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Registered User
Joined: 9/21/2011
Posts: 15
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Hello All,Last spring I took a class taught by a friend on trading options. As someone who never previously had an interest in the market I was suddenly intrigued. I funded an account with a small amount of money to start trading and did pretty well early identifying plays during summertime trading. Then, emotions go the best of me and I am back to my original balance after tripling my account.
Yes, I know I should have been trading virtually until I felt more comfortable but if nothing real is on the line then how do you learn? The indicators we were taught to use are the MACD, EMAs (8,20,50,100 and 200) and identifying divergences on the larger charts for entries into 2-3 month calls and 1-2 month puts. While reading Trading For A Living I noticed Dr. Elder put a lot of emphasis on the MACD histogram for larger charts to identify reversals which was EXTREMELY helpful. Had I been armed with that information prior to a few trades I would not have made them. Entering calls when the histogram slope was down and bearish or vice versa. This information would have also helped me identify the bullish divergence on the weekly and daily MACD and MACD histogram on 10/4 indicating the reversal.
The reason for my post is to get more guidance on indicators that I see talked about on these boards quite a bit. TSV, Moneystream and BOP. Not looking to add everything to my charts but wanted an opinion on which would be the most helpful indicator and timeframe for trading 1-3 month options. The reason for the above paragraphs is to disclose what I use, where I am with this and invite constructive criticism. Thank you for your time and any help given will be greatly appreciated.Sincerely,Stephen
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Registered User
Joined: 1/28/2005
Posts: 6,049
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QUOTE (stephencardillo) Hello All,Last spring I took a class taught by a friend on trading options. As someone who never previously had an interest in the market I was suddenly intrigued. I funded an account with a small amount of money to start trading and did pretty well early identifying plays during summertime trading. Then, emotions go the best of me and I am back to my original balance after tripling my account.
Yes, I know I should have been trading virtually until I felt more comfortable but if nothing real is on the line then how do you learn? The indicators we were taught to use are the MACD, EMAs (8,20,50,100 and 200) and identifying divergences on the larger charts for entries into 2-3 month calls and 1-2 month puts. While reading Trading For A Living I noticed Dr. Elder put a lot of emphasis on the MACD histogram for larger charts to identify reversals which was EXTREMELY helpful. Had I been armed with that information prior to a few trades I would not have made them. Entering calls when the histogram slope was down and bearish or vice versa. This information would have also helped me identify the bullish divergence on the weekly and daily MACD and MACD histogram on 10/4 indicating the reversal.
The reason for my post is to get more guidance on indicators that I see talked about on these boards quite a bit. TSV, Moneystream and BOP. Not looking to add everything to my charts but wanted an opinion on which would be the most helpful indicator and timeframe for trading 1-3 month options. The reason for the above paragraphs is to disclose what I use, where I am with this and invite constructive criticism. Thank you for your time and any help given will be greatly appreciated.Sincerely,Stephen
Elders concept is that larger timeframes should agree with your trade.
If you want to go long on the daily, the weekly should look positive.
If you want to go long on the weekly the monthly should look positive.
(and so on)
One thing to remember (besides indicators) there is trade management and money management.
With the volatility of last year, I’m going to guess there were times you were in profit but gave if back.
So you probably need to focus on things like stop losses, position size, profit taking, and taking some off the table.
Elder recommends something like: hit a loss level and you don’t trade for a month.
You shouldn’t be tripling an account, then giving it back.
Some say if you manage your money and your risk, random entrees will work.
I would go back to your trades and define everything exactly.
Right/wrong, over trading, too large a bet, you need exact definitions.
Things like: “my emotions got the best of me” don’t really give you answers, you need definitions.
Even though we never like to admit it, you’ll find that the majority of what goes wrong in trading, isn’t on the charts, isn’t in your indicators, its between your ears.
(notice the conflict in your statements, you say: “emotions got the best of me” but you’re looking for new indicators)
Thanks
diceman
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Registered User
Joined: 9/21/2011
Posts: 15
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Diceman,I couldn't agree with you more on the problem being between my ears. The vague thought on emotions was more to do with satisfying the need to trade after I had success. Getting to high with a victory and too low with a loss. I am actually not a gambler in anyway but I found the emotions of trading tougher to deal with than I had originally thought. Elder's book is helping me with that. Yes, I was profitable many times in my trades before closing them with a loss. Got a little greedy. There were other trades that I closed because I didn't wait for a proper pullback and got crushed when the hourly put in 3 red candles. This was a CAT call in late November. It ended up going for 100% on the option before I had a reason to exit the trade. I closed an X put that I bought on 9/16 (Friday) on 9/19 (Monday) with a 30% profit. $2.00-$2.30 that ended up going to $7.00 before there was a bullish divergence or trend line break on the daily or hourly. I hold my bad plays for longer than I should and close my good ones sooner than I should. The question on the indicators was more to do with recently reading about the MACD histogram and going back through my bad trades. Knowing that information "may" have kept me out of a lot of those or kept in plays that went in my favor. The money stream and other indicators I have seen mentioned many times on here and wanted some guidance on the most effective way to utilize them in 2-3 month call options and 1 month put options. Settings questions mainly. Any video tutorials would be helpful if they are posted. I don't want to clog my thought process with too much but a volume indicator is definitely something that I need to pay attention to. I just don't have a clue which one or how to use it. Thank you for your response and I look forward to more conversation on the topic.Stephen
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Registered User
Joined: 5/9/2010
Posts: 144
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02/22/2011 - Momentum Power Trading, guest Martha Stokes and 05/05/2009 - Martha Stokes on TSV Check these out! They are located within the Worden Webinar Archive.
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Registered User
Joined: 9/21/2011
Posts: 15
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Thank you JPeteSmith! That was exactly what I have been looking for. Much appreciated.
Stephen
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Registered User
Joined: 5/9/2010
Posts: 144
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Pleased to Help! I have learned so much from Team Worden and Martha Stokes, CMT. There are a lot of Sharp People here willing to help. I am glad to be of service to you. Yeah! This place is GREAT!!!
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