolio wil beat 20% this year (and I just started Monday) if I stick with it, but this might be the naive wishful thinking of a young pup. I've heard so many people say they wished they had started the compounding investments when they were young. I'm saving approximately 30% of my after-tax income. Right now it's just in a lame-o savings account, but as I build more confidence I'll be putting more of that into a compounding situation--whether that be options, ETFs, or real estate is yet to be determined. Keep expenses down. Keep learning up. Learn from others' experiences and mistakes since you don't have enough time to make all the mistakes yourself. to die is gain
-
The first half of this year has been piss poor, I did not trade at all. No surprise there - nothing really stimulating the economy, we still have an ongoing war, and now a deficit spiralling out of control to boot. In the last several months I have cautiously made a couple of trades. The QQQQ showed a very favorable MACD crossover in the middle of May - I like to see a pretty strong, pretty fast crossover for most reliable trading. I got in a little above $36 and got out about 10 days later a little under $38 - a good trade. MACD crossed over again the first week of July. I don't like these sort of crossovers - a crossover from a low near the zero line could mean a rally but it could also just be chop. This turned out to be a rally, but not my favorite trade scenario. I got in a little above $38 because there was clearly a trend but I got out a little below $39 because I was nervous about this trade setup - a not so good trade, but definitely not a loser. QQQQ ultimately hit $40, but better safe than sorry. As far as another poster asking where the QQQQ is going now, it is impossible to say. The MACD is bouncing around the zero line since mid to late August - I consider that chop, and I don't trade chop. What I would like to see is the QQQQ fall so that the MACD drops well below the zero line, then crosses over quickly. Look at the chart pattern between May and June - that is the kind of setup I like to see. The QQQQ has not cycled this year with the frequency I would really like to see. We need to get out of Iraq, and badly. The chart explains it all, although these charts are not the greatest: http://finance.yahoo.com/q/ta?s=QQQQ&t=6m&l=on&z=m&q=c&p=&a=m26-12-9&c=[^] If you really want good charts, get an account at Prophet.net
-
The first half of this year has been piss poor, I did not trade at all. No surprise there - nothing really stimulating the economy, we still have an ongoing war, and now a deficit spiralling out of control to boot. In the last several months I have cautiously made a couple of trades. The QQQQ showed a very favorable MACD crossover in the middle of May - I like to see a pretty strong, pretty fast crossover for most reliable trading. I got in a little above $36 and got out about 10 days later a little under $38 - a good trade. MACD crossed over again the first week of July. I don't like these sort of crossovers - a crossover from a low near the zero line could mean a rally but it could also just be chop. This turned out to be a rally, but not my favorite trade scenario. I got in a little above $38 because there was clearly a trend but I got out a little below $39 because I was nervous about this trade setup - a not so good trade, but definitely not a loser. QQQQ ultimately hit $40, but better safe than sorry. As far as another poster asking where the QQQQ is going now, it is impossible to say. The MACD is bouncing around the zero line since mid to late August - I consider that chop, and I don't trade chop. What I would like to see is the QQQQ fall so that the MACD drops well below the zero line, then crosses over quickly. Look at the chart pattern between May and June - that is the kind of setup I like to see. The QQQQ has not cycled this year with the frequency I would really like to see. We need to get out of Iraq, and badly. The chart explains it all, although these charts are not the greatest: http://finance.yahoo.com/q/ta?s=QQQQ&t=6m&l=on&z=m&q=c&p=&a=m26-12-9&c=[^] If you really want good charts, get an account at Prophet.net
Thanks. Very educational.
-
Thanks. Very educational.
The market is hard to "predict", which is why I like charts. Unlike analysts, who usually make their money selling their analysis instead of actually trading, LOL, charts show the current trends, they don't try to predict the future. You can see from my patterns that I tend to "buy high, sell a little bit higher". That philosophy will never make you the "most" money, whatever that is, but it will usually keep you from losing money. :-) September is historically a pretty slow month, and so far that seems to still be reasonably true. But Katrina does not seem to be having much of an effect - that makes me suspicious. Personally, I think that the big boys are skewing the market pretty heavily right now - propping up prices so they can gradually ease out of their long positions. If that's true then the market may drop gradually over the next few weeks. My mood is extremely cautious right now. But it is impossible to see the future.
-
The market is hard to "predict", which is why I like charts. Unlike analysts, who usually make their money selling their analysis instead of actually trading, LOL, charts show the current trends, they don't try to predict the future. You can see from my patterns that I tend to "buy high, sell a little bit higher". That philosophy will never make you the "most" money, whatever that is, but it will usually keep you from losing money. :-) September is historically a pretty slow month, and so far that seems to still be reasonably true. But Katrina does not seem to be having much of an effect - that makes me suspicious. Personally, I think that the big boys are skewing the market pretty heavily right now - propping up prices so they can gradually ease out of their long positions. If that's true then the market may drop gradually over the next few weeks. My mood is extremely cautious right now. But it is impossible to see the future.
rwestgraham wrote: market is hard to "predict", That's been my experience. As far as charts go, I find them hard to read. But, I'm learning and trying. Thanks again for your input. rwestgraham wrote: big boys are skewing I see you're familiar with market manipulations. rwestgraham wrote: impossible to see the future Aint that the truth.
-
rwestgraham wrote: market is hard to "predict", That's been my experience. As far as charts go, I find them hard to read. But, I'm learning and trying. Thanks again for your input. rwestgraham wrote: big boys are skewing I see you're familiar with market manipulations. rwestgraham wrote: impossible to see the future Aint that the truth.
Honestly, I have not had the best success trading individual stocks on Nasdaq using charts. As you know the market is definitely manipulated. With many stocks it only takes one or maybe two market makers to completely control a trend. So with many stocks, no matter how good your charts look, you still never know when a market maker may decide to jump in a clobber your trend, and they can turn in minutes, even seconds. Now the QQQQ is not nearly so easily manipulated. The setup I showed you in May-June 05, by the time the MACD hit the zero line, you already had a LOT of inertia that had pushed it up to that point. So you have 3 possible scenarios - the trend will continue for a while, the trend will fizzle, or the trend will reverse and tank. Either of the first two are both reasonable liklihoods. But the likelihood of the price rapidly tanking at the crossover is possible of course, but the probability is really not very high. A fizzle is OK - most likely the price will move sideways for at least a little while. There is no shame in taking most if not all of your money off the table, and if the trend fizzles, the QQQQ usually, not always, but usually gives you more than enough time to get out safely. Or as in this case, the inertia keeps moving - you make money. Now, suppose the QQQQ was going up (it wasn't but ...) before Katrina hit and you were happily riding the upwards trend. I genuinely believe that the market response, or more accurately, the illogical upwards response, was the result of a concerted effort by all the big market makers to avert a sudden tank of an already modest down trend. So in this case, the market makers stepping in to try to create a "soft landing" actually would save the little guy - they propped up the price by buying up shares at least long enough for someone like me to not only get out, but maybe get out with a profit even. I think that trading the trends on the QQQQ tends to align you a lot more favorably with the actions taken by the market makers, as opposed to a lot of other Nasdaq stocks where the market makers sometimes step in and really run up a price, but also frequently step in and step all over the little guys.