| macinsmith71 |
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Gold User, Member, TeleChart
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| Saturday, March 19, 2005 |
| Wednesday, October 19, 2005 8:05:46 PM |
47
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When trading options, you're usually looking for leverage. The higher the price, the more leverage you have, and also the greater the risk, but still limited to the amount you invest if you are long in your option. I tend to look for the higher priced stock. If a $100 stock makes a 1% move, that's $1 and an in the money option will move approximately $1. If a $10 stock moves a 1% move, that's only 10 cents and the the in the money option will also move about 10 cents. The option on the higher priced stock will be more expensive, but not proportionally more, so you get a much greater return on your money. I agree with robwiley, do it on paper until you are confident, and only use a small portion of your investment capital. There are some online brokers who allow you to paper trade formally which really helps keep you honest. You have to place a virtual trade, and watch it's performance. You can't fool yourself by saying "I would have sold there.", you actually place virtual trades based on current market performance. If you are really serious, there are systems which will allow you to backtest your trading system too.
Stephen Smith
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I would like to thank Worden Brothers for this contest. The contest, though fun seems biased toward investors as opposed to traders. Here are a few observations that I believe are worth noting. Others may wish to add to this list.
1. Although it is advisable to look at a chart in several time frames, I believe that the best decision is the most current decision, yet the the contest is designed such that the one who makes the earliest decision is rewarded in the case of a tie.
2. If afer analyzing an investment, and one enters it, and it goes sour, I don't think it is wise to ride it out. Of course you don't want to be whipsawed out of a position by small fluctuations, but should one of the sectors that you pick make a dramatic down turn you would not be wise to stay with it.
3. A trader may enter and exit several trades during the month.
4. There is no way in the contest to short one of the sectors, so the only way one can make money is when a sector is going up.
5 On the positive side, this contest encouraged us to make use of a lot of the tools that are in TC2005 and it will be fun to see how well we do.
Stephen Smith
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Thanks Bruce,
This is exactly what I wanted. I'm not sure why the base security changes color as I move from symbol to symbol, but I was able to do the analysis I wanted. i wish there were a way to set the start point rather than just use the left side of the chart.
Stephen Smith
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I want to compare two securities and would like to plot them on the same chart. How can I do this?
Stephen Smith
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I would like to create a plot of the percent of change (i.e. slope) of the linear regression line. Is this possible? The formula would be (the value of the linear regression today - value of linear regression n days ago) *100 / (n+1)
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Where can I find a list of all the symbols other than securities such QQQ. I found the sectors by using name search for each one, but is there a list somewhere?
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Mr. Worden,
I watched the video with interest. I realize that this is a new trading system, so I'm willing to wait to see it develop and be refined. There are two things that I observe. First, the signal to enter the trade is pretty fuzzy. In several occasions the signal failed, or was at least too early as you noted. Second, there was no discussion of an exit point. To be a really useful trading system, it needs a way to enter the trade with an expected success rate considerably higher than 50%, and a signal which tells you when it's time to take your profits or cut your losses. So, probably the implied, but unstated advice is that this technique is just another tool which needs to be confirmed by TSV, MS, and some of the other great tools that you make available.
Stephen Smith
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Jim,
Thanks for the suggestion, but that really defeats the purpose. One technique that Millard uses in Channels and Cycles:A Tribute to J.M. Hurst is to create synthetic data, then use the techniques for analyzing cycles to show how you can study individual cycles. Theoretically if the price behaves in cycles, as there is a lot of evidence that it does, then if you are able to determine when longer and shorter cycles are all rising, the probability of a successful trade will be enhanced. While I'm reading the book, I'm trying to actually try what he is doing, then I want to use the same indicators on real data. Currently I'm using Excel for some and thinking of writing my own program to do some of the rest. I just think that if it were done by Worden Brothers, it would be available to everyone.
Stephen Smith
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Then I will post it as a product enhancement.
Thanks,
Stephen Smith
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Did it. See my post in under Centered Weighted Averages.
Thanks,
Stephen Smith
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