Chat Room Lessons

Valuable trading lessons archived from the OneOption chat room.

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Dave W
13:36:33
SAVA    a note on the stock it has completed what is called a doji sandwich  ie  big green candle (10 points) on tues followed by a doji on wed and another 10 point candle today   almost exactly the same as tues  that is a perfect doji sandwich      for anyone interested in candlestick patterns 
puckshaw
13:39:17

Question Is there an expectation for what comes after a doji sandwich?

Dave W
13:44:07
FREY is a doji sandwich setup for trading tomorrow if it opens green 
Pete
16:03:35
puckshaw wrote:

Question Is there an expectation for what comes after a doji sandwich?

Follow though in the direction of the long candle that precedes the doji. Typically that pattern will produce. If not, I expect heartburn from that sandwich.

Pete
09:05:52
According to purists, yesterday was not a doji, but close if you strip out the last 10 min yesterday. DaveW is enjoying his breakfast doji sandwich.
Dave W
09:16:23
regarding the doji sandwich    what you are looking for is the doji sandwich setup which is a big green (or red) candle followed buy a doji then if the stock opens green after the big green candle and doji or red after the big red candle and doji you can take the trade looking for todays candle to be approximately the same length as the original big green or red candle 
Dave W
09:17:03
SAVA was a perfect example of a bullish doji sandwich yesterday 
ican
09:17:29
NIO is on doji sandwich today
Dave W
09:37:22
NIO is a doji sandwich setup yes

SubZer0
12:14:18

Question @Hariseldon Another mindset question. I come from a scalper’s past and tight bid-ask spreads were highly critical to my stock picks. I never traded stocks that had spreads larger than 0.03 because if the stock moves against me, it could’ve burnt a hole in my p&L very quickly with a large spread. I see many tickers traded here have large spreads and i’m still not comfortable trading them. Do you even look at spread when selecting a stock to day-trade using the RS/RW method? Or just overlook it because you are confident with your conviction?

Hariseldon
12:48:24
SubZer0 wrote:

Question @Hariseldon how do you develop the mindset to trade very slow moving tickers? They show up in the scanner as having great RS or RW but the tape barely moves. For me, a decent or fast moving tape shows good liquidity and enough interest from traders, which means you can expect the price to move. I have always traded those type of tickers and avoided slow moving ones because i could be waiting for a long time and still not make much money from them. Thoughts? Totally avoid slow moving tickers? Or is there a different approach to day-trading them?

Answer It has to have volume foremost, if it trades under a million shares a day I will generally skip it – but if it does, than I use the daily chart as my guide

2022-09-22
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AriS
10:08:04

Question If you buy/sell a tech stock. Are you looking at QQQ or SPY for RS/RW or paying attention to one more than the other? I typically watch both but with tech I favor QQQ a bit more.

Hariseldon
11:12:34
AriS wrote:

Question If you buy/sell a tech stock. Are you looking at QQQ or SPY for RS/RW or paying attention to one more than the other? I typically watch both but with tech I favor QQQ a bit more.

Answer SPY – not saying ignore QQQ but absolutely you should be looking at SPY for RS/RW

2022-09-22
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SubZer0
11:36:40

@Dave W @Hariseldon How do you know where to exit on a stock that is at all time high… with reference to FREY here

Hariseldon
11:40:14
SubZer0 wrote:

@Dave W @Hariseldon How do you know where to exit on a stock that is at all time high… with reference to FREY here

You don’t.  I had decent profit, so I took it.

Dave W
11:41:42
Hariseldon wrote:

SubZer0 wrote:

@Dave W @Hariseldon How do you know where to exit on a stock that is at all time high… with reference to FREY here

You don’t.  I had decent profit, so I took it.

I had a sell order already working  

Superpantz
16:42:41

Question if I decide to only swing trade, what is the best timeframe to trade with?  I’m considering to switch over to swing trade primarily when my day job take too much of my attention.  5M would be too demanding during a busy work day.

Hariseldon
16:50:35
Superpantz wrote:

Question if I decide to only swing trade, what is the best timeframe to trade with?  I’m considering to switch over to swing trade primarily when my day job take too much of my attention.  5M would be too demanding during a busy work day.

Answer You should be using the daily chart to make your decisions – it is fine to look at the M5 for entry reasons – but really all you care about it the daily candle

Superpantz
17:11:38

Question follow up question.  This is something that I’ve been confused about for a while and I’ve been asking questions in different ways, but still a little confused.  If we lean on the daily when we day trade, how is it different than swing trading other than entering and exiting based on 5M and closing the trade during the day? I think I’m confused because I size my positions based on where I set my mental stop where some others have a specific share/contract count.  So if I’m daytrading and I’m leaning on D1, should I set my mental stop based on D1 structure or M5 structure? If I’m setting mental stop based on D1 structure, that would make any trade swingable, but it would also make sense to exit based on D1 as well since exiting on M5 would make risk way bigger to reward, but that becomes swing trading.  As of now, I’m using D1 to determine what stock to trade, entering and exiting based on 5M structures.

Hariseldon
17:19:30
Superpantz wrote:

Question follow up question.  This is something that I’ve been confused about for a while and I’ve been asking questions in different ways, but still a little confused.  If we lean on the daily when we day trade, how is it different than swing trading other than entering and exiting based on 5M and closing the trade during the day? I think I’m confused because I size my positions based on where I set my mental stop where some others have a specific share/contract count.  So if I’m daytrading and I’m leaning on D1, should I set my mental stop based on D1 structure or M5 structure? If I’m setting mental stop based on D1 structure, that would make any trade swingable, but it would also make sense to exit based on D1 as well since exiting on M5 would make risk way bigger to reward, but that becomes swing trading.  As of now, I’m using D1 to determine what stock to trade, entering and exiting based on 5M structures.

Answer There are several answers to this question – first – when the intention is to day trade, trading a stock in the direction of the daily chart (i.e. if the stock is bullish on the day but the daily chart is very bearish it is not as high a probability trade than if I were to day trade a stock that is both bullish intraday and on the daily chart).  So the first reason to use the daily chart even when your intention is to close the position before the end of the day is that informs the trend and tendency of the stock you are trading.  Next – as we all know very well, not every trade works out – I could short NVDA with every intention of making it a day trade but the market may have turned against me and gone bullish, and now my NVDA position is under-water.  Trading in the same direction of a strong daily chart now gives me a viable option of holding the trade.  So even though it was not my original intention to swing NVDA (in this example) – because the daily chart is so bearish, it becomes an attractive choice rather than just closing it for a loss.  However, since my trade is intended to be a day trade I would be using the M5 to guide my decisions on a potential exit.  I hope this answers the question?

2022-09-21
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Fox
13:07:55

@Zander re institutional participation in options, volume & liquidity is obviously in SPX above all else, often as conjunction with part of their nominal exposure in equities (as hedge or leverage). vol fund guys are very very active in highly liquid retail names and they consider this the easier money than reliably farming SPX option inefficiencies

st0rm
12:27:28
Purely hypothetical, but wouldn’t a time spread on spy before FOMC benefit the same way as a time spread over earnings? I suppose one reason it wouldn’t is the unknown expected change. 
Zander
12:33:44

@st0rm Part of the time spread is selecting companies where the market has a strong historical tendency before earnings to over-estimate volatility and subsequently over purchase the post earnings options – you would need to know that the market has the same tendency pre-FOMC and I’m not sure it does or does not. I would also wager that due to the much greater liquidity of SPY options, that institutions would have more of an incentive to pay attention to inefficiencies like that than on the less-liquid options on individual equities, and any edge might be harder to find. Curious to hear thoughts on this from someone more experienced. 

Zander
12:55:32
Also, with a time spread, I think it’s been mentioned that part of the mispricing is due to retail traders predominantly using the cheaper weekly expiration to speculate on earnings instead of more expensive further-out options, so a disproportionate amount of earnings-related IV is packed into that nearest expiration options chain. I would also bet that FOMC related speculation is more evenly distributed among different options expiration dates than earnings related speculation, since people know that post-earnings moves often happen immediately overnight but post FOMC moves might take longer to materialize, so paying more in time-premium is worth it. If this is true, it would further reduce the edge of the time gap between the short-vega leg and the long-vega leg because the FOMC related IV is more spread out among different expiration dates. But that part is entirely just speculation and a total guess on my part and more relevant to a pure interest in options than actual trading. 
Fox
12:56:56

@Zander yes

Fox
12:57:23
time spreads largely depend on the inefficiencies of pricing single name option chains around binary events
Fox
12:57:36
such inefficiencies are not to be so easily or reliably found/farmed on index options

2022-09-21
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Fox
15:43:49
one that’s been working well for me all year – buy 1*25delta C and 1*25delta P about an hour before the meeting and sell a minute before the meeting starts. natural increase in IV as a whole outmoves the loss in delta from one side. well it has this year with so many people piling into bets pre-meeting
Fox
15:45:01
the idea comes from OptionStalker “Buy into Earnings” (buy the build up and get out before the boom)

2022-09-20
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A man
14:27:56
Done for the day. 4L, 2W. I’m one of those who got ripped up today lol. The chop burned me. Red for the week, will try and reset. Won’t trade until after Fed tomorrow. Hope everyone is having a better day! 
Dave W
14:28:33
low probability trading days will do that  much better to sit on the sidelines 
A man
14:29:44

@Dave W Def should’ve stayed on the sidelines today, but I was trading 1/2 position size so was able to manage my risk somewhat. 

Dave W
14:30:31
you maybe trading just to trade then  
A man
14:34:44

@Dave W I’m not trading for the sake of making a trade, I’m trading to learn. I’d like to get better at navigating these choppy environments, and I think the best way to do that is to trade with real (but reduced) capital. I risked what I was willing to lose, so I don’t feel too bad about it. After all, every red day is an opportunity to learn!

owensd
14:38:44

@A man the lesson is that not all days or times should be traded. I took three trades today, with high probability setups, got out quick, and have been completely in cash for about 70% of the day.

Dave W
14:42:59
A man wrote:

@Dave W I’m not trading for the sake of making a trade, I’m trading to learn. I’d like to get better at navigating these choppy environments, and I think the best way to do that is to trade with real (but reduced) capital. I risked what I was willing to lose, so I don’t feel too bad about it. After all, every red day is an opportunity to learn!

I am just trying to help   learning to not trade with no edge is also a good thing to learn 

owensd
14:43:35
ROKU has been beautiful today… 
Hariseldon
14:44:29

All – understand this – a consistently profitable trader is very rare – in fact, you will not find many out there offering advice, in any at all.  So when someone like Dave W. gives you advice or tells you his interpretation of what you are doing take it for the gold that it is.

Fox
14:49:05

@owensd that sounds like a great approach to getting paid on a day ike today

owensd
14:49:43

@Fox been employing it all month – best month trading so far!

JohnB
13:49:47

Question When selling .10 delta weekly covered calls against a long position, do the professionals make any adjustments to this strategy during weeks like FOMC knowing volatility will be high? (e.g. avoid doing it, picking a different delta, etc.)

Hariseldon
14:04:36
JohnB wrote:

Question When selling .10 delta weekly covered calls against a long position, do the professionals make any adjustments to this strategy during weeks like FOMC knowing volatility will be high? (e.g. avoid doing it, picking a different delta, etc.)

Answer yeah, don’t do it on those weeks

Pete
10:30:57
When I trade futures if they drop really hard on stacked red like this, I will take some gains. Those really big drops retrace and I can usually set a sell limit higher and re-enter well. Very short term tactic. If I don’t get filled, no worries, I will just have to wait for follow thru and I can usually catch an even bigger move. That is why I pull my bid if not fill quickly. 

2022-09-15
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lilsgymdan
11:00:17

Answered View  are REIT’s reliable with the RS/RW method or are they more akin to some basic materials stocks, energy stocks, or ETFs where they are subject to other forces than just SPY?

Pete
11:07:15
lilsgymdan wrote:

Question are REIT’s reliable with the RS/RW method or are they more akin to some basic materials stocks, energy stocks, or ETFs where they are subject to other forces than just SPY?

Same concept works. The RS/RW in the group will make them come up in the searches. We  don’t care too much why they are RS/RW, we just follow the money like we do for basic mat stocks. They have rotation in and out just like other groups.

2022-09-15
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Pete
11:34:33
As I have said a hundred times, this is a game of chess. If you only focus on what you are going to do, you are going to be mated quickly. “OMG the trendline was breached. I am going to buy some puts!” That is how most retail traders think. Your opponent is thinking, “If I can poke through that D1 trendline I can lure a bunch of shorts in and then try to squeeze them. They have no staying power there because then we will be back above that trendline and they will be afraid that it confirms support and they will cover for a loss.” The seasoned trader shorts the high today on signs of resistance that that trendline will be breached. He treads cautiously at the trendline and waits for a breakdown and then continuation to confirm the selling pressure.

Hariseldon
16:13:22
BennettN wrote:

 Question @Hariseldon I know this is one of those things that often comes down to feel/experience, but were there any signals you can point out that tipped you off to the possibility of a bull trap here?
Answer Very difficult to quantify – it just lined up too perfectly – it is exactly the type of bounce that would get people out of shorts and get bullish specs long – there was no reason for it other than to do that.  In my head it went like this – the Algos had one job today – Sell – but if on the way down they could grab some extra $$ from retail, why not take it.  Basically I felt it was a Bull Trap because it was what I would have done if I were them.

ican
16:43:14
I need to learn how not to sabotage myself. I had bearish thesis, which played out today. I was holding onto my position through all drawdown without being anxious actually (position was sized appropriately). But as soon as I knew my thesis was playing out today – I exited for a small gain. somehow thesis being proved was enough as opposed to making gains on it. I do not really know what triggered the exit – maybe subconsciously – don’t want to see drawdown again? Need to introinspect. Ironically, I entered new positions with same thesis soon after. 
Hariseldon
16:44:45

@ican was it an issue with position size?

ican
16:49:23
not really. I had SPY oct $400 put for $14 about. I had been selling daily puts against it every day. Cost had come down to $12 already. Now as soon as hit the first LOD at around 11 today – I knew we have decent selling pressure and good likely hood to go down further. On the bounce there after I got out of position. Have been holding this position for over couple of weeks and thru the 389 test on 9/6 and the massive bounce. Had chance to exit for profit on 9/13 – didn’t take it with bias of “going lower”. Somehow today was the day – still struggling to figure out why I exited. 
Hariseldon
16:54:57

@ican first as an aside – likelihood is one word (I know that sounds obnoxious to correct, but figured it would help you if you use it in the future) – and I hear you and know the feeling – after awhile you actually get sick of the position itself and just want to be rid of it, and then you see it in profit – I had the same feeling with ENVX been holding it for a month and got it for around $9 a contract, averaged it down to about $6.75 – but it has been a stand out RED at the end of each day, and then today it finally went green , actually up around .75 a contract.  I wanted to close it, I really did – but I stopped myself and instead added two more contracts to my position.  And that is what I do now, when I get that urge to close the position that finally made it into profit, I add to it instead – that is the deal I made with myself and I stick to it.

ican
16:56:34

@Hariseldon I think that describes my feeling very well. I just lost the patience with “this particular position” – not logical at all. Thanks, I will work on this. 

Hariseldon
16:58:58

@ican another thing you can do is put an order in to close it, if for example it was at $11.30, put an order in to close it for $1 higher at $12.30 – if it hits your target, great, if not you still have it

Hariseldon
17:02:57
This really is the number one reason why traders do not come out ahead in the market – there are many reasons, but after all my years doing this, I truly believe this is number one – When your position is working in the direction of your trade is also when you are most likely to close that position.  Now obviously nobody can have the “perfect exit” where you get out right at the top (or bottom if you are shorting) – but it is the most inexplicable phenomenon that really only happens in trading – Traders leave when they are right and stay when they are wrong.  If the position is going your way, there is a much higher chance it will continue to go your way – 
Think about it – we spend all day looking for the highest probability trades, right? Well the highest probability trade is the one you have that is currently working and in profit – and yet that is the one we shut down and close.  That is the number one reason traders don’t “beat the market”.

Crux
11:10:52

Answered View For Dave/Hari/Pete, do you guys try to avoid swinging biotech stocks for exact reasons situations like ALT? Or is it just part of the game. I hadnt really thought about this before but it makes sense that a biotech stock is more likely to have a wild 50% swing that say AAPL would

Pete
16:43:19
Crux wrote:

Question For Dave/Hari/Pete, do you guys try to avoid swinging biotech stocks for exact reasons situations like ALT? Or is it just part of the game. I hadnt really thought about this before but it makes sense that a biotech stock is more likely to have a wild 50% swing that say AAPL would

That is why I do not swing biotech. They are very prone to news. I am not a scientist so I would have zero to go on apart from the technicals. GS has researchers who know the potential and I can’t compete with their fundamental research. They have clinical trial updates and I have no way of remembering those dates. They are also cash furnaces and they have to issue stock all the time. I will day trade the heck out of them, but I do not like to swing more than a CDS based on short term momentum.

owensd
14:02:07

Short TLSA 300/295 PDS for $1.90 – got the confirmation I was looking for the algo rejection and has lost all it’s RS from earlier.

Hariseldon
14:02:43

@owensd are you currently shorting a stock up $9? Just checking is all 

Dave W
14:03:44
TSLA also above the 200 and is having some news moving it today    be careful shorting TSLA
owensd
14:04:49

@Hariseldon yes – but the algo rejection is more influencing to me. Also why I did the spread, to limit potential loss on an overnight swing.

Dave W
14:05:54
in my opinion algo rejections are a reason to exit longs but not necessarily short it 
owensd
14:08:04

@Dave W I’m in TGT and META as well, but didn’t post those entries.

Dave W
14:09:25
perhaps post those and not TSLA

2022-09-14
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st0rm
17:45:25

Answered View  How do you handle short-squeeze rumors around tickers you might be holding short? I was holding CLAR short on 9/1 when it jumped (from 14.87 briefly to 17), then began to fall back. I held for a few days based on the D1, but then got scared when I noticed the ticker in reddit short squeeze comments. I sold immediately at a fat loss. Any lesson here? May be hard to answer. Thanks!

Hariseldon
17:49:29
st0rm wrote:

Question How do you handle short-squeeze rumors around tickers you might be holding short? I was holding CLAR short on 9/1 when it jumped (from 14.87 briefly to 17), then began to fall back. I held for a few days based on the D1, but then got scared when I noticed the ticker in reddit short squeeze comments. I sold immediately at a fat loss. Any lesson here? May be hard to answer. Thanks!

Answer The only thing I can tell you is that they actually did a study on this, although I am not sure where the citation might be, but I do recall the findings and they were this – there is no correlation between the magnitude of social mentions and the likelihood of a stock going up significantly

st0rm
17:51:12

@Hariseldon So I should stop taking my daytrade picks from reddit? Seriously, that’s a very interesting study I will go find it. Thank you.

Hariseldon
17:51:48

@st0rm if you find it, please link it here – thanks!

st0rm
17:56:53
I suppose a ticker with rw and clear institutional selling may offer a safeguard against a harmful short squeeze since those same institutions would defend their short positions (and my baby position riding on their coattails). 

2022-09-12
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Tonga
07:49:58

Answered View  Hi guys, I have a question regarding the CDS/PDS. It is always suggested to buy them with expiration in the same week. But on Friday, with so short expiration date, I would want to avoid buying lottos. So my question is if in Friday I could buy next Friday’s expiration and the strategy is still valid. 

And what about Thursday? Can I still buy next week’s?
I read the Wiki and I am still not clear about this, sorry if you already talked about this before
Pete
08:40:07
Tonga wrote:

Question Hi guys, I have a question regarding the CDS/PDS. It is always suggested to buy them with expiration in the same week. But on Friday, with so short expiration date, I would want to avoid buying lottos. So my question is if in Friday I could buy next Friday’s expiration and the strategy is still valid. 

And what about Thursday? Can I still buy next week’s?
I read the Wiki and I am still not clear about this, sorry if you already talked about this before
Yes you can buy the next week out and often your lottos are going to be excellent candidates because they are showing incredible strength/weakness late Friday. You do carry additional risk by holding over a weekend because of news and that is why you don’t see us trading them as often.

st0rm
16:08:11

Answered View  Is it ever OK to buy pds/cds beyond Friday? I like buying spreads for the safety it provides, but last week realized a mistake was buying pds that expire Fri when I should have bought calls further out. I allowed my desire for “safe” spreads to cloud my judgment and got myself trapped, instead of just buying longer-term puts. Thx.

Pete
16:28:38
st0rm wrote:

Question Is it ever OK to buy pds/cds beyond Friday? I like buying spreads for the safety it provides, but last week realized a mistake was buying pds that expire Fri when I should have bought calls further out. I allowed my desire for “safe” spreads to cloud my judgment and got myself trapped, instead of just buying longer-term puts. Thx.

Yes. I you are looking for a move that could take longer to unfold you can go out another week with CDS/PDS. We tend to wait for the move and then take the position when we feel the momentum will continue. That is why we prefer this exp for PDS/CDS. This week’s also moves better. 

Hariseldon
16:48:06
Also remember with a CDS/PDS you want to get to the natural intrinsic difference between the strikes , meaning you want premium to burn away, as your long call goes ITM – that is accelerated when the expiration is the same week.  Otherwise, both Calls go up as the stock rises meaning it is difficult to get a % profit without expiration approaching .

Russ
17:14:19

One thing I’ve observed recently is a lot of people changing their bias on the same stock intraday (i.e. being long a stock and then wanting to flip short after taking a loss). That is something that should really only be done by professionals and is also very different from flipping your SPY bias from long to short or vice versa. Why? When you made your original entry, you should have looked at the daily chart, assessed it as strong, and then looked at the intraday chart, and saw it met all your criteria. Even if it falls apart on an intraday basis, or if you have an event on a daily chart basis (breach of an SMA or the 8-EMA), then all that should change is the stock going from a good long setup to a good no trade candidate. You need to see a significant reversal on the daily chart which you will not see in one day except in exceptional circumstances! The chances are if you are getting a desire to switch your bias on a stock, what actually happened is you either 1) Made a poor initial entry and the stock did not actually have the strong/weak daily chart needed to justify your original position or 2) You are trading emotionally because you just took a loss.

Option_B
18:04:52

Can someone please elaborate on what it means to “Wait for confirmation”? Specifically, I was wondering 1) What kind of pattern formation do you look for after a trendline breach. 2) Do you have a resting order as you wait for price to come back to a “better” level, or do you jump in with a market order as soon as you have confirmation. 3) In the case of the resting order, what do you do if the price continues to take off after confirmation. For example, do you then decide to jump in with a market order, or do you consider it as a missed trade and move on to something else? Specifically, I’m trading on the larger time frame as more of a swing trader (anywhere between H1 to D1).

Pete
18:08:35

It means that the underlying has to move through the price point. If you are a swing trader, it need to close through it (not just trade through it). If you are a day trader, you need the M5 bar to close through it. Even then, I like to wait to see if the next bar follows through. If it instantly reverses it is a head fake and that does happen often at those price points. How the underlying approaches that price point matters. As I describe in The System under trendlines and MAs, we want it attacked. I never suggest using live orders (buy stops, sell stops). Alerts are much more effective. When they are triggered – evaluate. If all does not seem right, set another alert. You will notice in the charts I posted today that we had multiple new highs for the day. You want to make sure that breakout holds because it could be a head fake. Especially today where the trend strength was not very good and we were creeping up to those price points. It means you will miss a little bit of the move, but you will know for sure that the breakout is legit.

Superpantz
13:10:06

how do you set profit target for stocks at ATH or ATL

Pete
16:49:31

Without context it is impossible to answer this question. I am going to assume you are not talking about GME making a new all-time high. If yes and you are swinging it, you had better be using a CDS with limited risk and be willing to lose it all. If you are day trading it you would watch for compressions and retracements. You would also watch for bearish engulfing candles at the hod, bearish hammers at the hod. Is the volume heavy? Is it continuing? Is the stock still strong relative to SPY? Is this a normal stock like BJ? How did it get to the new high? Is it attacking it? How far did it have to travel during the last rally to get there? Are we swing trading it or day trading it? Every one of these elements matters. Please be very specific with your questions. Provide a symbol and your trade duration and we will be able to answer your question.

DanielF
17:05:55

Following up on the last question, in general, how do you set your targets? Every book has a recommendation, like if it’s coming off a flag, your target is double the pole or whatever. However, this doesn’t seem to work well when SPY is going haywire. I’ve just been aiming for the next area of resistance or support to exit (horizontal support, trendline, etc.), although I don’t know if there is a better way. To give an example, TNK had a good morning and I set my target to the 8/11/22 then going way back to 4/28/20 since that was the next one back.

Hariseldon
17:10:46

Honestly, I judge it from the price action – like with SPY today, I judged I could get a $1 but probably not more, same with GOOGL – that was based on how I felt the stock was moving and how the market was moving.

2022-09-06
Mark As Read

Pete
09:43:00

When you look at a D1 chart like ZI, notice how the candles overlap. “What does that mean?” It means the stock retraces a lot and you do NOT have to chase. I don’t even have to look at an M5 chart to know this.

Amerikaner
16:15:45

@Hariseldon When D1’s show such large weakness like QCOM did, do you more or less ignore the M5 chart? I ask because at your QCOM entry it was showing a higher low on increased volume and SPY was still in it’s bullish cross. I’m thinking you thought it wasn’t worth waiting on M5 with such overall weakness. You’d rather get in the short and look for other opportunities rather than squeeze slightly more profit out of a slightly higher bounce. Am I on the right path there?

Hariseldon
16:27:09

pretty close, yes -I am bearish on the market, bearish on tech, and QCOM was Bearish, so at that point it is just waiting for profit and whether or not I want to swing it

2022-09-02
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Hariseldon
14:16:00

Btw – I recognize there seems to be an inherent contradiction here – on the one hand we say, “Have a thesis on the market!” and on the other whenever someone asks where the market is going they get told, “Doesn’t matter, just pay attention to what is in front of you!” – So which is it?
I think the best way I can explain it would be to use a dating analogy. Let’s say you are getting ready for a 1st date – you met the person online, and based on the profile and your conversations, you have high hopes for this one. You’ve been on enough previous dates to know that these things can go wrong pretty fast, plus that time you were Catfished by a rather large and elderly Armenian man, but still this one looks good. So here you have your historical information, and your set-up that is informing how you are going into the date – hence you have formed a “thesis” about it, and because you have high hopes you dress nicer than normal, and choose a nicer place for dinner than usual for first dates – your thesis is one of optimism. Now – once you get there though, you need to pay attention to the date in front of you – your thesis can be nullified pretty fast if they start talking about how they still live with their ex-boyfriend/girlfriend – In this example, the two notions are not contradictory – and that is how you need to think of it.

Fox
14:35:15

from view of options trader, i have a thesis on market direction in next 1-2 expiration cycles (absolutely no further than that). then structure my trades & balance them to align with that thesis but also not pay too much if the thesis fizzles out, and ideally a low probability low cost high pay out if there is a total reversal of thesis. tldr: i expect my thesis to be wrong at some point so try to give myself multiple ways to get paid on the trade

2022-09-02
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Fox
14:42:16

one of my bag of tricks is a low probability high reward low risk trade for intra-day reversal. E.G. just now i entered ITM put credit spread on NVDA at 139/140p for .90cr. Meadning if we get an end of day bounce and close above 139 i can close it for 0 ($90 profit). if not, max loss of 0.10 ($10). my overall book is bearish so i wanted something just to get a surprise upside whoosh into EOD which is always possible on pre-holiday light volumes. but not actually wanting to risk more than .10 on a reversal because catching bottoms is for idiiots on fintwit. Please only do [this] if you are consistently reaching the win rate & PF milestones. this is a step 12 out of 10 to trading for a living

2022-08-31
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Auto
16:04:56

I truly do not understand how to properly play stocks such as MEGL, ALT, NERV or any momentum play. I avoid trading stocks like that completely because in the past I have found myself losing more than winning on trades like that. So how do you size for those positions and how do you choose when to get in and out? To me when I see stocks like that all I see is chaos. To expand on that I trade leaning all my decisions on the D1 chart. I know if I cannot get my target today, more often than not I will get it another day. But with stocks that are borderline bankrupt like REV, I cannot justify holding something like that because the risk is just too much. So for me when the position goes against me I get out quickly to avoid a bigger loss. I just would love to understand how you and Dave play these because I see you guys make so much money on them.

Hariseldon
16:37:51

You want the honest answer here? It is all price action. Playing these momentum stocks is the cherry on the trading sundae so to speak – after years of trading and experience, you get to trade these types of plays. Anyone that tries to trade these set-ups without the experience of knowing how to read pure price action is going to lose money – I don’t care how many 3-Bar method videos there are – the simple answer is – don’t play them until you are ready.

Auto
16:42:53

Alright thanks Hari I’ll just continue ignoring those stocks for the time being then. It’s just so frustrating when I can see just how profitable those moves are when we are in such shitty market conditions. But then again it’s not like anyone has ever became a profitable trader by being greedy and impatient so I’ll just continue to do what I’m doing then, thank you.

Hariseldon
16:45:47

I get it – they move fast, and they are cheap – perfect combo. Here is the problem – one never knows when to get out – how far down is too far when you have stock that jump 20% in a single candle, if you enter at $6, and it is now at $5, do you bail? Even though you saw it go from $4 to $7 just an hour ago? Do you average down? Ahhhh….it’s volume you say? But wait….volume totally dried up and the stock sat there for two hours doing nothing, and then for no reason whatsoever volume exploded again….so what the hell….?? If you are in a stock like F or CLF and you are down .50….well you know it will take a lot to turn that slow moving grinder around, so the decision is pretty easy to bail – but a stock like MEGL that can go from $5 to $100 in an hour?? Yeah, that is a different story

Superpantz
16:18:47

When it comes to leaning on the daily chart to determine stop levels, it significantly increases my win rate as I don’t get stop out by intraday noise. However since the stop level is determined on the daily level it is usually further from my entry resulting in undesirable risk to reward ratio. Since it is a day trade, the profit are usually significantly smaller compared to taking a loss. Therefore even if I have 90% win rate, my profit ratio could be 1 or less than 1. For example, if I win 9/10 trade risking $100 each trade and on average make $10 each trade, that 1 loss would take all the earnings. Especially recently since there are a lot of sideway price action from SPY. How can I improve this situation? Am I doing something wrong?

Hariseldon
16:39:11

Next time you are halfway to your profit target, increase your position by 50% – that will solve your issue

2022-08-30
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Pete
09:24:43

Better one safe way than a hundred on which you cannot reckon. A cat goes up a tree and gets away while a fox is caught trying to figure out what to do.
Better one safe way than a hundred on which you cannot reckon.

Pete
09:29:15

Once a Cat and a Fox were traveling together. As they went along, picking up provisions on the way—a stray mouse here, a fat chicken there—they began an argument to while away the time between bites. And, as usually happens when comrades argue, the talk began to get personal.
“You think you are extremely clever, don’t you?” said the Fox. “Do you pretend to know more than I? Why, I know a whole sackful of tricks!”
“Well,” retorted the Cat, “I admit I know one trick only, but that one, let me tell you, is worth a thousand of yours!”
Just then, close by, they heard a hunter’s horn and the yelping of a pack of hounds. In an instant the Cat was up a tree, hiding among the leaves.
“This is my trick,” he called to the Fox. “Now let me see what yours are worth.”
But the Fox had so many plans for escape he could not decide which one to try first. He dodged here and there with the hounds at his heels. He doubled on his tracks, he ran at top speed, he entered a dozen burrows,—but all in vain. The hounds caught him, and soon put an end to the boaster and all his tricks.

Pete
14:20:23

ADP revamped the way they calculate data. They stopped publishing their number in May and the first jobs report will be posted Wed. It might show weaker job growth just because of the way the number is calculated. It might not carry much weight for that reason. Initial jobless claims the last 4 weeks have been super steady. I am not expecting a bad jobs report. The BLS number is filled with seasonal adjustments (one reason I hate it) so maybe those will force it to be weaker. A strong jobs report could be bearish. Good news is bad news. Either way, the Fed is steadfast and as long as inflation is hot, one weak jobs report is not going to impact them. They said that taming inflation might come at the expense of economic growth and they are fine with that. This is why the reaction last Friday was so bearish.

2022-08-30
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Hariseldon
16:17:08

What is the point – or the check boxes, that tells you to Leg Out of an OTM Bullish Put Spread, rather than just close it for a loss and how far out in time should one make that decision?

Pete
16:35:22

There are many moving parts (the market, the stock and time). Since it is a swing trade and it is OTM it is going to take a fairly big move for it to go wrong. I evaluate the spread near the close and I let it move around during the day. When the technical support levels for the stock are in danger I need to know the cause. Is it stock specific or market related. If it is stock related, I better check the news. I don’t worry about broker downgrades, but material news on the company or group will get my attention. Then I look for continued rel weakness in the stock. I need a market backdrop where the market is setting up for a drop and then I can leg out. If the stock is super weak it won’t take much of a market move, I just need to make sure the market is not going to rally. If the stock is breaking down because of the market, I need to know the market move is legit and that it will have follow through. Then I am a bit more focused on timing the market because the stock will follow it. With regards to time, if the spread has more than a week until expiration I am in no hurry. Assignment is not a factor and I will have chances to leg out. Spreads that expire in a few days and that are ITM are more dangerous because I don’t have the luxury of waiting for a good set-up. Once I buy back the short put, time decay is working against me on the long put. My confidence that both the stock and the market are going to drop has to be VERY high or I will just close the spread as a spread.

Editor's note
23:59:59

Pete discusses legging out of bull put spreads in this video: How To Leg Out Of A Bad Spread

AlamVert
16:34:12

Is there a particular logic to defer mostly to bullish vs bearish time spreads for earnings? Does this mostly have to do with the ones bias on the stock/market going into the earnings?

Hariseldon
16:40:08

A time spread is neither bullish nor bearish – we use Calls because if the stock drops than you let the Call expire worthless and hold the long call for the next week. If we used Puts then you are hoping a stock that had a positive response to earnings is going to drop in the following week (if the result is outside the expected number). But a time spread is neutral on your hoped for direction.

2022-08-30
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Superpantz
16:22:03

I heard you said this today and last time on Twitter live; you said that setting stop level on 5M levels is consider momentum trading and is susceptible intraday noise and getting stopped out. I know we’re supposed to lean on the daily, but what exactly does that mean when it comes to determining mental stop for a day trade and not a swing trade?

Hariseldon
16:40:08

On my day trades my stops are typically determined by the daily chart, not the M5 – on occasion I will use VWAP but that is dependent on the trade. The overall point was that people exit trades because of 5-Minute candles that are basically just noise and not really cause for an exit.

lilsgymdan
10:20:03

Thanks for the pep talk coach 🙂 The hardest part of this is where you remodel your identity and beliefs. When they are still new It’s a fragile house of cards that can fall over once in a while and needs a hand to prop back up.

Hariseldon
16:32:18

You need to get three straight months of WR 75% and PF 2.0 or higher on paper trading, and then three straight months of the same thing with 1 Share – and only after that should you begin trading normal sizes. Any shortcuts around that never, like ever, end well.

lilsgymdan
16:49:52

should it be 75/2.0 for each of the those 3 months or on average across 13 weeks? Because I am EXTREMELY close

Hariseldon
16:50:20

It should be consistent – so for each month. I mean if you are close, it really is a matter of how you feel – the whole point of it is not so much learning the method, but being able to maintain the mindset needed to be consistently profitable.

lilsgymdan
16:53:07

That makes perfect sense. This month I have felt very confident but not this week. Taking it very very very cautious just tons of fear in my head for some reason yesterday and today. I am scared of messing up my win% and PF now

Hariseldon
16:59:18

Don’t be – they are just numbers – indications that you can mentally handle trading in a consistent way, that’s all. You’re a very good trader – but what makes you especially good is your ability to improve and learn, which I have certainly noticed. You will get there, and in fact, I agree – I think you pretty much are there – you have shown confidence, consistency, you’re finding great trades, you are also ignoring bad trades, and you are constantly improving. Have more faith in yourself – trust me, I know a good trader when I see one, and you will be an excellent trader.

lilsgymdan
17:26:39

@lilsgymdan mate your quality of picks & trades is visibly there or thereabouts. the difference between where you are now (trading ability CHECK) and where you want/expect to be is still a huge journey of personal growth & development. the rest beyond technique, which we have shown over and over to be simple, is all in the grey matter between your ears and it will take time. you will have great runs then have bad runs and think you just were lucky and are actually a total fraud and today your skillset has no value anymore. not only you need to be ok with that struggle but actually enjoy it. thats why we are all sick in the head and stay together as a bunch of nutters. Time at the screens. There’s a reason why prop desks give their junior traders at least a 1.5 year runway without any expectations other than follow the system and dont blow up.

Hariseldon
12:40:03

There is no asset manager in their right mind that is looking at this market and thinking, “Yeah, I should buy here”

Dave W
12:41:37

of course they all arent in their right mind

Hariseldon
12:42:09

And that right there is the entire problem with the rational actor model – there just aren’t enough rational actors out there!

Hariseldon
15:17:48

This is a rather important distinction here – Support and Resistance exist as guideposts during regular trading, buying and selling – rebalancing, retail, etc. However, they typical do not withstand either a news related catalyst or an market with a strong trend. When they do (as was noted with DASH ) you know that the catalyst was either recycled or not that strong. Also, not all S & R are equal – an Algo line that has had multiple tests against it is going to withstand a lot more than just VWAP will, if the stock has remained above the SMA 50 for several months with various failed attempts to breach it, that might hold against a news event but not something like missed earnings report, etc. Just like ATR is an important metric, but it is also important to note that most of the stocks you are looking to trade, by definition of all the boxes they check, will be acting outside its’ normal ATR range for that day. So how important is the SMA on AAPL ? If Powell came out right now and said it is going to be at least 75 BPS then that SMA is going to fall like it wasn’t even there.

Fox
15:19:19

@Hariseldon ATR is by its definition, going to be misleading on the days when the stock is in play (and why we would be trading it)

Dave W
15:21:44

i think too much emphasis is given to ATR i only use it if i am doing a straddle or a strangle to judge what move i may get and if it will create a profitable range

st0rm
15:26:39

I think of ATR as “the stock is running up/down the stairs two at a time”, I can make my profit goal with a small number of shares. Is there a better way to measure that besides eyeballing it? Your point is totally taken, ATR is useful until things explode and it’s not.

Russ
15:29:23

@st0rm All I look at it – does this stock normally move enough to make a trade off of and justify my use of buying power? Okay, if it normally moves a bit then if it is behaving especially RS/RW it should be enough to justify a trade. My view is that trying to optimize sizing/other factors specifically based on ATR or IV is not worth your time. Focus on the chart, and at what point would the stock reaching invalidate your thesis (put your mental stop there) and at what point do you think the stock can reach based on how it normally moves (recognizing it should be moving more than normal) and nearby support/resistance (put your limit take profit order there).

Hariseldon

There are various ways you can look at it – for example, let’s say you have a max loss of $1,000 on a trade – no matter what you do not want to exceed that –
Ok, so that is your rule. Now there is a trade you want to take on a stock that is currently at $100 – you want to go long. Looking at the chart you notice that VWAP is at $99.45 and the SMA 50 on the daily chart is $98.20 – You feel the stock is bullish overall and the market is bullish, so you don’t want to use VWAP as your stop as you don’t want to get knocked out of a good trade just because of a .55 cent pullback. So you are going to use the SMA 50 – that stop is $1.80 away. That would mean you should size your trade to around 555 shares. If you hit your stop, that will be roughly a $1,000 loss, which it your maximum.

William T
15:03:56

What’s the most efficient use of study time outside of market hours? Assuming you have a good understanding of the system here, if you hypothetically have 10 hours total on the weekends to study, what would the hours be spent on? Reading charts, reviewing trades, re-reading wiki, re-watching youtube vids, etc?

Hariseldon
18:31:40

That all depends on where you are in your trading but I would suggest one of two things – either use the time to analyze your trading journal and review your trades of the past week, or use the time to set alerts and go through charts.

2022-08-27
Mark As Read

Crux
22:49:20

@Hariseldon DaveW I know you guys preach Tradexchange but what is the actual edge that this paid service provides? News is free and there are many sites like financialjuice that give all the economic reports as well. If a Bloomberg terminal costs 10s of thousands to get the news first and the internet has it free, where does tradexchange fit in? If we aren’t trading off the news either then why pay for this source? I’m generally interested because I haven’t used it yet myself. 

Dave W
23:23:52

@Crux TradeXchange i use for getting early heads up on news and rumors that can have either a short term or longer term impact on a stocks price and option premiums. You have to be selective choosing the news that will impact the market. I get 3 to 5 trades a week of the information. Today MMM was a great example of a TradeXchange story that dramatically impacted a stocks price. It was material to the stock in a negative way and i traded it short using a pds and legged out for a beautiful profit. I made enough on the 1 trade to pay for TradeXchange for 2 years. Again you have to be selective, there is a lot of unusual options activity most of which can be ignored but some are significant. Free news is not going to give you any edge in your trading, TradeXchange does, at least for me 

Dave W
23:25:13
Remember, news whether it is earnings or any other significant news, over rides technicals on a stock, at least for a while 
Russ
00:19:19

@Crux Highly recommend TradeXChange. It only takes 1 news event to pay for it – MMM alone paid for my entire years service today. Their morning report is excellent as well. My morning routine involves reading their report, identifying stocks of interest from it and marking up the charts, then doing the same with selected Option Stalker searches.

SubZer0
00:25:15
I attended a webinar hosted by a guy who runs the news desk at Benzinga (Luke Jacobi).  He explained how the news flows from the source to the masses. When the source (fed, govt or corporations) release news, the first tier to get access is reuters, bloomberg and few others. Next is Benzinga, Dow Jones and others. Followed by WSJ, CNBC and others and the bottom tier is Yahoo, MarketWatch, CNN, MSNBC. I am guessing TX and Benzinga would be at the same tier
SubZer0
00:26:30
In the world where information is king, getting early access to the information would set you ahead of everyone else, which is what the paid services do. If you are getting it from free sources, there is a delay and its often too late by the time you see it.
SubZer0
00:46:10

@Crux i know my earlier response doesnt directly answer your question and you have a good point. If your strategy does not involve trading news events then it wont help but the way i see it, having such a news service would atleast let me know why the stock i am trading behaved that way and would give me heads up to bail out or double down.

2022-08-26
Mark As Read

2022-08-26
Mark As Read

Pete
15:51:12
Zander wrote:

Likely stems from a deeper issue where I have extreme trust in my analysis of individual stocks but very little trust in my market thesis beyond the next 15 minutes. My thesis all week has been that we will test the 100ma but I didn’t capitalize on that at all because I insisted on staying balanced between longs and shorts in case I was wrong. Still ended up ahead due to patience and good stock selection but probably made 1/10th of what I could have if I trusted my market thesis and balanced accordingly 
Most days you will see at least some type of bounce. It is unusual to see price action this steady. I still take gains once support has been established and I will play the odds that we will have a bounce. That does not mean buy. You wait for the price action to tell you whet to do next. If you get nice bounces with good retracement, there will be opportunities on both sides and it is business as usual. When the market can’t even muster a solo short covering candle, you know that the sellers are super aggressive. 

2022-08-26
Mark As Read

Pete
16:09:46
I missed an opportunity to do a video on legging out of LOW BPS this morning,. I will try to do one next week. It broke the stop level and the market had steady selling pressure. We’ll see what the market does at the 100-day MA. LOW broke the D1 up trendline and it has room to the 100-day MA so it has more downside. 
Izzy
16:11:38

@Pete I bought back 1/2 of the short puts and let the position run, then sold the other 1/2 of the long puts at EOD.  Still not scratched but better

Pete
16:13:28

@Izzy Good for you. You scaled out. It is not easy legging out of spreads because you are switching your bias on the stock and increasing your risk profile from neutral/slightly bullish to out right bearish. 

Izzy
16:13:30
Not sure if that’s the correct way to do it, but I figured I had more limited risk without 2 naked puts
Pete
16:16:28
For BPS we are leaning on the technical support when we put the trade on. When that support is breached convincingly (not just intraday) it is significant and the move is likely to continue. In the case of LOW it was market related. we still need to close it down, but now we know the market could be in for a round of selling and the stock will have a hard time finding support now that it has broken a D1 up trendline

Bez
16:12:04

Hi all, I have thought long and hard about this but today is the day I finally call it quits on trading. I have been at this for about a year now and haven’t seen any significant progress towards profitability. I have had good months and bad months. I have tried trading RS/RW…couldn’t string together more than 1 green month. I have tried options (time spreads, debit spreads, credit spreads, etc.)…couldn’t find an edge/positive EV in that. I am now currently trading futures and made good progress this month with /MES only to lose almost all of the gains this month in one day.

Bez
16:12:09

I have tried countless strategies and tagged my setups in TraderSync, I have used tight stops and wide stops, I have tried scalping and swing trading, etc…I have gave it my very best. Spending hours at this every day and on weekends. Unfortunately, this profession is not for everybody and I have finally accepted that I am not good enough to call this a career. I will most likely finish out my Option Stalker subscription (which ends in a few months) and just observe you all in the chat but my time in trading is most likely done.

Ruddiculous
16:15:58

@Bez Ultimately it’s your decision, and if you’re done you’re done. But what I’m reading is that you’ve spent a year bouncing around between a dozen different strategies. If you want to give it a go, why not just focus on the strategy here, which has actually been shown in real time to be reliable, and shut out the other noise? You aren’t expected to be profitable until two years anyway.

Jerson
16:20:01
I agree this month really wiped a months’ worth of gains, if sucks but like @Ruddiculous says if you bounce around trying new stuff eventually you get tangled up in bad thoughts. The new plan is the old plan, only trade the highest probability trades and always market first. My account is still up for the year but I’m being more patient with the market I’m not giving up without a fight because this lifestyle is worth trouble.
Hariseldon
16:22:02
Again though I don’t understand when I hear things like “Weeks of gains” or “Wiped out the last months of profit” – I don’t know how many times I have to say it – until you can achieve a 75% win rate and a PF of 2.0 or higher for 3 consecutive months on paper trading, and then replicate that again trading only ONE share for another three consecutive months of hitting those targets, you should not be trading your capital – period.  
Collin
16:22:50
Thanks, Hari, and I really appreciate the input. I’ve just had really bad luck taking losses on stocks that eventually go back up, even if they lose RS, they almost always gain it back according to my backtesting. I’ll do some studying on this one.
Bez
16:22:55
@Ruddiculous I was trading RS/RW for the most part of the year but I could never string together a few good months using it. I would tag my setups everyday and see which setups gave me the highest win rate but I would end up getting emotional at times and overtrading on some days. I have tried sitting on my hands on choppy days but how can I expect myself to make a living if I am sitting out half of the time? I just don’t have the belief and mental fortitude to do this everyday. Like Hari said, you need to love trading in order to last in this profession and I can’t say that I feel that way now. I feel demoralized. I need to stop and take a break from trading entirely.
Jerson
16:24:09

@Hariseldon this is something I needed to hear I will return to papertrading starting tomorrow and wont return to capital until I achieved that benchmark 

Crux
16:24:59

@Bez Sorry to hear this. There are a few things you can do to help if you do wish to continue. First, I really think time off after an event like this is so important. I took a month off this spring and it really reset me. It allowed me to reflect from a more neutral stance on what I am doing and the reality of the situation. You may also realize that a year is not that long. Ive been trading for over 2 years and in 1OP for 15 months and feel like it was just recently I started to get a better feel for things. You can go back to paper trading to dial the system in while keeping cool mentally. One of the biggest things for me was market timing and preventing FOMO, as in not jumping in when everyone posts trades if it doesnt align with your SPY read and that means watching a lot of stocks fly by you.

Ruddiculous
16:25:04

@Bez Again, totally up to you. You may need a break. This may not be for you. But also, it seems you are about where you’re expected to be in your progress?

Crux
16:25:05
This has been crucial for me and it can be very tough when the chat is filled with trade entries and you feel like you need to join. Anyways, I hope you keep at it but if you do I highly recommend taking substantial time off from anything stock related to go enjoy life for a bit
st0rm
16:25:45

@Bez Taking a break and clearing your head for weeks or months is an enlightening experience. I like the idea of hanging out in the room for the rest of the year and watching trades. And maybe you aren’t so far away as you thought. Or maybe it’s not for you and that’s OK too – you will be a better investor/human for the experience you’ve had.

Hariseldon
16:26:12
I don’t mean to be a dick here, I really don’t – but most of you should not be trading with money – you just shouldn’t.  You have an incredible opportunity to actually practice a proven method at zero cost….you can keep at it until you feel confident enough in your numbers to switch to trading one share….but so few people actually do that.  I say it again and again – there is almost no chance you will be successful at this unless you properly train first or have unlimited capital to lose while you do.  
Bez
16:26:52
Crux wrote:

This has been crucial for me and it can be very tough when the chat is filled with trade entries and you feel like you need to join. Anyways, I hope you keep at it but if you do I highly recommend taking substantial time off from anything stock related to go enjoy life for a bit

Thank you, Crux. I will likely be taking vacation soon and will use that time to reflect on things.
Ruddiculous
16:26:52

@Hariseldon But I’m special and different

Hariseldon
16:27:29

@Ruddiculous lol, yup – everyone thinks they are – 

Dave W
16:29:02
As has been said hundreds of times, trading successfully is hard and getting through the drawdowns with out giving up and having your emotions ripped apart is very difficult. It is not easy and every and i mean every pro trader has been through these times. The information you are getting here from Hari and the rest of pro traders will make your journey easier but it is not easy. You have to keep your expectations of what you can accomplish is a short time very low. Hari points out the paper trader and then 1 share and 1 contract for a reason and that is to not get your capital decimated as you learn. If you are trading for significant money when you are learning you are trading for ego thinking that you can beat the odds, you cant 
Jerson
16:29:04
you can be a dick all you want the fact of the matter is, you are correct and the most painless way to do this is the long way again I appreciate your bluntness 
Hariseldon
16:30:59
This is why I say it takes two years – two long and hard years where you are watching everyone else trade with money and you are trading with paper fake crap….two years of screwing up and having two straight months of hitting your numbers only to miss them on the third months, having to start all over again – two years of intense studying, giving up weekends, giving up time with family and friends….two years of reviewing your mistakes and implementing them…and somehow you have to maintain your desire and love for doing it –  only at the end of that process can you say you are truly ready – and for some it takes longer, but it shorter for almost nobody.
A man
16:32:05
Today was hands down my worst trading day ever. I’ve never suffered a loss so big and I’m especially demoralized at the fact that the past two months have been quite profitable. I feel so defeated right now. 
st0rm
16:32:07
I went off the real money and paper traded for three months. I had more exhilaration, fun, and PEACE OF MIND trading that way while I learned. I switched to 1 share/contract a few weeks ago and for a bit the old emotions came right back. I’m still settling out of all that phase and finding my swing again. Listen to the advice people. My year-to-date balance stares me in the face is ludicrously stpuid and reminds me every day what I came from.
Ruddiculous
16:32:14
One of the things I struggle with is reconciling sort of contradictory advice. For example, “let your trade breath, rely on the daily” vs “cut your losers early.” Usually the advice is to cut your trade after a technical breakdown, but in this market, we’re trying to get .10-.20 on most trades, and a technical breakdown might be a couple dollars away. So occasionally you “lean on the daily” only to have one trade that cancels out all the other ‘base hits.’ I know this part is subjective and part of learning how to trade, but it is difficult
Hariseldon
16:33:25

@A man putting aside the caveat I just wrote and that you should not be trading with actual money right now – tell me what happened, specifically…outline your trade(s), let’s see if I can help

Hariseldon
16:35:01

@Ruddiculous you just hit on the crux of why it takes two years right there – because that distinction, that fine line, is extremely difficult to quantify and takes a detailed knowledge of price action, the stock itself and the market – but for the sake of discussion can you give an example of one that you feel could have gone either way

Pete
16:46:38
The title to my pre-open comment was “Slow till Jackson Hole”. The theme was treat this like an FOMC day. My comments to day traders included, “temptation is your biggest enemy”, “we need  heavy volume (which we did not have)”, “trim your trade size and your trade count”, “error on the side of not trading,” “you do not need more than a good trade or two”. I provided a play by play for the first two hours and did not take a trade for the first 3 hours. Hearing that this was the worst day in weeks and that you got crushed tells me that you can’t control yourself. It makes me sad to hear this.
Pete
17:22:51

@Bez Trust is built over time and after almost a year you trust your instincts more than you trust my comments and the system. I wish I could have gained your confidence by now. Taking time off is a good thing. It sounds like you have done some reflecting. I’m not throwing in the towel on you and I will try to help you in any way that I can, but I can only do so much if you ignore what I teach. 

Bez
17:26:03
@Pete You are right, I should have listened to your comments. My thesis for the trade was that after a strong opening, the bearish cross would lead to a bullish divergence and another leg higher but my mistake was trying to anticipate the price action instead of waiting for confirmation. I will still be in the chatroom but will take the next month to observe other traders here.
Pete
17:29:24
Bez wrote:

@Pete You are right, I should have listened to your comments. My thesis for the trade was that after a strong opening, the bearish cross would lead to a bullish divergence and another leg higher but my mistake was trying to anticipate the price action instead of waiting for confirmation. I will still be in the chatroom but will take the next month to observe other traders here.
I 100% thought the same thing and I probably posted it. The difference is that I did not act. I watched to see if the scenario I felt was most likely played out. When the market started stacking red candles the drop was much deeper than it should have been for that scenario to play out and my suspicion was wrong. No worries, adjust my expectations and continue to evaluate. Look for the next set-up. 

2022-08-24
Mark As Read

Hariseldon
13:41:02

https://twitter.com/RealDayTrading/status/1562494968031195136?s=20&t=FHK_cLKl94bqVZ4JuH1tag

After the market closes I will give a tutorial on Options, from beginner to advanced – if you have any difficulty with options you should definitely attend!

2022-08-24
Mark As Read

Pete
13:47:05
corey_mv wrote:

Question How does one confirm when it is a breakout or a headfake?

You have to wait for follow through. If the breakout candle instantly reverses it is a head fake. and the market is likely to go the other way as those traders get trapped. You do not want to retrace more than half of the breakout candle and you want to see continuation in the direction of that breakout candle in 15 min. Any longer than that and you run the risk of retracing and the move is running out of gas. 

Pete
13:50:17
Think of yourself. If you bought that solo green candle thinking the bounce was underway, you are regretting that decision 10 min later. You are bailing out of the position along with other traders and that fuels the drop.
Pete
13:51:42
We have all been < 75% win rate early in our career. If you think about the mistakes then and what motivated you to take the trade (or now if you are still learning) it will help you understand price action. 

2022-08-24
Mark As Read

Pete
16:07:22

Harry48 wrote:

Question TSLA calls for 8/26 are $17 for 9/2 $27. I’m looking to sell a covered call. Willing to have some stock taken away. How do I compare the risk?

Your market opinion and you confidence in it along with your opinion of the stock’s potential movement (direction, magnitude and duration) determine the best option strategy. If you believe the market and the stock are going to stay put for a few weeks, take advantage of accelerated time decay and sell near term. Then you can re-evaluate after the option expires. If you feel that the stock could drop and you don’t know if you will have a chance to resell your options at this level, you might choose to go longer term. That will provide you with a little more protection. Models are roughly all the same. The inputs are what matter and that is what you need to determine. 

Hariseldon
16:08:32
Harry48 wrote:

Quesiton TSLA calls for 8/26 are $17 for 9/2 $27. I’m looking to sell a covered call. Willing to have some stock taken away. How do I compare the risk?

Harry didn’t we discuss this last time? Always go with weeklies if you can

Dave W
16:09:43
Hariseldon wrote:

Harry48 wrote:

Question TSLA calls for 8/26 are $17 for 9/2 $27. I’m looking to sell a covered call. Willing to have some stock taken away. How do I compare the risk?

Harry didn’t we discuss this last time? Always go with weeklies if you can

weekly calls in general return 2 to 3 times what monthly calls do when they are being sold for premium

Zander
22:09:58
Getting comfortable leaning on the D1 chart has been a total gamechanger. Now, my current biggest goal is learning to lean on the D1 chart in a more dynamic way than “I am holding onto this trade for dear life until my target is hit as long as the original breakout level holds and D1 1OSI is above/below zero”. That all or nothing approach, while it has kept me from overmanaging trades, leads me to take way bigger loses than necessary if a stock is within a valid setup on the D1 chart but has CLEARLY lost RS/RW over multiple days. It can also lead to capital being tied up in a stalled position for weeks for no reason. 
Zander
22:10:00

This balance has admittedly been a very tricky one to figure out, largely because it is so highly dependent on the unique story the charts are providing at that moment, and my specific market thesis at that time. Hari’s position swapping has been very helpful (focusing more on maintaining exposure to my favorite positions at all times and not being concerned about my exit price when a position is no longer a favorite), but every time I exit a position while the D1 is still valid I worry I am working against everything my walk away analysis told me. 

Dave W
22:11:53
Izzy wrote:

Dave W wrote:

I am really gratified to see so many traders leaning on the daily chart before taking a trade, it is a critical criteria in finding the highest probability trade setups 
Dave, there were a couple of months this year where leaning on the daily wasn’t really an option (after initial interest rate increases and the beginning of the Ukraine invasion). Are you now more comfortable swinging a trade that goes against you vs then? I’ve personally Started to add a bit more swing positions mainly using spreads and selling premiums, as well as some stock that I’ve been able to hold for a day or more. 

i always lean on the daily chart first regardless of the market. I would be inclined to take profits intraday in poor swing environments but still having the daily chart with you gives you are lot more flexibility even if you think you have to exit during the day. You can take more heat on a pullback than if you had no daily chart in your favor. Even in poor swing conditions most of my trades were intraday but the ones that i took overnight  still had net gains overall. The gap downs hurt the overnight longs of course but helped the swing shorts and visa versa on the gap ups. By knowing that you need to lean more on intraday trades during those times and be more passive with your profit targets and focus more on exact entries then when you have an overall trending market. By following my criteria for the highest probability trade setups, one of the criteria is to enter on a break out of compression, the results will be improved from entering later in a trend. That said the overnight trades didnt work as well as during trends buit still produced net profits.

Jared B
22:40:49

@Zander Would you say the bigger losses are still manageable with the all or nothing approach since you’re less likely to over-manage a position or turn winners into losers via not holding long enough? Walk away analysis allows you to take bigger wins, but also eliminate the medium losses that would be winners if you just held a little longer. Basically just by increasing your win rate and PF, the bigger losses are ok?

Zander
22:50:58

@Jared B To be honest, I haven’t been disciplined enough in trying/documenting one approach consistently enough in multiple environments to give you a conclusive answer to that question. My limited sample-size trade review suggests that the all-or-nothing approach (i.e. taking a position and sticking with it no matter what until it hits a target or breaches significant D1 levels) based on a basket of actual entries I’ve made would be profitable, but I don’t have a live track record to back that up. Why don’t I? Because I am very impatient and am prone to switching methods of managing trades when one doesn’t go my way for a day or two. 

Jared B
22:54:33

@Zander Understood!

Dave W
22:55:15
Zander wrote:

@Jared B To be honest, I haven’t been disciplined enough in trying/documenting one approach consistently enough in multiple environments to give you a conclusive answer to that question. My limited sample-size trade review suggests that the all-or-nothing approach (i.e. taking a position and sticking with it no matter what until it hits a target or breaches significant D1 levels) based on a basket of actual entries I’ve made would be profitable, but I don’t have a live track record to back that up. Why don’t I? Because I am very impatient and am prone to switching methods of managing trades when one doesn’t go my way for a day or two. 

that is an interesting comment. it is very common for traders to try a strategy for a short time, take a few losses, and move on to another strategy. They will never know if any strategy they were using is a net profitable or not because they weren’t patient enough to actually test the strategy over enough of a sample to get a definitive answer. This approach has traders jumping from one strategy to the next and they will never find a successful one because every strategy will have losers, sometimes several in a row 

Zander
23:04:41

It’s an issue of mine that’s definitely rooted in perfectionism. Whenever I take a loss or have a red day, my urge is to try to figure out exactly how I could have prevented that loss (“oh, I would have won that trade if I just got out on the m5 3/8 cross” or “oh, I would have won that trade if I had just set an alert below the 200ma and gave the trade plenty of room over the last week). I don’t think that kind of review and data collection is necessarily bad, but it leads me to assume that every loss is indicative of a deeper problem with the system I was using which is not a good assumption. Luckily I have recently begun to break that pattern and stick with things for longer while collecting better data. 

Crux
23:06:15

@Zander What you said about trying to figure out the fine line between Hari’s “swapping a loss for another trade method” vs trusting the walkway analysis is something I resonate with as well. I’m always working to increase my patience with trades so I feel that doing that method is tricky. WA shows most my losers would be profitable so if I wait they will likely be fine and if I start dumping them for a new trade then I am not actually trusting my trade’s thesis anymore. So far I havent figured out how to combine both these methods, both patience and efficiency. Any thoughts on that Dave?

Crux
23:09:06

@Zander That is also important. Something worth remembering is that even the best trade could be a loss. We have no way of knowing if the next trade will be a winner or loser but we can only take trades with the best setups for the highest chance of success. I try not to beat myself up on every loser. Sure, many of them had mistakes but some losers were great trades at the time that just didnt work for whatever reason.

st0rm
00:39:18
Such good discussion about D1 tonight. The more I think about it, not trusting the D1 is almost like we’re picking a top or bottom. We’re using our imperfect judgement to say the D1 trend is wrong. 
st0rm
19:19:17
I’m working on trusting the daily and having faith that the rug won’t be pulled on my trades (market and chart willing, of course). I realized I’m in constant fear of the rug being pulled from watching the GME chart for 18 months before discovering this group. I think a whole generation of us has PTSD from the experience. Rug pulls are all we know. 
SubZer0
19:38:25
st0rm wrote:

I’m working on trusting the daily and having faith that the rug won’t be pulled on my trades (market and chart willing, of course). I realized I’m in constant fear of the rug being pulled from watching the GME chart for 18 months before discovering this group. I think a whole generation of us has PTSD from the experience. Rug pulls are all we know. 
I know exactly what you mean. Although my PTSD isnt from meme stocks, it was from scalping SPY. I got burnt on choppy days. Every time i entered, it violently went against me right away, took my stop out and then went back in my direction and kept doing this aggressive yo-yo dance . I was green many days but all it took was a few choppy days to trigger my revenge trading and unleash the hulk. Those were the days i overtraded and lost  2x of what i had made that month. 
SubZer0
19:38:28

That fear is something im still trying to shake off and this group has been like AA for me trying to detox me from my past bad habits.

Long way to go but i hear ya
flowbee
20:00:09

@Hariseldon yes ive read up on them, its just for eg, if you talked about a stock last week , i couldnt go and look at the options today to get an idea of why you picked those strikes, because all of the values would change,  i know they might not move much.  I know you’ve mentioned HD in the past,even if you could do an example with todays closing option prices , then i could go look at ALL the options, see why you picking a certain strike price over another,(the Greeks,Volume.IV ect) just learn faster

Big-Bear
20:23:13

flowbee wrote:

@Hariseldon yes ive read up on them, its just for eg, if you talked about a stock last week , i couldnt go and look at the options today to get an idea of why you picked those strikes, because all of the values would change,  i know they might not move much.  I know you’ve mentioned HD in the past,even if you could do an example with todays closing option prices , then i could go look at ALL the options, see why you picking a certain strike price over another,(the Greeks,Volume.IV ect) just learn faster

Please correct me if I’m wrong Hari 🙂 
But I believe the main takeaway from your “market reversal” post was conducting fundamental analysis, which would be much more important than the strike price selection or its corresponding Greeks.
In either case, I believe Hari did say he prefers to buy 70~ delta calls with less than 5% premium for both straight LEAPS and LEAPS for fig leafs. I would assume that it also depends on the liquidity as well. 

st0rm
20:33:57

@SubZer0 you said it so well – that’s exactly what happens. I’ve avoided the hulk and revenge trading, and am on track in so many ways. But my “unlearning” the hyperactive instinct to watch every tick for a monster red bar reversal will take time. I’m doing walk-aways on all my trades now and am seeing the power of the D1 chart – this should help me stay calm when a trade seems to be getting away.

Alan B
20:40:22

@st0rm I keep seeing “walk-away” referenced.  Do you simply mean to put on a trade, and walk away (ie dont watch every tick)?

st0rm
20:41:27
It’s a method of looking at your daily trades and figuring out what would have happened if you left the trade on for an hour longer, or until the end of the day
st0rm
20:41:35
I’ll find you a link
st0rm
20:42:16

Walk Away Analysis from RealDayTrading

st0rm
20:42:59
But in my case, “walking away” would be the solution in many cases 🙂 
Big-Bear
20:46:49
Walk-away analysis is integral to Hari’s method. OneOption member AwkwardAlien posted his own experiences with Walk-away analysis last year, and I believe it would be a great read (in addition to the canon source which st0rm linked) for those who are not familiar with it.
thiencly
20:47:49

@st0rm I have the same issue. But recently been able to trust the D1 more. I sized down and became more strict on my D1 criterias. I still have some bad trades but I have had better swings. Just having more and more experience with it gave me more confidence to hold. SPY yo yo-ing a few months ago gave me PTSD. I am finally now getting over that lol 

Zander
20:51:17
The walk-away analysis is amazing. Earlier this year, I looked at a huge basket of my losers and found that 77% of them would have been winners if given just another trading day to work. Now, all my trading decisions are made through that lens. 
Crux
21:04:09
@Zander Same with me. It has been one of the most important parts of changing how I trade. That and timing trades better with the market…which I was quite bad at today actually.
Dave W
21:24:18
I am really gratified to see so many traders leaning on the daily chart before taking a trade, it is a critical criteria in finding the highest probability trade setups 
Jared B
21:35:59
Got inspired to take a peek at my walk away analysis tags on tradersync. Walk away analysis is so powerful.. I quickly went through my losses from this week. 5 out of 6 would have been winners the next day on open and my W/R would be 80% instead of 64%. Frankly, I really have gotten away from considering taking things overnight because of the market environment.
Jared B
21:38:43
To add onto that, about 28 out of 100 trades this month would have been either “Loss to Win (11/28)” or “Win Increased(17/28)” had I waited either 1H longer, or until EOD.
Izzy
21:51:56
Dave W wrote:

I am really gratified to see so many traders leaning on the daily chart before taking a trade, it is a critical criteria in finding the highest probability trade setups 
Dave, there were a couple of months this year where leaning on the daily wasn’t really an option (after initial interest rate increases and the beginning of the Ukraine invasion). Are you now more comfortable swinging a trade that goes against you vs then? I’ve personally Started to add a bit more swing positions mainly using spreads and selling premiums, as well as some stock that I’ve been able to hold for a day or more. 

2022-08-23
Mark As Read

Hariseldon
16:32:33

@BreakfastCrayons There is a very fine line between coming up with a thesis on the market and trying to out-think the market – having the former is essential, but the latter will crush you every time.

Hariseldon
16:49:27
This is an example of trying to out-smart the market: 
“Soon everyone is going to be driving electric cars and those cars need batteries and those batteries need Lithium – so I’m going long LAC  and holding it for a year” – The problem with this? The entire premise of the logic is based on the notion that they are the first person to think of this, and thus the current price of the stock does not reflect anticipated enthusiasm for the future need of Lithium because nobody else has yet to consider it a possibility. It would mean that no Institution and/or enough retail traders have started buying the stock and it is currently under-valued for that reason.    There is either an extraordinary amount of arrogance or naiveté (or both) that goes into this line of thinking.  
An example of having a thesis on the market is: 
Investors have begun to see the latest FED minutes as more Hawkish than they originally thought – and the recent positive economic numbers will only further convince the FED that the economy can handle larger rate hikes – this has dampened the bullish enthusiasm we saw after the CPI indicated the first real reduction in inflation in awhile.  Afraid that the Jackson Hole conference will end with Powell indicating a .75 hike and continued aggressive action to control inflation, even at the risk of inducing a Recession, has caused Investors to cool down their buying spree, even despite the better than expected earnings results across the board.   This fear has led to break the $417.50 support, and if the attitude is indeed more Hawkish coming out of Jackson Hole, we may soon see the $300’s again.  So my thesis is that this market is Bearish and only an indication of a Dovish Fed will stop the return to the downward selling pressure.

st0rm
17:17:36
@Russ had the comment of the day for me about stocks like OXY and CELH that are allowed bigger swings. The position sizing is so important so you can trust the swing and not let the P&L freak you out. That’s my current mindset obstacle. 
Russ
17:54:40
st0rm wrote:

@Russ had the comment of the day for me about stocks like OXY and CELH that are allowed bigger swings. The position sizing is so important so you can trust the swing and not let the P&L freak you out. That’s my current mindset obstacle. 
This is knowledge that has been imparted on me time and time again by Hari, Dave and Pete. Sometimes its hard to hear what you know you are “supposed” to be doing and turn it into practice, but one thing that opened my eyes to the impact over management was having on my trading was doing the Walk Away analysis – I highly recommend it if you aren’t doing it regularly. 
Russ
18:03:28
You need to go into a trade with an idea of how you are going to manage it and size accordingly. One thing Hari said a few weeks ago that has really stuck with me was that you need to either be nimble or patient in this market, but not both. This applies to sizing as well. If you go into a trade intending to swing it and size down, you will lose almost all your trades when they move slightly against you and die a death by a thousand paper cuts. At the same time, if you go into a trade intending to catch a smaller move and size up, you cant afford to be patient with it because of how you sized. That trade you put on intending to make $100 turns into a 4-figure loss that you are bagholding because you got patient with a trade you needed to be nimble on. Stocks like OXY and CELH today both great examples of fantastic setups that you can be more patient with because of how strong their daily charts are. Right now we don’t have the market helping us in either direction so focusing on the daily chart is a must to have a good trade setup. Stocks that are at 52-week highs and lows are great candidates because they are very strong/weak vs SPY which right now is nowhere near its 52 week high or low.
st0rm
18:46:27
@Russ thank you, this is just what I needed to hear tonight. I have not been studious with my walk-aways and the lack of faith in good setups is apparent. I’m going to work on sizing appropriately and being more thoughtful in how I plan to manage a trade. Thanks for the coaching, the lessons are real-time out here and I’ve got some homework to do.

2022-08-22
Mark As Read

Auto
11:53:25
I have done next to nothing today. Essentially break even. On one hand I am annoyed that I am not making money, but on the other am glad that I am not burning capital on crap. 
Dave W
11:54:22

@Auto not losing money is making money

lilsgymdan
11:58:55
Dave W wrote:

@Auto not losing money is making money

Being okay with not taking trades has netted me a 3.5 PF this month so far

Fox
11:59:06
@Dave W the mental capital loss getting chopped up “all my beautiful ideas” during low probabilty carp makes it difficult to load up when the clean move arrives

2022-08-22
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Fox
12:19:05

@Hariseldon the flies have been my bread & butter since May, the combination of credit spread & debit spread at a key technical level gives a few outs to adjust given new market information or just ride out time decay in a low proability market. sometimes i do wider on the credit spread side if its below a key level, and that can almost put the trade on for free or a smaller debit. also having a lot of fun with ratio spreads recently my WMT 137/135p ratio (playing gap levels) i put on for 0.01db and  closed for .30cr! not as margin efficient though

2022-08-22
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Fox
12:22:09
one thing i find helpful as a really quick indicator is to keep my always open SPY m5 chart with 1op on HA candles. just the nature of body size vs. wick size is a good indicator of trend strength in either direction. HA wickless flat bottoms = cleaner move indication
Fox
12:47:01
HA candles on SPY today tell you something : very few flat bottom candles have been green. most flat bottoms were red, and the greens were mostly wicky greens. may sound simple but still tells me something

2022-08-22
Mark As Read

Hariseldon
13:15:53
My wife bought back the short side of the BA, DIS and META BPS’ and is now riding the long Puts 
Dave W
13:18:22
remember when a trader buys back the short side of a bps and holds the longs their bias on the stock has shifted from neutral/bullish  to bearish
Fox
13:19:32
and when spread traders do it, who are normally leaning toward the risk averse side, it is especially meaningful. spread traders dont typically just buy long calls/puts
Hariseldon
13:20:09
Indeed – she is responding to the market and the clear selling pressure keeping us comfortably below 417.50

Hariseldon
13:31:04
So here is a topic that most traders experience but it is rarely discussed – You find a stock you like – let’s say it is going down, the market is bearish – so you wait – the stock continues down, and has now broken compression and you’re finally convinced – all the boxes are checked. You short the stock. And it what seems to be a reaction so constant that it feels intentional – the stock goes up !! WTF, right?? You literally just watched 10 consecutive red bars in a row and when you enter it goes green, in what feels like every single time.  There is a reason for this – the entry you are choosing is most likely the same entry other retail traders are choosing as well – the Algos know this, plus a large number of shorts go in to the stock at the same time, causing a bump.  Another reason is every stock takes a breather, chances are you are entering right after a long stretch in the same direction.  And the final reason is intra-day noise.  You can do the following things – 1) Wait 5 minutes next time – right as you feel the entry is perfect, stop yourself and wait five minutes – see if you get a little reversal and better entry.  2) Enter with 1/2 a position, and when it temporarily reverses, add the other half, or 3) ignore it and have faith in the overall larger trend.

2022-08-21
Mark As Read

Pete
19:37:44

Pete
19:39:59
This search has some nice shorts. I am looking for D1 trendline breaches and the Algo Line (new) search variable will find them. I feel this is a good spot to sell some OTM bearish call spreads (call credit spreads). Look for stocks that have overhead resistance, have broken the D1 up trend line and that have rel weak D1. 

2022-08-21
Mark As Read

thiencly
19:37:53
The upwards slope of the 1OP while SPY is flat or slightly down means a big divergence? So the next bearish cross should produce a nice move down? Which is why you would want to use any upward movement on this divergence as a good short entry ? 
Pete
19:38:12
Correct. 
thiencly
19:47:18

@Pete for identifying divergences, do you put more weight to the slope of the 1OP not matching the SPY direction or when the cross not matching the SPY direction?

Pete
19:51:31

@thiencly Movement (stacked candles) is always the priority. When we have movement 1OP will tell us when a trade is setting up. When the market is compressing, no indicator works well. Know that indicators (other than 1OP) lag. In a compression, other indicators will just be generating a signal and the move will be over and ready to reverse. 

2022-08-21
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Pete
07:37:29

@lilsgymdan It really depends on your market forecast. My forecast is for a pullback and some nervous jitters for a few weeks. I believe that is going to set up some excellent BPS, for longer term trades. How far we pullback and the speed with which it happens will help me gauge support. I suggested a BPS on LOW, but for all intents and purposes, that was just dipping my toe in the water on BPS. CCS at the high end of the range also make sense, but I would not enter as many of those because I liked the bounce and I feel support at the low of year is forming. For longer term swings, I want to keep my distance as much as possible. For short term swings we rely more on momentum and there I favor ATM PDS/CDS.

lilsgymdan
19:40:38
ISRG d1 chart looks interesting for a bearish call spread
lilsgymdan
19:40:52
Would you recommend trying to do a shorter term expiry on these?
Pete
19:46:50

Hariseldon
20:22:22
You can also look for Put Debit Spreads.  Keep in mind the mechanics behind these trades.  In. CCS – much like a PCS, you are getting a 25% ROI, but also putting up 4X Margin and risking 4x’s the credit.  So if you did a 95/100 CCS for $1 for a stock currently at $90, and it expires below $95 you get $1 , if it finishes above $100, you lose $4.  Hence you need to make sure those trades are at a 80% or higher win rate, meaning you need a bearish D1, and preferably 2 major lines of Resistance between the current price and the short strike.
Hariseldon
20:27:51
In a PDS, you are mitigating the cost of the Long Put with the credit from the short Put, these do not have to be OTM given the lower WR requirement – as your risk is defined by the debit – if the same stock at $90 – you bought the $90 Long Put for $5 and sold the $95 Put for $3 , your risk is $2 – you want your debit to be less than 50% of the spread, so in this case the spread is $5, you want the debit to be $2.50 or less.  Much like the Call Debit Spread these are plays done with the current weeks expiration.  You’re looking for around 20-25% on a Mon-Tues, 25%-40% on Wed/Thurs, and 50%+ on a Friday.
Hariseldon
20:30:19
Both a OTM CCS and ATM PDS are bearish plays but also very different.  A OTM CCS takes advantage of a longer-term bearish outlook and provides passive income as theta ticks away, the ATM PDS takes advantage of current weakness in the stock and is much more focused on a larger acute move in the ticker .
Hariseldon
20:31:01
It’s important to fully understand the differences and underlying mechanics of each spread 
lilsgymdan
20:55:51
So theoretically we would want to see a lower high on the D1 trend after this hypothetical pullback to have more conviction in call credit spreads. Where right now if we get some bearish action we can have an even mix of certain high quality call credit spreads and put debit spreads?
Hariseldon
21:41:16

@lilsgymdan OTM CCS follow the same requirements as OTM PCS just reversed – so you’re looking for a chart like the one @Pete showed for WYNN – the stock can stay flat; go up or even drop some and the spread will be fine.  Whereas for a PDS you’re looking for a more immediate move down.   

2022-08-21
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Pete
08:16:06
There was a question about anticipating vs waiting for technical confirmation. It is critically important to read the previous price action and to get context. That helps us to understand what is happening currently and watch for turning points that could be setting up. You may want to re-read my daily comments. They are your roadmap. I have seen a light volume bounce in a longer term  bear trend. The bounce had nice duration and magnitude, but it came on light volume. That makes it vulnerable to profit taking. August is a dull month and the Fed is in recess. The market will get nervous. That told me that I should NOT enter new bullish put spreads. If LOW is your only recent BPS (or you have a couple of different BPS on), no worries. We can navigate those. In general, last Monday I said do not put more BPS on at this level. I am anticipating that the market is vulnerable and I am reducing long exposure. I am also watching what happens at a key resistance level (200-day MA) and the price action as we do so. I am not taking short swing positions until I see signs of technical resistance and we saw that smack down last week. Now that I have that technical confirmation, I can start taking a more bearish stance. 
Pete
08:24:05
If I am playing chess, I am not waiting for my opponent to move and then conducting my analysis. I am trying to figure out what his game plan is based on his previous moves. That helps me to understand how he might move in the future. That reduces my chances of being surprised. I am trying to anticipate what is going to happen, but I can’t move until he does. Typically, my counter to the move is something that I planned for. 

Hariseldon
12:50:51

HOG looks really strong

AriS
12:51:52

the 40.50ish resistance on the D1 chart isnt a turnoff?

Hariseldon
12:52:47

The break of the 2/10 ALGO line is more of a turn-on

2022-08-11
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Crux
11:19:08

Is anyone familiar with how the last day to buy in before the dividend payout is related to the stock price falling after that day? For example, COP last day to buy is tomorrow and that makes me wonder if the stock will then weaken there after

Hariseldon
11:29:34

That is generally priced into the stock – otherwise it would be pretty simply to always short the stock the day before

2022-08-11
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Hariseldon
13:31:06

I however will comment on stops, because, well, I am me…..I don’t use hard stops, never have, never will – but I get why traders use them. However, many traders ignore the market and only set their stops based on the technical set-up of the stock. When you are in a choppy market your stops will get triggered far more often only to see the stock bounce back. The choppier the market the wider those stops will be – stocks will test and even break through levels of S/R specifically to trigger those stops and then head back to where they were. So please take the market into account.

2022-08-11
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st0rm
14:15:40

Long BOIL (hope an ETF is ok), fantastic rs on the m5, recent cross of 100 and 50sma and very high atr, more than other oil tickers.

Russ
14:17:24

That is a commodity ETF and RS/RW to SPY does not apply to it. Stock ETFs do work for RS/RW but commodity ETFs are based on futures contracts of the underlying commodity. Leaving your post up for awareness to others.

2022-08-11
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Mister-Bin
16:58:13

Question: does anyone here have or have had trouble staying in a trade longer after their initial target? I’m talking about going past that $1 (or $1.05) target and wanting to stay in a trend longer. Has anyone had success with riding a trend (even the whole day)? I’m sure there’s RDT post there out there…trying to find it

Hariseldon
16:59:51

@Mister-Bin Yes, in fact doing that is one of the primary ways to become profitable. Hence the walk-away analysis. The issue is doing it with options, far easier with shares.

Mister-Bin
17:05:19

@Hariseldon yeah I think the issue is for me is that I always add to my winners, hence if the trade goes against me (or is just a mere pullback), I tend want to take profits quicker as my exposure is 1.5x to 2x larger. I know a lot of people like to use the 8EMA as a guide, so maybe that’s something that keep me more focused on adding on pullbacks vs wanting to take profits quickly. Maybe instead of adding when I get halfway to my $1 target, I only add on pullbacks that touch the trend guide (example: 8EMA)? Seems like I have to get that $1 target out of my head to ride longer

Mister-Bin
17:10:27

I think the $1 target is great, but I’m only trading minimals shares at the moment (1-10), sometimes (20-30), which is a very small fraction of my account. I understand the $1 target if I’m using up all of my buying power, but I’m not ready for that yet. So I’ll test that out starting tomorrow, giving the market more time to pick a direction and finding stocks with nice tight trends to enter

Hariseldon
17:12:15

@Mister-Bin $1 is arbitrary – set your target based on the chart – I tend to take trades that have more than $1 of room before any technical point for an exit, so I usually just take profits there unless I feel it can continue.

Hariseldon
17:14:53

@Mister-Bin Hit on the glaring issue within trading – we exits trades when they are working. If you think about it, when a stock is doing exactly what you thought it would is also the time you leave the trade, even though stocks tend to follow Newton’s first law

Mister-Bin
17:20:26

@Hariseldon makes sense, that’s something I will focus on for the new few weeks. It won’t be easy, because I believe there’s a lot of conflicting ideas in my head in terms of trade management: “Take profits when profits are given to you” vs “Sell into strength” vs “Let the winners ride” all while taking into context the market, because sometimes the market doesn’t have enough tailwind to get my stock to that target. But I think the first step, as you mention, is set the target based on the chart, and if the market permits, ride it until it gets there. Thanks for the advice!

Russ
17:22:29

It is very tough skill to master @Mister-Bin

Mister-Bin
17:23:22

I’m starting to realize it all goes back to the market: no market tailwind, take profits early; yes market tailwind, ride it baby. @Russ very much so, and I’m learning every day from the you and the master traders here

Russ
17:24:16

In my opinion, the two points in time where you make or lose all your money is 1) Trade selection – when you decide to enter a trade – @Dave W is the master of this and 2) Decision making when you have a trade – deciding to exit, stay in, or add to a position – @Hariseldon is the master of this.

Hariseldon
12:25:08

Btw – tough question – but anyone that gets it right will get an award – I chose TGT as the main trade for the challenge account today – obviously it has RS – but there is another reason I bought the call for this stock instead of others – can anyone tell me why?

JTD
12:25:47

Earning keeps the price stay high

Hariseldon
12:29:37

In the PDT account I am forced to swing these trades, so I need to look for every edge I can get – there were around 20 different really good trades out there – TGT broke compression, has Relative Strength, in the gap – which groups it with around 5-10 other stocks – so I needed something else – Earnings was that extra thing – it keeps the option pricing higher and mitigates against a drop. This is what you need to do to find the highest probability setups

Hariseldon
16:51:10

I don’t like taking profit on BPS’ until the very end – they work because of the statistics – it is a 25% ROI, which means you need to take full profit more than 80% of the time for it to work – Let’s say 85% of the time at expiration they are worthless, and 5% of the time you can leg out with the same profit – that leave 10% that you are losing. If you start taking 50% profit when they are up then your win rate needs to be over 95% for it to work in the long run.

2022-08-10
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Hariseldon
17:53:09

[…] over the last 20 years the staffing and resources at the IRS fell by over 40%, and as a result the amount collected in taxes by the wealthiest Americans also dropped significantly, along with the number of audits. So there was a huge increase in people worth over $100 million and a huge decrease in the amount of tax revenue collected by people making over $100 million.

The new bill also now introduced a tax on large corporations – where if they report more than a billion in revenue, they get taxes – so no more Amazon paying $0 in taxes for instance. What happens when the Federal Government loses their revenue? Programs get cut and the tax burden falls on the working/middle class as taxes get raised on goods and services to compensate for the lack of money brought in by those that control over 90% of the wealth.

However, this can’t be done at the current staffing and resources – so this Bill gives the IRS the resources to finally collect the taxes from those that have been avoiding paying them.

It will be a huge benefit to the middle class – the government does not care about making sure they get that additional $150 from Joe/Jane tax-payer that wrote off $150 to charity but don’t have a “receipt” , they want the $30 million that someone like Mark Cuban did not pay because it was written down as a “loss” when it was actually not.

In general – as a rule – don’t listen to anyone’s explanation of a piece of legislation if they have a bias in giving that explanation. The Inflation Reduction Act will not reduce Inflation, but it is a catchy name. It will however reduce the deficit, it will help lower Health costs, and it definitely will provide financial incentives to business and individuals to use/produce more climate friendly products. It won’t raise the taxes on the middle class, and it won’t result in someone making $100K being more likely to get audited, but it will make it far more likely that the CEO of the company that person works for gets audited and it will make that company pay its share of taxes.

Will this have a trickle down impact? Perhaps – although due to the tight labor market Corporations will find it difficult to save money on overhead or salary reduction, there are just too many jobs and too few people looking for them – will they raise the prices on their goods and services to compensate for the money they now need to pay out? Again perhaps and there are various articles out there from Economists that debate the point. Read those. But if someone from MSNBC or CNN or FOX or Washington Post or Wall Street Journal, etc is telling you what something is….don’t even listen to it. There are plenty of actual sources to get your information.

This actually an important distinction/discussion – for the past 15 years at least I have been surrounded (either through occupation, social or both) by extremely wealthy / successful people and during that time I’ve been able to get a sense of the attributes they have in common, which is how I was able to write that post on the “Insidious Nature of Wealth.”

Because I am from the media industry and so are most of them, we are all very much aware of how slanted/tainted the information is that gets reported out to the public. So it is pretty much burned into our brains to ignore everything on Social Media, MSM, etc and always just go to the source and any academic/well resourced analysis.

Hariseldon
15:16:06

As a note – do not freak out on these Bullish Put Spreads if they are down a bit – they will go back and forth – I do not even look at the intraday on my BPS’ unless there is something major – all that matters is that the short strike is staying above the Support levels, that’s it.  It will balance out in the end for you as long as that price remains above.

2022-08-08
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Hariseldon
17:34:44

you know how I time my entries? “Hmmm BLUE still looks strong – daily chart is good, volume is good again – nice Relative Strength. Ok, I am long BLUE.” Done. That’s how.

Dave W
17:37:15

try not to complicate your trading . What Hari just posted is exactly how i enter. I am not trying to get the exact entry if i like a stock long i want to be in. I do try to do it out of compression but i dont try to get too exact

Dave W
17:47:52

i think something a lot of traders miss is the larger picture of the chart starting with the daily. That is where the decision to take a trade needs to start. Without that you can get whip sawed around with no idea whether to stay in the trade ot not because you are so focused on the minutia on the 5 min chart

Hariseldon
17:49:43

Burn this into your brains – most M5 candles are just NOISE.

Hariseldon
17:50:39

Yes you look at the M5 to see the trend and if the stock is strong or weak on the day, especially against SPY, but to make a decision off any 1 or couple of M5 candles is a recipe for over-complication and bad trading.

2022-08-08
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Jerson
17:52:26

I have seen a lot of indicators for RS/RW to SPY as well as RVOL and RS/RW to Sector. I do not use any of these, I straight just eyeball RS/RW on the ticker and check if it had a good D1 and volume moving it. I really try to keep it simple, maybe I’m keeping it too simple? Should I rely on these indicators in trading?

Russ
17:54:56

@Jerson Personally I think doing what you are doing (focusing on price action and volume) is the best approach. I use the indicators as an easy filter to say “move on from this”, but I always look at the price action before entering a position.

2022-08-08
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BennettN
18:01:34

@Hariseldon I often struggle with taking trades overnight even if they are still a good setup into the close because SPY seems so unpredictable from close to open and it can really affect those overnight positions. Are SPY’s overnight moves actually unpredictable like I think and so it is up to the stock’s strength to hold it up, or does this mean I am just not great at reading SPY yet? Clearly you’re killing it in the PDT challenge, so it is absolutely an obstacle that can be overcome, but I don’t think I am thinking about it the right way.

Hariseldon
18:07:27

If you notice my portfolio is generally balanced, for example right now I have shorts on OXY, META, JNJ and DASH – all different sectors, I have Longs on SAVA, BLUE, SPCE, AU, SBUX and BA, also different sectors. What I can depend on is chop, which means at one point my Bearish positions are going to be doing well, and I will take profit when they are, and then if I wait, my bullish positions will also do well. I am depending on SPY being erratic and choppy.

BennettN
18:15:18

That makes sense. Is the fact that D1 SPY has been in a lower volume compression around the 100SMA your reason for expecting chop? And do you also just expect to take some losses on one side when SPY finally exits the chop and chooses a direction?

Hariseldon
18:19:55

It is because earnings season is over, and there isn’t any spark that should get SPY above that 417.5 resistance level, probably not until September. But inflation is improving, earnings overall were decent (at least better than expected) and the economy remains strong so it looks like we may avoid a recession, and that should keep SPY from cratering (at least for the moment, I do think there is more downside risk here). All of that equals chop to me, I don’t even need to look at a chart to construct that story.

Hariseldon
17:29:06

This weekend I encourage all of you to look through my trades (I will put up the updated journal soon) and look through Dave’s trade this past week. Study them – and don’t just focus on the entry and exit, don’t just look at the check boxes – but zoom out, look at the larger picture – see why we took the trades we did. Way back during the time I refer to in that quote @Big-Bear put up, when I started to really learn – whenever someone would ask what I am doing for the weekend my answer was – “Studying” and that is what I did – every free moment I had I went to my computer and studied. I wanted to start each week more knowledgeable than the week before – and back then I had nobody to ask questions to – so I made a list of those questions and spent the other half of my times searching for answers. If you are going to become a full-time trader than you are seeking one of the most enviable jobs in the world. Pure financial freedom, nobody to answer to, everything is in your hands – and to get there means intense hard work.

AriS
16:40:39

Mainly for discussion: Win Rate and Profit Factor…Which is more important? I know the two should go hand in hand but I feel like if I can get my win rate up then move on to focusing my entries and exit I will be a better trader. I have a small issue with a higher win rate though because if you are not skilled at your entries and exits then the win rate is meaningless because you will be constantly leaving a lot of money on the table. My goal, like many others, is to maximize the profitability of each trade.

Hariseldon
16:54:40

Win Rate is the most important thing you can work on – Trading is about mindset – it doesn’t take long to learn the rules and methods, but the mindset is what makes the difference – Staying above a 75% WR gives you confidence in the set-up/strategy, and it is that confidence in those statistics that you will need to overcome your emotions. Plus, there is a psychological boost to not losing. Once you get WR up then you work on PF. And of course in the end you need both. In fact once you have the method/strategy down and confidence in it, one can be successful with a 50% WR, but that is not something one should get to until they have managed to get the WR and PF to a good place.

Russ
16:58:54

I think win rate is more important when starting out (agree with Hari here). That said, they are two metrics assessing very different things and focusing too much on either can be detrimental – if you focus exclusively on win rate, you may take large losses because you are stubborn about taking losses. If you focus too much on profit factor, you may try and take a lot of small losses on trades that would’ve turned into winners, or you will become too selective trying to be a “perfect” trader. I would focus more on win rate and look at the consistency of your profits at the end of the day. If you see small green days sprinkled in with some huge red days, then you know you must focus more on cutting your losers earlier. But that has to be combined with your walkaway analysis.

2022-08-03
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st0rm
14:58:32

AMAT again, I got too jumpy on the 100sma cross

Dave W
15:05:48

@st0rm when a stock goes thru a moving avg resistance i think it is better to wait for a retest and move back to the upside many of those shallow breaks fail

2022-08-03
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Hariseldon
18:00:34

Trading automation is difficult – in my former life when I did predictive modeling it was just the beginning of ML models and they are far more advanced now thanks to improvements in computing power than they ever were but they still aren’t anywhere near what they need to be – consider this – Ask Suri/Google/Alexa any question with complexity and you won’t get a valid answer – and that software is some of the most advanced AI around. Also consider this – run a back-test on a simple 3/8 EMA cross-over and you will get an over 80% win rate – but we all know that doesn’t translate to an 80% win rate in real life. The problem is inherent in something we mentioned a week or two ago – You need your checklist, yes – but you can’t trade off your checklist. You have to be able to read price-action – there are just too many intangibles to be able to program in to an automated system

Harry48
18:25:45

Hariseldon wrote:”You have to be able to read price-action – there are just too many intangibles to be able to program in to an automated system” About 30 years ago, I programmed probably the first successful automated residential mortgage approval system. I am very temped to ask for the data from the red traders in this room and try emulate that success. Given what my strengths and weakness are ,I have more confidence in the programming endeavor than I have in my ability to learn to day trade.

Hariseldon
18:39:25

@Harry48 consider this – every day hundreds if not thousands of new traders come in, just like you and see patterns in the market, just like you – they also have some programming and modelling knowledge – also like you. I am sure many are less knowledgeable than you are in this field and I also sure that many are more knowledgeable. Some have few resources at their disposal, while others have an immense of computing and programming power to rely on. All of them have the same goal that you do – automate trading using a set of rules. Now – knowing this – and knowing that if that is every day, that every year the number of people that attempt this is immense – I would challenge you to go find one success. One example of someone that has automated trading and come up with a system so successful they can prove it. And not through some scam or youtube video selling you their wares – but where there is actual proof of this program putting out profitable trades publicly in a consistent manner. You will not find one. You will find sub-reddit and forums dedicated to it, but amongst all those claims and people, not one real example of it actually working. So the first thing you would need to believe is that you can manage to do it where everyone has failed, because they have failed.

Russ
18:54:31

Our edge is in our ability to be discretionary traders and not algorithms. We need to develop the ability to see the forest from the trees. We all have a limited amount of time and energy to put into learning the art of trading and all the time we spend looking for shortcuts actually lengthens our development process. It’s the same thing as looking for the magic indicator that prints money. One day – if you keep at this – you’ll finally get to the you can print money and it will be from the time you spend doubling down on the basics again, and again, and again, and again, and not from the time you spent focusing on the obscure and abtract.

Russ
18:57:38

Everything you need to be a successful trader is outlined and I guarantee none of you have gone through it all twice (I know I haven’t yet). The Wiki, every post on this website, Pete’s YouTube channel, Hari’s YouTube channel, the recommended books. If you haven’t done that yet that’s what you should be focusing on. This is just as much a post to remind myself of these facts as it is to the room, because I’ve fallen for the distraction traps myself.

2022-08-02
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BennettN
08:43:22

How much does SPY’s behavior and close on one day hint towards its overnight move and next day open? If there is no big news, will a close near HOD point to stronger action overnight and a close near LOD point to weaker action, or is it not very meaningful?

Pete
08:43:22

I have tried to find correlations between the close and the open and I have not found anything tradeable. If you have a longer term bias, hold overnight. The market is very fluid and it trades 24/7 so it never really closes.

TheProfessor
09:01:49

I agree with Pete. The futures trade 23 hours a day. The market tends to do the opposite of what is most logical many times. Unless you have a very good picture of the Micro and Macroeconomics and understand how that correlate to the overall market, stick to price action, RS/RW – that is really your only edge, otherwise you are playing poker with better players than you.

2022-08-02
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Hariseldon
10:49:30

One of the benefits of an OTM Bullish Put Spread (which used to be a bread and butter in this room during more bullish times) is personified in a stock like ENPH – if I was just bullish on ENPH with Calls or Stocks, then I most likely would have exited with a loss when it was down $17 this morning – but with a BPS, I am still well above the short strike and the spread is fine

Dave W
12:21:53

you really need to be able to just look at the ENPH 5 min and daily chart and see a tremendous setup

Hariseldon
12:25:00

Here was my thinking this morning – I am in a PDT account for the challenge – but ENPH has an incredible set-up. Perfect for day trading (and I did day trade it), but do I trust the market for a swing? do I trust the sector? That led to the thinking (by my wife who found the trade) of – what type of trade protects me from sector rotation, let’s me lean on support levels, but still profit from the bullish move in the stock? An OTM Bullish Put Spread with a 25% ROI does that. Thus the 260/255 BPS for a $1 Credit. This is how you need to think of your trades, especially if you have to swing them.

2022-08-02
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Hariseldon
12:55:18

Here is the danger of AMTD – you go long at let’s say $9.80…it drops $9, but you hold because this thing can jump to $15 out of nowhere, it hangs around there for a bit and then jumps back up to $9.80 – you consider exiting for a scratch but don’t want to miss the big move, then it drops to $8.50, but you hold again since hey it just jumped back up before, it will again….bell rings, you’re hoping for after hours action and you get it, but it drops down again – it’s now at $7.10 and you are screwed, at this point, you have no choice but to hold, right? By the next morning it is at $6.50 pre-market and you can’t take it anymore, so you exit for a $3.30 massive loss. Market opens – it goes $11.50 – you start drinking, heavily.

Dave W
12:57:24

i just dont trade momo stocks meme or otherwise

Hariseldon
12:57:47

I am not proud – at this point I am practically begging GS to give me shares to short – they just laughed and laughed and laughed

2022-08-02
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Pete
13:40:40

When the market is in a news vacuum and the trading volume is light, you can expect moves like these. Everything will look great and then out of no where you will see a giant move. Those are often recycled news reports. I don’t know if this is legit or not, just want to warn you in advance.

Dave W
13:41:46

if you knew what caused the drop what would you do differently than you would by just watching the market

Hariseldon
13:47:00

Knowing the source of the drop would: a) give me a sense if it is transitory – i.e. from recycled news or more substantial – knowing this might cause me to rethink some swing, b) if I know it is due to China, for example, I might hesitate before day trading a stock like BABA which is bullish today, but could be more susceptible now to a negative headline then previously, c) make me feel super smart

2022-08-02
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Pete
17:43:22

There are some stocks that you can and should chase. Some of the cloud computing companies, EV, biotech, cryto… These were not stodgy old companies with boring products. They are cutting edge and often they don’t even make money. Investors and traders start foaming at the mouth and when some of these take off, sure you can buy those breakouts. The difference is that you know the nature of the company and you can see sustained price action on M5 with stacked candles and heavy volume. Those are the “tells”. I should provide some clarity. I am not saying you should chase the stocks I referenced now. There was a time when the sky was the limit on them and they were “HOT”. They made their run and they were bought up like they were the next AAPL. COIN, UPST, ZM, AFRM, LCID, QS… the list is long. If you see a flier, take a look at the StockER and find out what they do. It will help you gain some perspective

2022-08-01
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JohnB
13:04:29

Question How current is the data within the 1OP “Pre-Earn Options” tab, specifically the IV when comparing this week to next? Looking at CAR for example, 1OP shows a .33 difference whereas TOS shows closer to .55.

Pete
16:52:03

We use end of day options data to calculate the IVs and expected move. Typically the difference if any will be minor. The historical calculations use the IV just before the close the day of the earnings announcement for the historical calcs for expected moves so they are spot on. When you are placing the trade, always look at the current values in the options chains. This will give you the most accurate reading.

2022-07-31
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DnJoe96
00:07:29

I know it’s been talked about before here and in the subreddit, but its hard to deal with the judgement you get from people when you tell them about this place and what you’re trying to learn to do for a living. The only friends I have supporting me are people who don’t understand the stock market at all, and everyone else thinks it’s the dumbest thing ever. “Not a real job”, “gambling”, “you’ll lose everything”, etc.

DnJoe96
00:07:48

It really does put a lot of added pressure on what is already a very mentally exhausting thing to do. To top it all off, I believe I am currently sliding down the dunning-kruger effect slide as I have recently learned what all the talk of mentality issues are actually about. It almost seems like doing this is much easier when you have no experience and have never had a big loss before lol.

Dave W
00:12:17

It is important to have a partner or significant other that supports you with your trading. You will have to ignore or avoid the naysayers who have no idea what they are talking about. If they arent supporting you they dont deserve your attention.

2022-07-31
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TheSwoleTrader
10:58:54

Do you sometimes need to give RS/RW a chance to start up again? I’m on mobile so don’t have the exact samples to show but I’ve found a stock will look bullish technically in addition to having RS, spy climbs and i enter the stock, and it can sometimes take 10 mins for the stock to react. If the stock never breaks down I hold for 10 mins regardless, but is this normal? My gut tells me yes as it’s usually successful but would like a pros 2 cents

Pete
17:59:43

Yes it can take a stock a while to regain its bid. Especially if the stock surged higher and it has to work off some profit taking. In the context of a strong stock with lots of D1 and M5 checkboxes marked, if the market is making a nice jump you do want to see at least some upward movement in 10-15 minutes if it is a day trade. If the market is in a bull trend day, you can give it a bit longer, but if the market is rangebound and choppy, you should start thinking about an exit.

2022-07-31
Mark As Read

ExpatTrader
11:15:38

I know Pete doesn’t like to trade in the afternoon unless there is something extremely compelling. What would that look like at the bare minimum? Right now I’m thinking 40min+ compression as a bare minimum, that could keep me out of trades whose move has already started attracting profit takers.

Pete
18:10:24

Bullish Trend Day Scenario: I would want heavy volume during the day, a nice D1 SPY breakout above the prior day high and a nice run with at least a few stacked green candles during the morning session. I want to see evidence that a bullish trend day is unfolding. I will be looking for a bullish 1OP divergence for confirmation. Bullish Range Bound Scenario: If the market is range bound (“inside day”) and there is nice movement from one extreme to the other I would look for a drop to the lower end of the range. I would want to see a higher low double bottom or other signs (tails under body, bullish hammer, bullish engulf) off of the low of the day and it could coincide with a bullish 1OP cross. If the price action during the morning is choppy without any nice runs, lots of overlapping candles of a mixed color on low volume and we are caught in the first hour range, I am not likely to trade in the afternoon. This is all in the context of SPY. On any day there could be a hot stock or group we can trade.

Pete
18:16:54
Pete
18:24:33
Pete
18:29:24
Pete
18:35:54
Pete
18:40:59

These are some examples from the last two weeks. It all comes down to checkboxes. Each day has its own personality. Wait for your windows to set up and know the patterns you are looking for. If you get nice runs with stacked candles and volume, those will always be your higher odds days. Nice clean (not a bunch of mini crosses) bullish and bearish 1OP cycles are also a good sign that you will have good price movement

Dave W
12:18:01
Every scan result has to be viewed on a chart to look at the total context of the price action and technical setups.  Scans are meant to get you prospects that you can then make a decision as to how close it is to a trade you will take or perhaps watch or set am alert. There will always be some subjectivity based on your technical analysis skills, your ability to read overall market story and if there are currently better prospects. If you try to make the scans to exact you will be making perfect the enemy of great.

Dave W
12:09:10
Trading only the highest probability setups is very important and takes patience 
Dave W
15:21:24
@DnJoe96 it is extremely rare for me to go all day without 1 trade even in a choppy low probability market. Finding 1 or 2 highest probability trades every day is normal even on a terrible trading day. Since one of the criteria is trading rs/rw those that meet that criteria as well as the others i outlined (dynamic compression break, trade with the trend of the stock – no counter trend trading, HA reversal setup, BB width expanding and institutional buying or selling driving the trend)  will have a extremely high success rate. In a choppy market taking profits early is important since rs/rw can wane in a stock and with no market direction there is no need to go for home runs.
Dave W
15:23:17
Remember, making money is our prime objective, not making trades so most of my trading day is done scanning and searching while watching the market

Hariseldon
15:22:22
Jerson wrote:

A question for the Pro’s, I have been dabbling with the idea of trading the SPY directly options/futures BUT following 3-month paper trading and then 3 month of 1 contract until I can achieve a 75% win rate with a PF of 2.0 doing so. The system seems to prepare you to trade the SPY eventually because we are always putting market first
That question is asked monthly – there are a bunch of posts and articles on the topic but to bottom line it – there’s no edge in just trading SPY, your edge lies in RS/RW.  Is it good to learn SPY, the 1OP, and how to read the ETF in general? Yes, of course – but it takes years of experience to learn the subtle patterns.  

2022-07-30
Mark As Read

Hariseldon
16:17:54

@flowbee IV Crush is specific to earnings.  There are several factors that go into an options price.  Let’s say you have $95 calls expiring in a week for a $100 stock,  that means you can buy the stock at $95.  So technically this should cost $5, right? But instead it’ll cost like $7.50ish.  Well a big part of that is Theta, or time decay.  Let’s say every day is worth .20 cents.  So with 5 trading days left – that’s $1. Ok that gets you to $6.  The next biggest is usually Vega – or Volatility.  The more volatile a stock is projected to be, the more you pay.  Why again? Because if a stock is going to make big moves you could profit a lot (or lose a lot), and you’re paying for that chance.  Right before earning IV is very high, which inflates an option pricing.   So in this example let’s say a full $1.25 of that $7.50 is from IV right before earnings.  But once earnings comes out, it’s not so volatile anymore, after all the big move already happened.  So IV drops , a lot…now instead of contributing $1.25 to the pricing it only contribute .25.  

Hariseldon
17:36:17

@flowbee Only insomuch on whether the option is overpriced, I buy ITM options.  If I’m trying to use options as a proxy for the stock I’m looking for .9 or higher delta , if I’m looking for a straight trade it’s .65 or higher.  If I’m holding for a few hours IV will stay consistent, so I’m not concerned except for the cost dragging my buying power.  If I’m buying before earning and selling before earnings then I’m counting on IV staying up to keep the price stable.  So I’m either using it to hold up the price or avoiding it so it doesn’t drain buying power, but I’m never holding over a major event which can crush it 

Fox
04:05:41

@flowbee I will defer to Terry’s permission to repost it. It is very similar to Hari’s recommended steps for preparing RS/RW candidates and then entering the RS candidates on bullish 1OP cross and RW candidates on 1OP bearish cross. The aim is to build muscle memory of preparing to getting ahead of the next anticipated 1OP cross

Pete
10:24:43

Pete
12:03:27
Show me that stock that is up on heavy volume today, through an algo line D1, above the prior day high, on a buy signal M5 and that has good option liq. Here is the kicker, it is also in M5 compression
Pete
12:03:56

Pete
12:49:57

Pete
12:50:29
Glad you mentioned AAPL Dave. Top of the list. You know you can use the Algo (new) on any time frame
Pete
12:52:01
Using M5 and Algo (new) is an alternative method to using compressions. You can add heavy volume M15 as well. AAPL was on that search as well. Then you know you have the algo breach and volume
Pete
09:03:13
The video does not use Option Stalker Pro. That disappoints me because OSP does all of this. That in turn motivates me to make OSP better. I am going to spend the back half of the year adding studies and making the display better (color coded bars). Group/sector analysis is already in the works.  When any of you decide to do a video, I want OSP featured, not because I am asking you to use it, but because it is what you want to use.
Pete
09:04:02

Pete
09:04:34
This search finds those same stocks
Pete
09:04:59
1OP would help you enter INMD from the video
Pete
09:05:18

Pete
10:08:23
“Pete, what is the difference between today and yesterday? Why are we buying early?” Yesterday we had a possible reversal after the FOMC. That has happened often and we needed to make sure that was not going to happen. We also had neg earn from META. This morning we knew that factors were resolved favorably because the market rallied the entire day. In doing so it also confirmed the tech breakout above the down trendline. Yesterday 1OP was declining into the open and it was to our advantage to see what that cycle brought. This morning we are on a beautiful 1OP bullish cross and that set us up with a nice tailwind. The market did not gap up very much so we did not have to feel like we were chasing. The early green candles  after 15 min were the sign that we needed to act quickly
Pete
10:10:18
It does not happen often, but when the checkboxes are marked and you get all of these factors lining up, you have to be more aggressive on the open. 
Pete
10:16:43
Jerson wrote:

MCD holding very well
Right now you do not want a stock that is holding up. You want a stock that is exploding higher

2022-07-29
Mark As Read

Hariseldon
10:41:09
If last month you did not remove profit from your account then you should be following these rules:
Don’t Short a stock when SPY is in a bullish trend
Don’t Short a Stock that is Green and don’t go long on a stock that is Red
Don’t trade a stock that doesn’t have at least 1 million in volume
Don’t trade a stock that is under 1.5 in Relative Volume
Don’t trade any momentum-based stocks under $10
Don’t trade a stock without RS/RW on the M5 and D1
Don’t trade a stock without a strong corresponding D1
Don’t trade against the 1OP Direction on the M5
If you follow these rules it will save you a lot of pain

2022-07-29
Mark As Read

Pete
11:41:09
Shiv wrote:

Question @willbeing & @Pete – In future updates to OS Pro, have you considered a feature where we can have the D1 and M5 for a stock linked so that we can quickly see both charts side by side? Right now I look at the D1 chart and then switch back to M5 for an entry provided D1 is good. Thank you

Already exists. Click the chain icon in the chart to link them

Pete
12:16:17
Every day there is a tug-o-war in the market. The good thing is that you get to see all of the players on each team and you get to decide which one you want to be on. Sometimes they will be balanced and you can join either. Sometimes the choice is obvious. You don’t have to be in every battle. There is little question that the long side is stacked right now. 
Pete
12:18:04
The players are your technicals and they all favor the long side here. Yes there will be rounds of profit taking and you want to avoid those battles. The does not mean you join the other team. I just means that you have to wait for your team to recover. 
Pete
12:20:05
In that spirit, you know that buyers are engaged. You take some longs you ride them as long as you can and you take gains. For most of you, you patiently wait for the next entry for longs. You do not trade the short side. That is the losing team.
Pete
12:20:54
If you are a pro trader, you can try the short side and you can do well. 
Pete
12:24:53
Dustin Johnson goes for the pin from 240 yards out and water surrounding the green. I don’t have enough balls in my bag to attempt that. I go with a much shorter shot that I know I can make and I stay within my game. When the market gives us longer term momentum that we can lean on, it is wise to only trade from that side. 
Pete
12:27:16
If the market does not set up for a long – OK. Don’t trade and be good with that. If the bottom drops out and you missed some good shorts… that’s OK too. What you do NOT want to do is to start getting cute by taking shorts against a strong market. You are not likely to recognize the warning signs and you will take a beating
Pete
12:28:41
Look at the D1 SPY chart right now. Is there anything that says short? No. Might the 100-day MA provide resistance? Yes. That does not mean short. 
st0rm
14:35:52
@AwkwardAlien Look for them for Monday, build up your master list. It’s interesting to see what’s weak on the greenest day in recent memory 
Dave W
14:36:16

@AwkwardAlien anticipating based on fear will not have a good outcome 

Hariseldon
14:38:35

@AwkwardAlien I’m smacking you from the road that’s how much you need to be smacked 

Fox
14:03:15
key lesson for trading options — liquidity is everything. without it, just numbers ona screen. have a PANW call butterfly 500/505/507.5c from 0.55db showing 1.25cr now but cant get out for even .90cr

TuckChat
16:04:53

@st0rm – everyone is using the term “Profit factor” – I just want to make sure I’m right on this. Does 1.78 mean that your average winner was 1.78 x your average loser.

Hariseldon
16:05:52

@TuckChat Made $1.78 for every $1 lost.

st0rm
16:08:30
TuckChat wrote:

@st0rm – everyone is using the term “Profit factor” – I just want to make sure I’m right on this. Does 1.78 mean that your average winner was 1.78 x your average loser.

Yep what @Hari said, total profits from wins divided by total losses. It’s a nice stat because it encourages you to keep the losses small.

terryO
16:09:49
For the people that are transitioning from paper to $ trading.  DOn’t get cocky and skip the one share at a time segment.  One thing the paper trading doesn’t exploit as much is emotions in your trading.   The 1 contract/share excercise will give you insight on how $ trading differs from paper trading with out the big exposure.  There are differences.  Keep your paper trading results to compare with your $ trading results.  Often times it will show how much emotions play into it.

Hariseldon
16:25:38
Klinton wrote:

was this you trading the system on your own or mostly following others to learn ? just curious
Think of this place and RealDayTrading on Reddit as a University – there is a proven method taught, mindset and process – it takes time (roughly 2 years) but the goal is to get one to become a full-time trader with financial independence. Everyone follows the method/strategy taught .

Pete
16:29:22

KatersTraders wrote:

Thanks Pete.  In your trading do these divergences cause you to trade smaller or with even more confidence?
I get more aggressive with the divergences because I have confirmation of trend strength. Today the divergence came late in the day and it was near a major MA so I scaled in slowly and got confirmation along the way. In general I trade smaller late in the day and I am more cautious. 

Pete
16:33:13
In the first half of the day when I get nice stacked consecutive candles I get aggressive on heavy volume and D1 tech breakouts. I will take some of the position off on a 1OP M5 bear cross and let a bear cycle start. I get confirmation that trend is still intact and then start adding back. I am expecting a bull div and I am expecting a bull flag formation.
Pete
16:39:14

@KatersTraders Patience is critically important. Let the marginal trades come and go. Save your money for the really good  stuff. If you ever get all of the tumblers lined up (market momentum D1 plus all the rest) you can get more aggressive. Don’t do that until you get your win rate up.

2022-07-29
Mark As Read

Pete
16:48:58
All of you have been  training in tough market conditions. Many traders have failed to make the cut, but you are still standing. When the market finds support there will many days like the last 3 and you are absolutely going to CRUSH IT!!! Just remember the lessons that got you here. 
Pete
16:50:53
This tough market has taught you to respect it. You are much less likely to fall victim to it because you know what to look for and how to patiently wait for your windows

2022-07-29
Mark As Read

Pete
17:06:21
Amaya_trade wrote:

Question For day trading,  is there any specific rule to close position for profit/loss ? Because I work full time, usually some of my profit position turned into loss such as AMZN . Any suggestion ? Thank you all . 

My suggestion is… don’t day trade. You have to focus more on swing trading. I am not a fan of placing bracketed OCO orders. If you are going to day trade you have to be engaged all day. The alternative is to enter the position knowing what your trading window is… I have 1 hour. The stock had better make the move in that time. If not – get out!

2022-07-29
Mark As Read

terryO
17:32:31
Fox pointed out what I was trying to convey.  I ,too watched alot of lottos expire worthless while the more experienced walked away with big winners on the same ticker.  Delta is one part, gamma is another.   your return increases significantly once the price goes in the money itm.
terryO
17:36:30
Your stock selection and entry timing were spot on.  I wasn’t trying to infer you did anything wrong or that Dave made a better trade.  It was a “live” example where you could see for yourself how the different strikes react to price movement.
terryO
17:37:33
hope that makes sense
terryO
17:40:32
I like the 5 units approach for lotto management.  By 5, sell 3 at 100%, 1 at 200% and try to max the last one.

Pete
17:45:06
DnJoe96 wrote:

Question Hi everyone, so my question is this: When do you decide whether to enter a verticle spread versus a single or just straight stocks? I’m trying to learn more about options and verticle spreads seem like a great way to limit your losses 

The first part of that decision comes from your win rate. If it is > 75% for a couple of months you are ready to consider trading options. If it is not, you still need to work on the win rate. Options are a way to leverage your capital. That is a double edge sword and it means you will lose money more quickly if you have a poor win rate. In your question you state that verticals are a great way to limit your loss. If you trade 100 shares and you do a 1 contract vertical spread that would be true. However, most traders don’t do 1 contract verticals. They do 10. Why? Because they can afford to. In that instance the vertical spread is not safer because you are overleveraging. The best advice I can give anyone is don’t trade options until you have the win rate. 

Pete
17:48:43
I prefer to day trade stocks. I don’t need the leverage and 4:1 is plenty. I love the liquidity of trading stock. For swing trading I prefer options. 
Hariseldon
19:29:53

@DnJoe96 there’s sections in the wiki on taking spreads vs stocks vs straight options

Hariseldon
20:33:44
I’m not sure how many but there are a lot of testimonials of people who quit their jobs.  The process takes two years – and many trade for a long time before they actually start down the road 
Hariseldon
20:39:10
One of the biggest issues is impatience – people don’t realize that they really do need to take two years , they need to hit the milestones paper trading and hit them again trading 1 share, they need to learn everything along the way and change a mindset that is often deeply entrenched.  Instead they rush in, start trading and then wonder why it’s not working after months of losses.  
TomServo
20:56:19
Hariseldon wrote:

One of the biggest issues is impatience – people don’t realize that they really do need to take two years , they need to hit the milestones paper trading and hit them again trading 1 share, they need to learn everything along the way and change a mindset that is often deeply entrenched.  Instead they rush in, start trading and then wonder why it’s not working after months of losses.  
This is me. I came in guns blazing in Jan and Feb and got my ass handed to me. I stopped finally and went back to paper trading. I’m now taking only the best setups (still on paper), and and working my win rate and paper PF up.  In a couple months if I can get my numbers high enough, then I’ll start the 1 share 1 contract step.  I have been watching and learning from all of you. My day will come, and I refuse to give up because I love doing this.  Thank you Hari for your trading grit, your devotion to this community, and your video rants! Thank you Pete for an amazing OS platform, your market commentary and building this community from scratch.  Thank you Dave Wyse and your stoic patience taking on the best trades since I’m now doing the same. 

Hariseldon
21:02:27

@TomServo great attitude and approach!

willbeing
22:41:23

mSquare wrote:

Is there somewhere on the site where one can get link to the various videos posted by @Pete and other Red traders? Perhaps ‘last N’ videos by poster & date Question
Hi mSquare, all the latest videos can be viewed on their YouTube channels:
willbeing
22:47:28
Harry48 wrote:

Question  is there a working index for the articles at oneoption.com?

Hi Harry48, oneoption.com/blog is a good place to start exploring Pete’s writings from over the years. He has articles about RS/RW dated as far back as 2006. While we don’t have a full index yet (I’ll put this on my to-do list – it wouldn’t be bad to have!), from the blog you can explore articles by category, view ‘All Articles’ via the large blue button, or click the category badges (the blue text above article titles) to view category-specific pages.

Hariseldon
10:46:07
ollyman wrote:

Question When trading algo line breaks, you  sometimes have a series of pivot highs or lows that are close in price.  Take META for example, I see an upward sloping algo line starting on 6/23 making a series of higher lows. If META breaches this algo line, is this a lower probability play because of potential support along each of those lows, and the better trade is to wait until a break of support around $154?

I think you have more faith in pivot highs and lows as areas of S/R than we do 

Fox
08:17:46
R.Trader wrote:

Can someone give me an example for a CDS please and explain the purpose?
There is an article on it in the RDT wiki. The exact mechanics that we use here are… unique and will set you up for the highest probability of success as long as the stock pick is good and market plan is not horribly wrong

Fox
08:24:52

@Collin put credit spreads worked amazingly well in 2020 and were enough to build a whole trading book on. But as market conditions changed so did the probabilities & pricing dislocations. For Put Credit Spreads, Call/Put Debit Spreads, and Calendar Spreads i can attest that the exact mechanics as Pete Dave & Hari lay out here will outperform almost every other retail execution model of them. If you go deep into Euan Sinclair/Nattenburg super nerdy option pricing models, you will find Pete Dave & Hari have “stumbled” onto the most desirable executions in practice. Just think… if OneOption is your first learning port of call you just saved years of reading quanty books on pricing models

Fox
08:34:33
the main point is that we use a methodology to get our win/selection rate 60-70%, when combined with structural edge of option spreads, then they become more reliable because those outsized 3-4x losses are way more rare than the probabilities dictate @Electric Surfer 
Fox
08:57:43

@Electric Surfer for me in 2020 Q3-Q4 took 18k sub PDT to 27k on spreads alone using OneOption swing scanner & methodology + credit spreads only. market conditions changed in 2021, vol dropped & options premiums decreased so it made more sense to start using debit spreads long premium than selling premium with credit spreads. there is an element of buffer built in to credit spreads so that your entries dont need to be so accurate as long the stock or long prmium.

Hariseldon
11:55:35
Collin wrote:

@Hariseldon, I sure paid the price for selling; this really is a learning experience
What specifically did you learn?

Collin
11:57:03
Hold strong positions longer rather than pay attention to noise. 
Hariseldon
11:57:27

@Collin there you go….perfect

Hariseldon
11:58:41

There is scalping and there is trading – if you are trading but exiting like it is a scalp it will never work – if you are scalping and exiting like you are trading it also won’t work – you can’t do both.  

Hariseldon
16:29:15
Amaya_trade wrote:

Question @Hari what is difference between scalping and trading ? (newbie question) 

Excellent question – Scalping is entering a trade with the intentional of a very short time-frame.  That doesn’t mean a scalp can’t turn into a “regular trade”, it can – but you don’t want it to – your stops, whether mental or hard are usually much tighter and you are basing your decisions on the immediate price action, not the longer time frame charts/trends.

Pete
16:29:26

@st0rm Exaggerated moves will usually present an opportunity to trade in that direction the next day. It becomes a stock trade just like any other except that the stock is on your radar already

Dave W
16:33:02
on time spreads if you use calls and the price moves above your short calls you have to be aware of assignment so it is trickier to trade than if your short calls or puts are oit of the money
Dave W
16:34:26

@TuckChat on TDOC  you could let this weeks short calls expire worthless thus keeping that premium and holding the long calls for a bounce 

Hariseldon
16:35:02
ROKU you let the short calls expire worthless and then hold the long calls for next week looking for a bounce to cover the difference.  For AMZN it is more difficult, I will try to close the trade at break-even.  With both AAPL and AMZN exceeding estimates on their earnings I would wage tomorrow will be a bullish day – so I would not count on your time-spread that has gone up to pull-back much
Dave W
16:39:42

@st0rm as s suggestion when the stock is so far out of the money especially near the expiration day just let them expire worthless  otherwise you are adding to tour loss. If you think the stock will get above your lo9ng calls price by current weeks expiration than that would be a reason to buy back the short calls otherwise let them expire

Dave W
17:43:11
TuckChat wrote:

@Dave W do you mind sharing your TDOC time spread. ? I entered the 41 calls at about .35, and had to sell for .10. I never really saw the spread get much higher than .10 today. I’m trying to figure out what I’m missing on this…

i actually exited the trade yesterday. Put it on early thinking that maybe the volatility created by the fed announcement might benefit the time spread which it did and i got out for 27% profit without holding it overnight into earnings. If i was in it i would let the short calls expire worthless tomorrow and hold the long calls looking for a bounce next week especially if TDOC gets over the 50 sma 

Dave W
20:11:23

@BennettN I dont know if TDOC will bounce or not but since if you already have next weeks calls you want to hold them to see what TDOC does in the next day or 2. If it gets over the 50 sma you hold the calls and perhaps add some lower strike itm calls as well. If it heads down then sell next weeks calls and buy puts 

Dave W
20:13:17
last earnings season TDOC gapped down to $29 and recovered to $40 4 days later 
Dave W
20:36:12
that is a middle ground strategy. You can sell next weeks 41.5 call for about .15. If the stock doesnt recover you have cut your loss by .15 and capped it at .50 if TDOC moves up 41.5. 
Dave W
20:43:19

@Harry48 I exited TDOC time spread the same day i put it on for a 27% profit. My thinking was to put it on early on the fed day to see if the volatility created by the fed would move the TDOC time spread up in value as the bid ask widened. I was prepared to hole overnight but as it turned out i was able to exit for .46 after entering for .36 

Dave W
20:44:53

@BennettN The 50 sma that it bounced back up to is a consideration as well as the bounce last earnings report after a big drop as well as the decent move it made up today. I would just be holding my calls until i see the price action tomorrow 

Dave W
20:47:46

@Harry48 i usually set an exit for a profit of 20% to 30% and have it working when earnings are released then i evaluate the price on the spread as well as the price action on the stock. The price action after earnings can either move your premium on the time spread higher or lower and that needs to be evaluated 

Dave W
20:50:57

@TuckChat no i just try for near the mid point. On time spreads the price you get in at is not a specific % as it is in debit spreads 

Dave W
20:55:22
depends on the stock price and the IV 
Hariseldon
20:59:41
Remember if you sold a call at $1 and bought a call at $1.50, and you’re short call goes to 0 , and your long call is at .10 because of a big drop, you only need that long call to go up .40 to break-even.  At .10 you’re at a delta around .25 , so that means an increase of roughly $1.50 in the stock (not $1.60, because of Gamma).   
Now if it’s the last day and you see the stock is bouncing with RS and you think it can hit that amount you hold, if not you take the loss.  But if you have more than one day you have a decent change at a small rebound to break-even.
Dave W
21:38:44
AMZN & ROKU are different  AMZN has short calls in the money so assignment comes into play. Roku you can just let the short calls expire worthless and pocket that premium then decide what to do with the long call
Hariseldon
21:47:27
Yes with ROKU – short call expires worthless, and I’ll hold long call until it hits break-even or above.  AMZN – if it’s very bullish I might buy back short call and ride long call until I’m in profit. Or I’ll sell it for a loss on a pull-back.   Depends on the market and the market 

2022-07-28
Mark As Read

Hariseldon
16:38:29
Jared B wrote:

Question  I’ve picked up on some reads by Pete such as candles getting smaller when approaching resistance, mixed candles and wicks above/below body. But are there other ways to spot weakening price action that might warrant an exit?

Volume – 

Pete
16:39:58
Hariseldon wrote:

Jared B wrote:

Question  I’ve picked up on some reads by Pete such as candles getting smaller when approaching resistance, mixed candles and wicks above/below body. But are there other ways to spot weakening price action that might warrant an exit?

Volume – 

1OP cycle for SPY and the stock M5. Just like I posted today. Stock getting extended in 1OP cycle, take a little off

lilsgymdan
16:51:46
profit target based on a d1 support/resistance
1op cross out of bull on stock or SPY (for long)
price action showing RW if very close to entry
Any of those
terryO
16:54:39
OK, good, sometimes I get, “when I feel like it stopped going up”  One practice that helped some in here was using the HA candles.  Once you get a tail, look to exit your long.  
terryO
16:55:33
It’s not 100%, you can get a big move down before that tail shows, so you need to monitor the traditional chart, but it has helped others
terryO
17:00:32
yes, color change is a “big wick”.
terryO
17:04:39
a big thing I struggle with is getting right back into a ticker that is strong.  I have some voice telling me not to. “Dont give your money back”  Bullshit.  If it’s a good setup, get back in.
terryO
17:19:57
Careful not to beat yourself up too much about early exits.  Use the time to find the next good setup.  Work on developing your exit skills.  When you get more confidence in your setups, you’ll naturally stay in the strong trades longer.

Hariseldon
12:08:39
I don’t know who asked that question it was gone before I could read it fully but I will answer it – NVDA is what I consider a “safe trade” it gapped up above its’ SMA, there is strength in Semi’s in anticipation of the bill passing, it has over 205% the RV of SPY and I do not see a lot of downside for the stock, I have an out at the SMA and a lot of room go – happy holding it and happy taking $2-3 profit as well.
Hariseldon
12:10:51
As long as it is slow – questions like that are fine to be asked – if I don’t answer I don’t answer (because I am trading), but I want people to be able to feel they can ask questions during downtimes – I will do my best to answer (as I am sure will Pete, Dave, etc.) just don’t be offended if you don’t get answer to your question right away.
JohnnyBGD
12:14:57
Hariseldon wrote:

After hours (and perhaps after the earnings frenzy) I would like to hear from everyone what they think will improve this chat room – tonallyI want this to be a learning environment.  This is Pete’s community, and I am helping him because I believe strongly that this place benefits traders – the only thing I get out of it is to see you all succeed.  So as long as I run this chat room, I want to make sure it is geared toward that goal – so please think of whatever you feel can improve your learning experience here.
I think you encouraging us all to define our reasons for entering trades has made a giant difference so far

Hariseldon
12:16:46

@JohnnyBGD yes, I agree it is great to see.  To be perfectly honest, I struggle at times with trying to articulate why I am taking a trade – I read price action and saying, “I just see it” doesn’t really help anyone.  But to put into words what it is I “see” can be very difficult at times, so bear with me if I can’t exactly describe the reason.

Hariseldon
12:32:13
Remember – form your story.  This is what I see – the market is bolstered by some rare optimism here – earnings season has kicked off much better than expected, especially among Tech.  As usual the issue with SNAP is an issue with SNAP and not a harbinger for the rest of the sector (when will they learn that SNAP is just run like shit?) – Atlanta GDP numbers were revised upward (which may strengthen the resolve of the FED on rate hikes) and there is signs that inflation is beginning to wane – which makes guidance for these companies even better – The FED may screw things up through the sheer force of Powell’s charm and devilish smile, but at the moment all that money on the sidelines is beginning to find a home with some equities. 
Hariseldon
16:25:49

@AriS not much to add there – I was bullish on the market and on the Semi sector – I liked NVDA and felt the profit taking did not do much except give me a good entry for it – the volume on the pullback was also lower than on the bullish side, NVDA can move a lot and I also wanted something I could take profit on before the FED – so it fit a lot of criteria

Crux
13:21:51

@Hariseldon If we are considering this a slow part of the day I have a question… after adding to a winning trade, if it goes against you with the bigger position size are you more likely to exit for a scratch before letting it go against you further and relying on the D1? or is the answer completely market dependent

Hariseldon
13:23:29

@Crux depends on how much it goes against me and the market – NFLX went against me quite a bit (almost $11) and if I stayed with it one more day it would have been profitable – I exited when I shouldn’t have

Hariseldon
13:26:49

@Dave W perhaps you can weigh in since you are still in the TECK spread  @Joao’s position is the lack of decline in volatility is to due to “extreme” price movement in the stock – however, my position is that the price movement in TECK is actually less than anticipated by the option pricing and the issue is the lack decline in IV in the second week.

Hariseldon
13:28:06

@Joao the Options priced in a move of +/- $3 on the stock – it has moved +/- .80  it is not the price volatility because that is less than expected, not more

Dave W
13:28:50
i dont see any extreme volatility in price today in fact i see hardly any volatility in price  the IV’s should have been crushed as they usually are the only thing i see looking at the daily chart is the big gaps that are common  that may be what is keeping the IV elevated 
Hariseldon
13:35:43

@Joao well unless both Dave and I are wrong – your assessment is off – there is not extreme volatility in the price for TECK – there is actually the opposite 

Hariseldon
13:49:39

@Joao please stop arguing – once again both Dave and I corrected you here – TECK’s price movement was priced into the options the expected movement was +/- $3 and the actual movement was much lower than that.

Hariseldon
13:50:16
One thing I will not have in this chat room is incorrect information – and this one is not a matter of opinion – the price volatility on TECK is lower than expected.
owensd
13:52:30
There was news on TECK this morning: https://finance.yahoo.com/news/teck-ceo-lindsay-exit-miner-104923384.html – just speculating on why IV might still be up.
owensd
13:58:32

@Joao TECK’s normal volatility is  4.21% 4.96%, within the range of today’s price movement. So there’s nothing special about it. Also, the ATR is 1.7, still less. That’s Hari and Dave’s point. The price movement isn’t interesting.

2022-07-27
Mark As Read

Fred
13:37:47
ExpatTrader wrote:

Sitting here for 5 hours and not really doing anything is a real test of willpower. The FOMO when the market isn’t producing good tailwinds, you’d think it would be easy to avoid, but there is a real internal conflict that goes with days like this.
Summons your zen energy!

Dave W
13:38:53

@ExpatTrader i think because your main motivation is to trade which needs to be replaced with the motivation to be profitable

Hariseldon
13:59:05

@ExpatTrader you need to have faith in the market direction – particularly when there is a reason behind it (strong earnings) – 

Hariseldon
16:29:13

@TuckChat I just put in the price I want and wait to see if it fills – like for META I did not want to pay more than $1 so I put it in for .95 and got filled at .92

Hariseldon
16:33:09

@st0rm the size of the movement doesn’t matter – it could make a huge move and the time spread will work or it could make a small move and it will not work

Hariseldon
16:33:23

It is all about whether or not the movement is in line with the expectations set by the option pricing

Hariseldon
17:12:52

@ollyman it is always important to think about the reason for what you are paying – the difference between the credit you are getting for selling this week’s call and the debit you are paying for next week’s is primarily pure premium, time decay is always going to be include and is fairly constant, the main driver of the difference is the IV – the IV of this week is higher, and that should reduce the amount you are paying – so if I am paying $1 for the spread, that means I want a $1 or more to be drained from this week’s call’s from IV that won’t be from the next weeks – But there is no constant number like with Debit Spreads

Hariseldon
18:41:16

@Collin @lilsgymdan one can certainly use Time Spreads as a source of income, however – there are only so many you can do and it really only applies during earnings season – so that leaves a huge gap of time where you have no income coming in.   As for Credit Spreads they are actually one of the best R/R plays you can make – if you take an OTM Put Credit Spread on a stock with RS, a good D1 and the short strike of the PCS has 2 layers of support above it, you are entering into a very high probability set-up.  The credit you receive for these spreads needs to be a minimum of 25% ROI – which translates into 20 cents for every dollar in the spread – thus a 50 / 49 strike spread would give you a .20 credit whereas a 50 / 45 spread should give you $1.  If you are getting a 25% ROI , you need to win these trades more than 80% of the time.  Around 3 years ago we compiled over 300 of these spreads and members here all put them on – during that time the win-rate was over 94%.  And on the ones where the stock fell below the spread strikes, around half the time we were able to leg out of them successfully and either have no loss or get full credit.  

Hariseldon
17:42:03

mSquare wrote:

Question  How will the just passed deal between Schumer & Manuchen to reduce deficit, have minimum 15% corp tax, rid crried-intrest loophole etc. do to markets in near future?

Obviously the stock answer is “Trade what is in front of you and don’t try to figure out the market!” But I hate stock answers – so this is my take – It is very difficult to know how much of that deal was already priced in – consider this, large Institutions have entire divisions devoted to the impact of political activity – which means they already had this on their radar and a percent likelihood it would pass or not , they have contacts on Capital Hill and lobbyists that feed them info we as retail could never get – so a week ago a bump up in SPY could have been from an algo that implemented the chance of this passing, or it may not be priced in at all – and that is the problem.  We could say, “Yeah, that bill should help the market and businesses” but that doesn’t mean that SPY will go up, like I said it may have already gone up.

Hariseldon
18:05:52
Gehrman wrote:

Question Meant to ask this earlier but I was at the gym – Hari you were asking for feedback on the chatroom and policies etc. My question is, do volatility plays fall within the RS/RW purview? I haven’t been posting my SPY strangles (on FOMC and direction-less chop days) here or in the reddit chat, but they’ve been consistently profitable, and I know some traders here do them. I would like to learn more about trading volatility and see how others do it.

Good question – this is my thinking on it and tell me if you (or anyone) disagrees – While RS/RW is the foundation of the strategy here, I think underlying rule really is about having a proven strategy that is profitable – Members need to know that when they see a strategy or trade posted here that it isn’t just something thrown against the wall or that someone saw on YouTube but that is has been proven to be consistently profitable.  And from that perspective I don’t personally care what it is – as long as it is proven.  @Dave W has done hundreds of time spreads and shown a clear win-rate over 90% – to me that is something members should see.  OptionStalker was even augmented to include data that helps in identifying these trades.

Gehrman
18:10:43

@Hariseldon One thing I believe in is learning a strategy or technique to give context to others. For a brief time I studied scalping and practiced it – to be honest I did not like it, too exhausting – but it helped me understand how the trading we do is very similar, but on a different time frame, so I started looking at larger time frames in different contexts. It also helped me understand that often times, red traders will take a trade on a very different time frame from what many of us new traders are looking at. I’m a big fan of different perspectives because it really aids learning, so long as the techniques are proven. Trading context is an issue, though. So something that would help others see the context of a posted trade, without bogging down the chat or burdening a busy trader, would be very helpful.

Gehrman
18:12:15
I should clarify that before I practiced scalping, I went back into the wiki and found posts/comments where it was suggested that you must still use RS, but you are entering/exiting very quickly, which helped me grasp it better.

2022-07-27
Mark As Read

Hariseldon
20:25:35

veralam wrote:

 @hariseldon, or anyone that can help. This might be a really elementary question, but is there a specific advantage of using the Log chart when looking at charts and their RW/RS to SPY?
Log is better at identifying trends.  On an arithmetic chart the change from 50 to 60 it $10 and the same as 60 to 70, whereas log is %.  Small difference but better imo

AriS
10:29:02
Hariseldon wrote:

AriS wrote:

Short AA  $46.81

I don’t get this trade?

below all SMA, downward trend on the D1, except for the first 10 min of the market it has been downward sloping trending on the M5

Hariseldon
10:30:11

@AriS the last two weeks has AA in an upward trend on the D1and it broke into the gap – I wouldn’t say I am bullish on it, but I am definitely not bearish

Hariseldon
10:30:27
Nor is the stock Relative Weak

Hariseldon
11:38:13
I am not saying the LOD is in – but one does have to ask….Is there any reason to breach the SMA 50 before the FOMC comes out?  Now last time there was a similar question it was with the CPI release, where the SMA was breached before the number, but there were also persistent false rumors that factored in – Typical major support or resistance is not breached before a major economic release.
Pete
11:39:40

Hariseldon wrote:

I am not saying the LOD is in – but one does have to ask….Is there any reason to breach the SMA 50 before the FOMC comes out?  Now last time there was a similar question it was with the CPI release, where the SMA was breached before the number, but there were also persistent false rumors that factored in – Typical major support or resistance is not breached before a major economic release.
You reminded me of an excellent point. Beware of recycled news and rumors when the market action is dull. That is when they love to circulate that stuff.

Hariseldon
11:42:48
Pete wrote:

Hariseldon wrote:

I am not saying the LOD is in – but one does have to ask….Is there any reason to breach the SMA 50 before the FOMC comes out?  Now last time there was a similar question it was with the CPI release, where the SMA was breached before the number, but there were also persistent false rumors that factored in – Typical major support or resistance is not breached before a major economic release.
You reminded me of an excellent point. Beware of recycled news and rumors when the market action is dull. That is when they love to circulate that stuff.

100% – People tend to make the assumption that the Market Makers, Major Institutions, et.al all know what they are doing.  And in large part, they do – but they are also ALGO run primarily – and those ALGO’s do not differentiate very well between old new and new news – so recycled reports can have an impact simply because the ALGOs pick-up on the key words in the release

Pete
11:43:22
Often on these bounces off of this pattern you will see a release to the upper end of the trading channel. Then the downward momentum stalls and you form a horizontal trading range. 
Hariseldon
11:43:47
It is very likely we go from trend to chop
Pete
11:43:59
We have a bullish 1OP cross so the timing for all of this seems like it is lining up.
Hariseldon
11:47:59
During the horizontal chop that is most likely to emerge from SPY Support holding you will see RS forming on various stocks that are far in the Red – this is where corrections to any over-reactions occur – for example, I would look at DLTR as an example of that in a bit.
Hariseldon
11:53:04

@el_brento no there was no over-reaction in RBLX – I am talking about stocks that had an over-reaction to the WMT news will tend to correct during horizontal chop if that is what we get, that correction will look like RS, but the stock will still be in the Red and shouldn’t be considered for a long. DLTR is an example because it is brick and mortar retail, but WMT’s main issue was apparel, which does not impact DLTR, also DLTR is the store that would benefit from consumers looking for lower prices….hence it might “correct”

Hariseldon
11:58:21

@mSquare a bit, but CVS did not have an exaggerated drop from WMT, it was dropping prior to that 

Hariseldon
15:40:36
it is times like these knowing how to read price action is so important.  It is hard to rely on the D1 when all the D1’s are crap – Hard to lean on Support or Resistance when things are so news driven the stocks just blow right through the levels.  These are temporary conditions – difficult, but temporary and during these times it is price action that matters a lot.  Hence why I got out of ABBV when I did, or anticipated the pop in NFLX just before – that is reading Price Action.
Hariseldon
15:49:30
I traded my thesis earlier which was that there was no reason for the market to go below the SMA 50 before big earnings announcements and the FOMC – so it was no going to go too far from it – since we were at the LOD, I traded a high probability of a bounce back up – there is no indicator for that, – it is just reading the story of the market and sticking to your thesis that lies at its’ foundation.

Hariseldon
12:08:57
ABBV is a type of trade we don’t discuss often – typically when you have resistance above you do not take the trade, right? You wait until it breaks through.  However – there are times where resistance is just far enough away to make the trade worth it – for example there is about .85 of room on ABBV.  What this does is give me enough upside, but also a natural stop – if it doesn’t break through, and retreats, I take profit (around .50), if it does break through I increase the position once it confirms.

Dave W
16:10:40
ollyman wrote:

@Dave W earlier you pointed out D1 resistance at 78.5 which it ended up bouncing right off of. Could you explain how you found this? Thanks!

6/16 candle bottom of body and bottom of 6/17  that is an area of 79.50 to 79.90 so there was some play in there, The price wont usually stop at an exact price but i figured it was close which should negate entering a trade near that level 

Dave W
16:21:19

@ollyman again the horizontal support or resistance is not a point but an area so it is more a crayon type “line” as opposed to a narrow line. When you know you are close to the resistance area it is best not to enter a trade and if you are in look to take profits when the momentum wanes 

ExpatTrader
05:32:05
I think I see what @DaveWise was talking about with TWLO. It wasn’t about a specific support point in this case, it was more about the fact that it was stretching into the afternoon, the stock was already beyond it’s ATR and slowing down, and it was getting close to the support area from the D1. I like to use specific numbers for my support/resistance early in the day on a strong mover, but it makes sense that if something is slowing down in the afternoon and nearing that support/just passed that support on the D1, it should be off the table or looked at with caution.

Pete
17:16:45
Have you read the eBook and the articles under The System? Lots of content right on the website in Start Here
Pete
17:19:15

@Kelly G SNOW  was on Heavy Selling all day and you can see the traders who nailed it. At what point today was it too late to short SNOW?

Pete
17:21:22
You have to look for those D1 technical breakdowns on volume. Those moves are sustained
Pete
17:24:24

@Kelly G Work I 100% understand. You might want to focus more on swing trading. If you are busy at work please don’t attempt to day trade /ES. That is a losing proposition for you.

Hariseldon
17:25:41

@Kelly G have you read the Wiki? 

Hariseldon
17:37:20

@Kelly G the WIKI IS  this system

Hariseldon
17:41:16

@Joao are you referring to the question you asked yesterday on SIGA?  First, I just saw it now, sorry I do not have an alert that tells me when a question is asked, I get to around 90% of them – but I apologize if you are offended that I somehow missed yours.  However, I did answer the question in my general comments today – my entries on SIGA yesterday was based on the price action – and there are various posts on that topic

Hariseldon
17:47:45
Around 11am yesterday the red candles that dropped SIGA were of very low volume – I entered when it went above the closing price of the 7/18 which represented an ATH for the stock – so when I see a stock that has a strong daily chart in compression then break that compression to the upside with heavy volume, and then the pullback is of low volume, I entered the trade – there was nothing fancy of about reading that price action – 
Hariseldon
17:50:07
I really hope you are all trading on a paper account – many of these questions and trades you’re all posting show a lack of knowledge around the basics, let alone the system – I say again and again – Read the Wiki – follow the 10 Steps listed there – I can tell you with virtual certainty that if you do not follow those steps and instead jump ahead you will lose money and will not be consistently profitable.
Hariseldon
17:50:40

@Henrik there is one system here – it is taught in the Wiki, taught in the sub-reddit, in the chat room and in all of the videos and posts that Pete puts up.

Hariseldon
17:51:21
It is all the same system – same method and strategy.  You are focused on scanner settings, you should be focused on learning the strategy which is why those ten steps are there – they are straightforward and easy to follow
Hariseldon
17:54:11

@Henrik that is not a method or strategy, that is just scanner settings – finding the stocks is the easiest part – hell they are listed right there in OS in the built-in scanners, if you want to use the Custom Scanner that can give you even higher probability results, but overall they are right there.   For example today, no matter what scanner you used, COIN and UPST would have shown up as shorts.

Hariseldon
17:56:51
For example, go now to Red Royal Flush on OS – the first stock you;ll see is COIN, then SNOW – if you shorted those today, pretty much whenever you entered, you would have made money
Hariseldon
17:59:52

@Henrik ok, so you know today is a bearish trend day, so you look at the Red Royal Flush, and you see COIN, SHOW right on top – you look at those charts and see both of those tickers broke below their SMA 50’s , they are Relatively Weak to SPY, have good volume – bam – grab ITM Puts for a week out with a .65 or higher Delta and ride them to profit.  Done.

Hariseldon
18:06:54
I just made $20 off $50K starting balance in a month (while trading my other account at the same time) using the strategy/method we teach here and in the Wiki – I am now going to do it again with a PDT restricted account – why would anyone want to try a different strategy unless there is verifiable proof it can beat those results?  I am doing this so there is indisputable proof that a) one can do this and b) this method works – to my knowledge there is not any other evidence of any method/strategy out there.  The closest thing I have seen is Ross with Scalping and that is extremely difficult to do, I would say maybe 1 out of 100 manage it.

Dave W
18:04:26
@Zander entering debit spreads using 5 min chart compression break and HA reversal is a good method. Your entry point is likely to give you a move in the stock in the direction you want and even a profit on the debit spread quickly

Pete
10:54:23

Pete
11:06:19
“Pete, you say to buy dips on CALM. How do I do that?” Use your alert tool. Set alerts at levels where the stock would still look attractive, but that are below the current level. Lean on prior candles. You could also lean on EMA (8) or VWAP… what ever technique you want to use. If you are not alerted, no trade. If you get the alert, monitor the price action and see if buyers are still interested. You can set upside alerts after that as well. Pick the top of a recent candle . 
Pete
11:06:55

Pete
11:09:57
On days like this you should spend MUCH more time setting alerts than trading. Alerts do not have to be managed like a position and they will help you enter at attractive price levels. While you are waiting for alerts to be triggered, market conditions could change and you might not want to take the trade. The character of the stock could change and you might not want to enter
Pete
12:50:31
MOS has a little strength today along with other basic mat. D1 down trendline breach also. Nothing super strong, just some nice rotation into the group. It could be setting up on M5 so here is what you want to do
Pete
12:50:50

Pete
14:21:39
There is a difference between being bearish and not being bullish. There were some Reddit comments asking about how the lack of volume makes me bearish. It doesn’t. The lack of volume recently makes me question the recent market bounce. That lack of volume tells me that there is a low level of conviction and while the price action looks good, there is no substance behind it. These low volume moves can easily be reversed (but it does not mean they will be reversed). If the market rallies on heavy volume from here, we are all good and we can get behind it. My point was that without that volume, it is too early to be loading up on bullish positions. I wanted to make this clear to all of you in case there was similar confusion.

Hariseldon
15:38:21

As much as I would love to close out the first month of the $50K Challenge and start the PDT Challenge (going to alternate every other month) – I am going to hold $NFLX and $CVS overnight (good daily charts, just a weak market).

I plan on closing $TBLT before eod.
Hariseldon
15:53:34

Btw – look at the drawdowns I took on NFLX and CVS but did not close the trades – remains to be seen tomorrow, but I am trading the daily charts here, not the P&L

owensd
16:09:10

@RAK $20K margin is going to be vastly better than a $5k margin. So many more options available to you, and while you have the same day trade limitations, you can effectively lock in option gains with spreads in that size account, or just burn a few day trades. I’m guessing Hari will be above PDT in about 3 days.

owensd
16:23:13

@RAK You can go long on a call or put and then make a spread later to “lock in profits”.

owensd
16:26:52
you can free up buying power the same way, and you also don’t have to worry about good-faith violations, especially problematic if you want to trade stocks.
owensd
16:29:49

@drluke you need to have options approval to create spreads with your broker.

Mister-Bin
16:27:28

@Jerson if I may: you are anticipating, trade what’s in front of you, NEM was weak after earnings, with a breakdown of the D1 chart, with a picture perfect example of M5 RW. There’s no reason for you to go long at all

Pete
16:36:51
Jerson wrote:

@Dave W, I noticed today you played NEM all day, a Gold materials ticker, I was inclined to go long today and was wondering if shorting NEM was like a proxy for going Long since typically when market goes up, precious metals like Gold and Silver typically go down. Did I overthink your plays? thanks
You over thought it. If gold ran contra to SPY then it should be making a new high for the year – right? At least very close to it. 

Dave W
18:25:25

@Jerson I went short NEM today several times simply based on the NEM 5 min chart and big drop on earnings. It had a highest probability criteria setup several times today. I never considered going long the market and that didnt enter my trade on NEM 

Pete
11:30:24
“Pete do always ignore the last 15 minutes of trading when drawing these channels?” No, but those last minutes are noise filled and if I take those out the trend has a nice orderly pattern to it. I do look for close to parallel lines when I draw them.  
Pete
16:40:21

rrathk1 wrote:

@Pete in regards to the end of day rally, was the midway point of the 3:25 red candle falling a good signal to go long SPY given the days action?  or would you have liked to have seen a 2nd test/bottom (had there been enough time in the day) prior to taking a long position?

I typically do not like trading the last 30 min of the day. I might hold a position that is working, but I do not enter new day trades. The market did not have any pace and the last 30 min can be filled with moc imbalances. There will also be some position squaring ahead of the FOMC and that can increase the likelihood of some wacky moves close to the bell

Pete
16:41:36
If that move has unfolded during the day, I would be more excited by the 3:35 candle than the 3:25 candle. That was a nice long bullish engulf that finished above the 3:30 bar
Pete
16:43:14
Sorry. I was referencing the wrong candle. The 3:25 was the red candle. Yes the 3:35 candle erasing it was a sign that buyers were in control. Again, I would suggest not day trading the last 30 min.

Dave W
00:06:21
there is no likely direction 
Hariseldon
01:27:07

@st0rm The profit comes from the IV differential, not in getting the direction right.  If for example you had a NEM Put Time Spread, you would be in equal shape, if not worse, at least will the call spread you get the full credit for the Short Calls and next week can ride Long call up, 

Pete
16:52:41
st0rm wrote:

@Pete curious how you handled your NEM calendar spread today. I had a similar play and I bought back the short side and will ride out the long since the value dropped so fast.
I did not trade the NEM calendar spread. I am not currently trading because I am focused on education and on adding features that will help us all. That said, once NEM showed  it hand this morning it was pretty easy to see that it was going down and you just had to position yourself short the stock.  

Hariseldon
16:53:40

@st0rm both Dave and I were/am in that spread – I bought back the short side at .04 and I believe Dave bought his back at .03

Pete
16:54:25
There were a couple of really good entry points for shorts on that stock. It was rel weak the entire day with no major bounces.
Pete
17:03:48

Pete
17:04:33
These are just the M5 checkboxes. D1 chart for stock is nasty
Pete
17:05:20
st0rm wrote:

@Pete sorry I meant Dave. Made the same mistake yesterday haha
It’s ok because all of us should be able to look at the same chart and reach the same conclusions. We are all trading the same system.

Pete
19:32:44
You are looking for stocks that historically do not exceed the expected earnings move using the Pre-Earn Options stats in Option Stalker. We want a nice difference in the IV between this week’s exp and next weeks exp. If the stock does not make the expected move you unwind the spread for a gain. If it makes a greater than expected move the stock is likely to continue in that direction and you trade the stock. As with any strategy, learn and observe, then try it small. The most you can lose is the premium you paid for the spread. There will be a ton of plays this week that you can monitor., 
Dave W
23:19:46

@st0rm The setup on the daily chart has no bearing on the stock price movement after earnings are released 

Dave W
08:58:52

@st0rm When you calls or puts go deep itm assignment risk comes into play  when you are otm you have time to mitigate the trade with no assignment issues 

Pete
17:12:54
When you see consecutive stacked red candles like that the stock is going down. That is one of the most reliable patterns you can trade. I advise you not to trade the first 45 min so in that spirit, you would evaluate the market and the stock and trade the compression breakdown. You could also have avoided shorts since the market was going up. That would be wise as well (the market rally was not very strong today so it would not have spooked me). Once you had the SPY bearish cross at 1:15 and the M5 broken uptrend for SPY you would start considering shorts. Then you would have looked at the NEM compression breakdown later in the day. There were a number of you who took that trade. 
lilsgymdan
17:24:23

@Pete Would NEM’s cousin AEM been a valid chart to look at as well? It wasn’t as bearish overall but might have provided some better SPY timing opportunities around 1:40 or 2:20

Pete
17:49:02
Yes. All of the gold stocks were hit hard today. I did not look at the news on those stocks, but it makes sense that they would be weak. Gold has been trending lower and these producers have higher extraction costs (fuel for mining equip). 
Pete
17:49:49
I used to watch a show called Gold Rush and the amount of fuel they burn is crazy. 

2022-07-25
Mark As Read

Crux
19:54:27

@TuckChat im not at a computer but it’s in the same row as Chart, Market View, etc… I’m pretty sure…on the upper right 

Crux
19:55:09
Read the manual on the website if you need more assistance it’s all there
Dave W
21:36:12
that tabs shows only earnings for after current days close and before the open  the list will be packed the next 2 weeks

DanielF
11:45:42
@Harry48 https://oneoption.com/options/calendar-spreads/
Dave W
12:46:33
that is my reddit post on using time spreads over earnings 

LooktotheLeft
12:35:05

@Henrik RS is relative strength to the SPY on any / all time frames chosen. It is always to the SPY. If you have a SPY chart up 1OSI will be a flat line because it is attempting to measure RS to itself.

LooktotheLeft
12:38:30

@Henrik Also, not a MA crossover.  Strictly a comparison of an instrument to the SPY on the given time frame. This should be spelled out in several places in the learning area.

LooktotheLeft
12:59:42

@Henrik Those are buy / sell signals on that time frame,  for stocks or SPY.  Pete has a rundown of it somewhere.  I’ve read it, but the exact calculation is proprietary I believe. 

Hariseldon
13:16:56

@Henrik The red and green at the top of the chat is an strength meter on SPY – it shows heavy volume when the circle is bordered, as for what measures the strength, that us SPY itself, which is a measure of SPY’s overall movement during those time periods.

Hariseldon
13:19:11
I believe, but not 100% sure it also takes the 1OP indicator into account.  Either way – looking at now SPY was weak on an M5, M15 and D1 basis .  
Hariseldon
13:19:54
And volume was strong on an m15 basis.  
I would need Pete to confirm all this though.
Joao
13:29:17

@Henrik I don’t know more than @LooktotheLeft for sure but from what I understand you are simply mixing buy/sell signals for SPY with the Relative Strength indicator, 1OSI, which is an orange line that compares RS/RW of stocks relative to SPY (page 13 of the Option Stalker Manual pdf).

Hariseldon
13:37:44

@Henrik The buy and sell signals are based on several factors including the 1OP and RS/RW, the volume ring around the circle is just providing additional information.  Which isn’t to say that volume isn’t included in the signal calculation, just that it’s a separate piece of info.  The nature of the buy/sell for stocks is different (I believe) than it is for SPY.  Pete would have to weigh in for further clarification though 

Pete
17:58:21

Henrik wrote:

Pete: I asked this question before but you were not here, could you elaborate on how the strength of SPY is calculated (the red/green lights on top). I understand that RS is measured against SPY, but against what do you compare SPY itself? Other indices for example?
The green and red dots are not measuring rel str. They are buy and sell signals based on our trading system for the SPY. it is the benchmark against which all other assets are measure for rel str/weakness

Pete
18:03:07

@Henrik If you look at an SPY chart (or any stock chart) you will notice green and  red arrows. Those are the buy and sell signals. For SPY the red and green dots at the top of the chat correspond to those arrows on the charts. The dots are just an easy way for us to know where the SPY signals are across multiple time frames. 

BennettN
00:06:01

@Henrik He says that you can use regular compression zones instead of the dynamic ones his software creates and that institutional activity is best gauged by RS/RW if you don’t have the software

Dave W
15:25:14

@ollyman Depends on where resistance is, market strength, strength of momentum. I will take some trades after the breakout has occurred but the further the stock is away from the break the higher the probability of a pullback

Dave W
18:16:38
generally i  use a dynamic compression zone that can occur several times during the day you are using the break of the initial 30 min hi and low i think, as your compression break 
Dave W
18:19:05
I am also using institutional activity driving the trade. I think yours will work 
Jared B
21:16:24

@TuckChat You can mess around with the compression in/out check box on the OS scanner. 

Jared B
15:54:19
Same issue for me sometimes and probably experience is the answer. I think the overall market context + deciding whether this is a day trade or a swing trade first, effects the decision. A day trade your stop can be below the swing low, or VWAP, or whatever the intraday says. But the swing will be below an SMA or D1 level that’s usually further away. Often times I fool myself into swinging, when it really should have been a day trade and I was simply just wrong. Then since we lean on the daily, I justify staying in my losing trade. Like “the market is pulling my RS stock down and I expect the market to rebound tomorrow” is different than “My stock lost all strength and market has no direction so I’ll lean on the daily”. Just an amateurs opinion. I took two large losses last week on Friday due to leaning on the daily of bad picks.
Hariseldon
16:33:24

@BennettN I believe that’s covered in the mindset section of the Wiki, no?

Joao
16:35:09

@Zander @Jared B I join just to add that I’ve cut losses purely on daily stops this past week, since a bigger loss still has the effect on me that @BennettN refers to, and this way I am more confident letting winners go longer (I follow the stock or update hard stops) and also I sometimes reenter trades after being stopped out if I think I’m finding another entry level, that doesn’t bother me much. I think this might be a problem when I increase position sizing or try to trade more underlyings at the same time, and also when I try swinging, since this looks too much like scalping. Appreciate thoughts on whether this is not also a question of personality and how that in itself should be incorporated into trading.

Andreas
16:54:16

@Joao I think alot of the issues is buying power on mindset… When managing a small account, you’re low on BP, you tend to let losers run longer because you don’t have alot left in the ammunition bag… it’s happened to me, so i’m sure it’s happened to others…

Hariseldon
19:19:06

@BennettN it’s the age old question of – Am I holding losers too long or am I exiting too early and not letting the trade breathe.  

“Well where are your technical stops?”
Hariseldon
19:19:24

but some times those stops are really far from your entry 

Hariseldon
19:20:52

and this is where the trade off lives – if you are sized correctly you can withstand the drop to support.  But usually that size results in smaller gains, which in turn leads to holding longer and the cycle continues 

Hariseldon
19:21:37

in the end – it’s mindset insomuch as “how much faith do you have on your story of the market and set-up of the trade?”  

Hariseldon
19:26:12

let’s say you are long at $50, minor levels of support are 49.50 and $49.  Major support is $45.  The stock drops to $48 – now if you had a 30k account, and did 1000 shares, you’re down $2K.  Are you ok holding to see if $45 holds? Probably not.  You exit.  It bounces.  You lost when you didn’t need to.  What about 500 shares? How about 250? At 250 shares you’re probably good – but now you need a decent bump to $52 to get a decent return.  See how it all goes together?

Hariseldon
22:19:02

@BennettN I think there is a difference between letting a loser run way too long and a poor exit.  Going back to the example – if you got in at $50 with 500 shares and did not exit at the breach of $49 or $48, and then held it overnight and the market thesis changed, but you still held, and wound up exiting at $44 three days later with a $6 loss.  That is one example.  Entering at $50 and exiting at $48.50 three hours later is another. 

thiencly
22:44:26

@BennettN I am still learning and I have the same issue myself.  How I am managing that issue now is this:  Enter trade at $50, but only 1/4 size.  If you’re right and price moves higher, then add 2/4 size and finally full size if price keeps proving you’re correct.  If you enter at $50 and price drops below the minor support, you can still hold until the major support. If it breaks major support then take the loss, but its only 1/4 size so you can handle it.  If it drops near major support but makes a higher low compared to major support and the market is still in your favor then you can still hold OR add 1/4 size.  If price breaks this new higher low then take the loss, still 1/2 size loss so not too bad.  If price keeps moving up and goes pass the minor support then keep adding.  If price makes a lower high and never makes it pass that minor support then you can scratch or make a minor win on the trade. 

Hariseldon
23:43:46

@BennettN The method of adding as you go up is in the Wiki, particularly in the mindset section.  Everything you’re asking about is definitely covered and mapped out – just an fyi 

WoodyNature
00:11:09
My best advice is to read those articles and use the replay function on your charting platform across various tickers. Look for said set up and replay a couple mins leading up to that play. What was SPY doing? How were the HA candles printing? Look at how potential entries were looking (easy in hindsight yes but now you know what you’re looking for and how it sets up).  Now do this everyday after hours, paper trade the strategy or 1 share/contract it whatever. It’s honestly pretty straightforward and Dave couldn’t lay it out any easier if he wanted, it’s an easy step by step. I like the strategy a lot because it’s simple and I feel like I understand it. I’m not the sharpest tool in the shed, not by a long a shot. Market 1st, strong/weak stock, apply everything Dave writes, and your chances of success increase a lot.
WoodyNature
23:53:18
Henrik wrote:

Can anyone point me to a resource that explains HA candles in context of the strategies mentioned here? I know what they are but they are discussed in the chat a lot and I want to learn the benefit of using them instead of standard candles. On first sight, they are confusing because they can draw red candles green and I don’t get why some HA patterns aren’t translated to “normal” candle patterns.
If you know what they are then everything should be straight forward. HA patterns are delayed by nature. Hence why they dont translate to normal candles. This article by Dave W is a fantastic resource. It’s helped me tremendously since posted 3 months ago. https://www.reddit.com/r/RealDayTrading/comments/ulavyw/how_i_trade_heiken_ashe_reversals_with_criteria/

Jared B
23:54:08
Pete also has some videos in the tutorial section on HA patterns
Joe H
06:35:29
Henrik wrote:

Thanks, yes, I have seen that one when I scrolled up before. This setup (cross of HOD with momentum) seems reasonable to me. I was just wondering where the benefit is in expressing the pattern as HA. I will read more first, I am too clueless about this particular topic.
The use of HA is due to the fact of that it is easier to spot a trend change. Stock breaks to high of day pulls backs consolidates and now wait for a HA reversal pattern ( Bullish ) flat bottom ( should be of greater size that previous candle(s) go long. 

Dave W
08:32:52
jobs  good news is bad news 
Pete
08:37:41
Yes 372K. Bad news short term (Fed has breathing room), good longer term (Fed hikes have not tanked econ growth).
Andreas
08:49:59
I don’t get this drop right now… those numbers came in robust…
Shiv
08:51:11
Andreas wrote:

I don’t get this drop right now… those numbers came in robust…

From Pete – Yes 372K. Bad news short term (Fed has breathing room), good longer term (Fed hikes have not tanked econ growth). Point #1 = market dropping momentarily
Russ
08:51:32

@Andreas The concern is that a strong economy will pave the way for the Fed to increase rates at a faster pace/higher rate, and the market is reacting to that concern. The market now views a 75 pt rate hike as more likely than they did before the jobs report and that is being priced in, at least in the short term.

Hariseldon
12:27:27
I have one primary objective here – to help all of you make money.  My other objective is to help all of you not lose money.  And here is the struggle – Trading with real position size is like being in the Majors and it takes a long time to get there.  When do you add, when do you exit?  What is a pullback and what is a real drop?  Is the market going to come back here or continue down? A million questions factor into every decision, and the advice you are getting here is excellent in various situations – but what situations are those?  Do you know the situation when you are in it?   And then the biggest one – do you have the mindset of a successful trader?    It is my honest opinion that over 90% of you should not be trading right now.  You just shouldn’t – you will lose your money.  And maybe that is something you have to go through yourself, I don’t know.    But the truth is that many of you are getting advice for which you are not ready to take. Are you really at the point where you can tell the difference with all the nuance that goes into the charts?  It is very frustrating for me to watch so many of you lose so much when it can easily be avoided.   So this weekend I ask all of you to seriously ask yourself – Am I profitable? Have I been?  And if not – please stop thinking you are on the verge of “getting it” – Instead – stop.  Stop trading with real position sizes and go back to the beginning – Paper trade until you hit the milestones, spend 6 months doing it.  Trade 1 share until you hit them again, spend 6 months doing it.,  Spend as much time on trading as you do now if not more, but stop losing money.  I seriously hope you all think about this.
Zippy
12:32:13
Pay attention to @Hariseldon’s post above. If you don’t understand how to identify a trend and the nature of the trend, or a trend reversal, or basic horizontal support and resistance (much less the hidden S/R levels that can trap you), or HOW TO KNOW WHERE YOU WILL TAKE A LOSS, don’t trade size of any kind. The red traders here have at least 5 years of experience and some have decades (Pete). I personally have 15 years of trading experience and spent over 10 years of that studying every form of price action analysis imaginable. 
Zippy
12:34:20
No pattern or indicator or collection of patterns and indicators will guarantee success on every trade. That’s why you HAVE to know when and how to take a loss.
Hariseldon
17:22:35
I will say it again and keep saying until I am proverbially blue in the face – YOU SHOULD NOT BE TRADING UNLESS IT IS PAPER OR 1 SHARE.  And if you are trading Paper or 1 Share the only thing you should be focused on is 1) Identifying the set-up, 2) maintaining a 75% or higher win rate and 3) having a profit factor of 2 or more.  There should be no expectation that you will achieve this in the first few months.    
But here is the real reason it takes 2+ Years to do this – it isn’t from learning the method, that doesn’t take long – it takes over 2 years to have a trading mindset.  Why? Because the mindset you need to trade is in many ways OPPOSITE of the one you use in regular life.

Hariseldon
16:27:13

@Kelly G FDX is staying above the SMA 200 – as long as it remains above that support level the chance of a bounce upward increases, but keep in mind it is very sector dependent and the sector (Industrials) needs to be in favor for that day to get FDX moving

Pete
16:29:49

@Kelly G no indicators or MAs, just the price action

Pete
16:44:19

@puckshaw great approach. great to learn from stocks that are posted by looking at D1 and M5, but ultimately you want to be finding your own. Otherwise, you are chasing your tail.

Hariseldon
16:45:51

@puckshaw I will hold a trade for days, Dave some times holds a trade for weeks – just because we haven’t closed a trade doesn’t mean we think it will come around on that day – 

Pete
16:49:59

@puckshaw If you are taking stocks off of Option Stalker searches, they will be great candidates. Check the D1 and M5 and wait for market conditions to line up. 

Dave W
16:55:35
puckshaw wrote:

@Hariseldon very good point. Too many times have I seen Dave post a winner that he held from a couple days ago that I took a loss on as I mutter “you son of a b…” lol

Nearly all my trades use a daily chart as a starting point then the 5 min as well as the SPY trend. This allows me to give the stock plenty of room to move during the day and for days if needed. It  can take a lot of patience to find only the highest probability trades but your win rate will be extraordinarily high and you eliminate the stress of being whipsawed in a trade 

Hariseldon
16:44:47

@st0rm On Sunday/Monday I had a thesis that the market would be Bullish – going into Tuesday I traded that Thesis which lead to an extremely profitable week as I was able to stay in trades that went against me and just about all of them wound up being nice winners because I felt the market would hold up.  Going into today I wrote in the trading journal that I felt it would most likely chop around, and thus other than my mistake with OXY, I was able to reduce trades and not believe in any trend one way or another

Hariseldon
16:45:06
If I did not have my thesis during the week and for today I could not have traded 
st0rm
16:46:38
That makes sense. It sounds like we should be thinking in terms of 2-3 days max for a market thesis, and have an ever-evolving perspective of the backdrop.
st0rm
16:47:13
I’m coming from a world of daily scalping (yeah, I know …) and I’m learning to zoom out a bit and let things breath
st0rm
16:47:21
*breathe
Pete
16:48:15
st0rm wrote:

I ask this respectfully – could having a market thesis beyond a few days run counter to our goal of letting the market direct our trades? It’s been nothing but chop since I joined, and now we have some trend. It feels like trying to predict a bottom rather than react to what’s in front of us. 
 I posted a video this morning where I said my short term market bias is up, but longer term I still think we will have weakness. As the day unfolded I gave a play by play with charts comparing price action and why I felt we would have big swings intraday. I don’t think I could have done more today to answer that question.

Hariseldon
16:54:53
Here is an easy way to decide if something is “swingable or not”:
Hariseldon
16:54:59

Dave W
16:57:58
notice on Hari chart all the tradable situations are breaks out of compression, one of the key elements of the highest probability trades 
Amaya_trade
16:58:01

Hi @Dave W  , 1 question which chart do you use to set your mental stop ? daily chart or 5min ? do you use support point to decide whether exit or not ? thank you 

Zander
16:59:23

@Hariseldon I’m a bit confused by that picture – it looks like a lot of the channels are only identifiable in retrospect. For example, I’m not sure how you would identify the March 14-28 price action as a channel and not part of the previous box until it broke above the previous box range in the last 1/4 of the move. Unless I am reading this wrong and how you drew the channels/boxes was more about the type of price action (clean moves) and less about the range/breakouts of the previous box

Dave W
17:00:36

@Amaya_trade if i am intraday trading without a corresponding daily chart i use 5 min candles for support & resistance but these type of trades are very rare for me so i am nearly always leaning on the daily chart. If i hit my profit target on any trade (with or without daily chart corresponding) I take profits especially in this tough to swing market

Hariseldon
17:00:36

@Zander does it not identify the current breakout and channel as it is happening, and I took AAPL Long over the weekend (as did Dave I believe) – that is not in retrospect, that is in realtime

Andreas
17:01:08

@Dave W How do you determine your profit target

Dave W
17:06:23

@Andreas my profit targets depend in the resistance level the continued momentum of the stock the SPY price movement. I also set sell orders at an arbitrary profit target if i cant watch the price action minute to minute so i have an exit working. If that executes i can review the position i closed and determine whether to reenter or select another higher probability psoition 

Superpantz
17:11:48

@Dave W I watched an OS video from few years back where you showed examples of how you pick stocks and determine profit targets.  I’ve also been paying attention to your intraday picks and when you take profit.  How do you deal with feelings of leaving money on the table when you take profit and the stock goes higher, like alot higher!?

Dave W
17:24:42

@Superpantz Price targets are max gain type targets for me usually, they have to be adjusted during the trade to take the market price action and stock momentum into consideration. I dont ever look at trades i closed to see how much money i left on the table, i dont care about that, i care about whether the stock is still giving me another entry point. If you think you are going to max out your profits on every trade then every winner you have will cause you to feel like it was a loser. Trading successfully is partly a mental game and every time you do a what if you are messing with your head

Superpantz
17:38:29
Dave W wrote:

@Superpantz Price targets are max gain type targets for me usually, they have to be adjusted during the trade to take the market price action and stock momentum into consideration. I dont ever look at trades i closed to see how much money i left on the table, i dont care about that, i care about whether the stock is still giving me another entry point. If you think you are going to max out your profits on every trade then every winner you have will cause you to feel like it was a loser. Trading successfully is partly a mental game and every time you do a what if you are messing with your head

thank you! would you please elaborate on “max gain type targets”

Dave W
17:42:53

@Superpantz Max gain targets are usually resistance levels like moving avgs, algo lines etc  a target that would be what i would consider max gain for that trade for the current setup

Zander
17:57:05

@Dave W How do you go about setting targets at ATH/ATLs when there is no technical zone that could be interpreted as the maximum extent of the setup? 

Dave W
18:07:41

@Zander For ATH or ATL if i am day trading i look to exit as momentum to the upside wanes if it is a swing i hold overnight and reevaluate the next day. I look at institutional involvement in the trade as well to decide when to exit 

Hariseldon
17:40:50

@DnJoe96 I do not use hard stops, only mental ones

DnJoe96
17:54:01

@Hariseldon I’m thinking of making one stop at 1$ profit and one at .50c loss 

Hariseldon
17:54:49

@DnJoe96 your stops should not be based in absolutes – if you are going to have stops they should be based on the technicals not your profit or loss ever

DnJoe96
17:57:18

@Hariseldon so if I see the price action is choppy, maybe you set them pretty small, like a .20c profit or a .10c loss. Or if the price action has a lot of range like today, maybe you go 1.50 and .75 or so. I think I just need more experience to see what you mean

AwkwardAlien
17:58:28

@DnJoe96 that is guaranteed to hit your stop loss and make losers.  You need to leave room for your trade to breath.  I am currently learning this myself 

Hariseldon
17:58:54
Your exits should not be based on your P&L – ever – that is like a golden rule 
Hariseldon
18:22:20

@DnJoe96 well I certainly don’t walk away when day trading – swing trading yes, but never day trading

Hariseldon
18:25:06
I may be somewhat atypical in this but I do not use hard stops and I do not go into the trade with a profit “target” per se – I mean sure, like right now I am Long TWTR and would love to take $1 off it, but my decision will be based purely on the price action I am seeing 
Dave W
18:27:12
dont look at your P&L while trading. You will be exiting on your emotional reaction to the profit or loss and not the technicals of the stock. You have to get out of this habit 
Superpantz
18:28:43
I haven’t look at my P&L while trading recently and it definitely help mentally and emotionally.  However, I can’t help but do the math in my head lol…Will take some time.
Hariseldon
18:30:22
Of course you will know in your head – the underlying notion is that you can’t let that influence your decisions 

Pete
08:14:15
ADP has typically taken a back seat to the jobs report tomorrow and that will be more significant. I do follow ADP. I believe it is a “clean” number from a data collection standpoint.
Shiv
08:38:35
US Initial Jobless Claims Actual 235k (Forecast 230k, Previous 231k)

8:30 Jul 07

Shiv
08:41:42
Andreas wrote:

@Shiv Where’d you find those numbers?  I’ve been googling

I got them from a newservice that one of the members shared yesterday. https://www.financialjuice.com/home
Shiv
08:42:22
Shiv wrote:

Andreas wrote:

@Shiv Where’d you find those numbers?  I’ve been googling

I got them from a newservice that one of the members shared yesterday. https://www.financialjuice.com/home
https://www.financialjuice.com/News/6765456/US-Initial-Jobless-Claims-Actual-235k-Forecast-230k-Previous-231k.aspx

ExpatTrader
08:42:40
This is a good site for anouncements: https://www.dailyfx.com/economic-calendar
Russ
09:00:17
All the important economic releases are under the “Market View” tab on Option Stalker, including dates and times for each report.

Hariseldon
10:38:04
Btw – for those wondering why I continue trading (and full size at that) after I hit my targets, consider this – if you were a business and you hit your profit goal, do you close up shop?  If you did you would go out of business pretty fast.
Crux
10:39:47
The difference in mentalities is that one person thinks they got lucky and want to run with what they got before it disappears and the other person is confident in their strategy and know statistically t hey will continue to make money when the opportunities present themselves

Hariseldon
11:01:12

Simple rule if you are not a profitable trader – SPY UP – Stock UP – don’t short.  SPY DOWN – Stock DOWN – don’t go long.  It doesn’t get more basic than that

Fox
11:05:57
Hariseldon wrote:

Simple rule if you are not a profitable trader – SPY UP – Stock UP – don’t short.  SPY DOWN – Stock DOWN – don’t go long.  It doesn’t get more basic than that

funnily enough is also how to stay profitable

Dave W
14:35:08

@MikeB OXY is green with a bullish daily a poor counter trend trade dont post them

Hariseldon
14:36:47

@MikeB much like the drug you will always be chasing that first high, eventually you will be sinking all of you money into it eventually finding yourself at the docks turning tricks just to get another hit – it is a bad road to go down – so don’t short a damn stock that is green on a day that SPY is green!

Hariseldon
10:57:13

@st0rm make sure you know the difference between a pullback and a drop

Hariseldon
11:00:20

@st0rm sometimes that instinct to bail is because you should really….bail.

Dave W
11:02:19
there are no black and white rules like add when you feel you should bail. You have to look at the context and story (as Hari says)   following a saying like “add when you feel you should bail” may end in disaster
Amerikaner
16:29:53
vinny wrote:

trend days are my worst days unfortunately… i just have this nagging thought that the market will drop anytime. Does anyone have tips on how i can overcome this.
I’m the same way.  Today however was one of my best days.  I think it’s zooming out and believing in the overall picture that did it.  We had 3 green days prior to today and no major news events or at least nothing we didn’t already know.  So with a bullish bias all I had to do was keep an eye on the SPY intraday and make sure there wasn’t any concerning bearish signals and just keep on looking for longs all day.  Before the market chooses a direction I’m looking for both RS and RW but today I don’t look for a single short.  We got above yesterday’s high and never dipped back below so why would I?  Every low was a higher low.

Zippy
16:49:20
vinny wrote:

trend days are my worst days unfortunately… i just have this nagging thought that the market will drop anytime. Does anyone have tips on how i can overcome this.
This is a common problem based on our natural desire to look for bargains. The thought of buying when price is making new highs seems wrong and the fear is that you will buy a top (or sell a bottom in a downtrend). Fact is, if price is being supported by the 5min 20EMAor riding above it and not even pulling back to it, you have a well-defined trend.

Zippy
16:49:54
Here is what you do: When a red bar prints, or price is pulling back and you get the overwhelming desire to short, buy right there.
Zippy
16:50:34
In a strong uptrend you may not even get a red bar for a long time. Drill down toa 1min chart and buy the close of red 1min bar when that happens.
Zippy
16:51:06
I’m serious, if there’s a strong trend and price pulls back and you think “There, that’s the end of this trend”, just buy.
Zippy
16:58:05

@st0rm MRNA next previous D1 resistance in line to be tested today was the horizontal resistance of the 4/13 high of 142.76.

Zippy
16:59:48

@Amaya_trade  Here are my criteria for a Strong Trend: •

Hariseldon
17:35:02
While everyone trades differently I want to note that with a $50,000 Account, I am up $11,000 in 9 days using – Relative Strength/Relative Weakness, The Daily Chart (50,100, 200 SMA’s), Volume and A Thesis on the Market – That’s it – nothing else – I look at the M5 and the D1 – no other timeframes while trading, there are no other indicators – I am trading the Price Action and the Story.  In my opinion anything that takes your focus away from those two things is detrimental to your ability to be a successful trader. 
Hariseldon
17:41:24

@Amaya_trade I have VWAP on my chart but rarely look at it – and no I do not keep the 3/8 EMA – I can see the trend by looking at the candles.

A man
17:47:27
Anyone under PDT feel like they would be consistently profitable if they weren’t under PDT? I feel like PDT restrictions make me a worse trader. 
owensd
17:50:19

@A man no – I was trading over PDT limits and I’d do really well, but then take a few big losses to give it all back. I’m back in my small cash account, which is forcing me to slow down, take better trades, and close them out during the day as normal. The difference between this and PDT was me trading too many sub-par trades because it was easy to get in and out.

Hariseldon
17:51:37

@A man I did a series of posts about this and the problems that PDT represents and how to get around them, I then did an experimental challenge under PDT working out different ways to effectively trade with those restrictions – all those posts are still up and contain various potential solutions, and I continue to work on other solutions to the problem

owensd
17:53:35
best solution: move to where PDT isn’t a thing or save up $30k **after** proving you can get your PF > 2.0 by paper trading or trading small (why I’m back into my small cash account).
owensd
17:55:04
I need the emotional part that paper trading lacks for me, hence if I have $5k on the line in my account, I’ve still got the emotional side to deal with and get better at.
A man
17:57:53

@Hariseldon I’m aware of the PDT posts and the 5k challenges, I followed them in real time and have been studying them since. I got very close to building my account to 25k but unfortunately suffered a couple big loses. I just think my psychology changes when I’m under PDT which is harmful towards my trading. 

Hariseldon
18:27:39

@A man what I am finding is that one needs to buy Options that have less than 5% premium on them, so they aren’t quite at parity but they are close –  the reason is this – If you bought a Call on AAPL let’s say on June 27th – and you got an ATM Call of $142 and it expired 7/8, paying $3.50 for it – and you got three of them, well you are pretty much paying all premium here right, there is no intrinsic value to an ATM Option.  By Thursday – 3 days later, AAPL is at 134 and your option is now worth about .30 cents or less.    You most likely would have closed the trade and taken the loss,  but today that option would have been worth $4.50, in profit.  

Zippy
19:02:00
A man wrote:

I got very close to building my account to 25k but unfortunately suffered a couple big loses. 

There’s a method a couple of very consistent traders I observed use to avoid “big losses”. Before entering a trade, they determine the price level around which their reason for the trade would no longer be valid. The subtract that level from their planned entry price and divide that by the max loss they are willing to take on the trade. This gives them the number of shares they will trade. This way the biggest loss they can take is the max loss they already determined was acceptable plus a little slippage cost.

Zippy
19:07:08
And if I’m under PDT and want to day trade stocks, I will choose only the finest high odds setups and limit my trades each week. That teaches patience and wise selection.. 
A man
19:07:25

@Zippy I do that already! I use that same position sizing formula before I enter trades. The couples of big losses became big losses because I broke my own rules and held the positions because of my thesis on the market.

A man
19:07:56

@Zippy I’m not swing trading anything right now, only sticking to day trades. 

Andreas
19:08:22

@A man PDT forces you to swing because of the 3 daytrade rules… how are you day trading?

A man
19:09:06

@Andreas I just make 3 daytrades a week. LIke Zippy said, forces you to be very selective and only take the highest probability setups. 

A man
19:09:53

@Andreas Once in a while I take some /MES trades, but usually I just stick to stock 

Andreas
19:10:39
You’re basically sitting on the sidelines every day then… if you’re only trading 3 times per week… that’s a problem in itself, as you won’t be able to pull the trigger when you see your setup
Zippy
19:11:46

@A man Now, I knew you broke rules because no one enters a trade knowing they could have a big loss. The big losses come from the very dangerous practice of believing that price absolutely HAS to do something which leads to breaking rules such as jumping the gun and entering without an actual setup, hesitating to place your order and then chasing into the position at a far worse price, or having thoughts as price approaches your physical or mental stop loss area. Never ever ever EVER have thoughts at that point because the thoughts will not be profitable thoughts.   

Hariseldon
19:26:37
Using the Walk-Away Analysis will give you a very good idea of whether or not the problem is swinging or stock selection.  If the analysis shows that a vast majority of the trades would have been winners if held for the right amount of time, then the issue isn’t PDT, it is that the trades are being closed before they have a chance to work.
A man
19:27:08

@Andreas Mate, I appreciate the pep talk, but I was simply curious if anyone else had a harder time trading under PDT than over it. Also, I think most people would disagree with you when you say “PDT is not the problem at all, not one bit.” Hari himself struggled on the second 5k challenge because a lot of the trades that were in profit became out of profit since he couldn’t close them due to having no day trades left, aka PDT. 

Hariseldon
19:28:50
All of that puts aside that it seems this trading is jumping the gun – first one is should paper trade until they hit the milestone win-rate and profit factor, then one should trade 1 share at a time until they hit those milestones again – only after that should you be trading anything larger – So to jump into PDT restrictions, which are already a pain in the ass, before having gone through at least a year of that process hitting those numbers needed, puts you at a serious disadvantage to begin with – 
Hariseldon
19:31:13
I have also come to the conclusion that – during times of market chop it is better to use a Cash account and during times of market trend it is better to use a margin account – of course the issue is that it is a pain in the ass to switch back and forth
Andreas
19:35:28

@Hariseldon Cash Accounts you need to have a sizeable amount in them unless you want to take a very limited amount of trades per day or OTM (Not a good idea).  Margin Accounts you have alot more options available, and you can make multiple trades with limited funds… I’ve been doing both, but haven’t touched the cash account in nearly a month…

Hariseldon
19:38:29

@Andreas yes of course, trust me I am a much bigger fan of margin accounts than cash accounts – but if one is trading 1 Share, like they should be until they are consistently profitable, then a cash account allows them to trade 1 share and Day trade as well. 

Hariseldon
19:47:30
I mean, I get it, it is frustrating to spend hours every day and you are trading a paper account – it amounts to nothing, and then you spend even more hours and you’re trading 1 share – AAPL goes up $4 with a huge win for your trade and you made…..$4?? That is extremely frustrating.  But honestly, unless you are taking out profit every week or month consistently, using the same base amount over and over, there is no way one should be doing more than that.  I do think a cash account works well for trading 1 share.  
However, that is not reality and most people aren’t going to do that, even though it dramatically increases your odds of being a successful trader, so given that – I also agree with @Shiv – if you notice @Dave W frequently swings his positions – and you will see him constantly say “taking profits in xxx from overnight” – PDT does not stop one from finding and executing on those trades – in fact, it encourages it – the only difference would be a smaller position size.   Still there is no doubt that @A man is correct in saying PDT makes it much more difficult to trade, and @Andreas is also correct in saying that you have to not let it impact your mindset.   

Dave W
20:37:53
Regarding getting your wife on board with your trading business, I have never met a successful trader who was married or who had a significant other who was able to be successful without their support, not active participation, but support and belief in their partner. You are going to hit some vary rough drawdowns and emotionally draining periods during your trading journey. Without their support you will be unlikely to make it. Not trying to be a downer but want you to know what to expect.
Shark
21:19:02
I think you can go without telling your wife if you don’t risk anything that effects your families day-to-day life. But as @Dave W your going to have some drawdowns. It took a while for me to tell mine because she doesn’t understand money (no offense to women) she just came from money and has never had to deal with finances, so if I say I’m risking $500 on a trade her mind thinks of it as “well we could use that money to buy a new kitchen table” or “update the garden”, she only thinks it makes sense if you always win money. So I didn’t tell her for a long time because I didn’t want her to pull me off my trading. Overtime I did let her in little by little until now she understands the risks that are involved and it is much better feeling when you are both on the same page and not trading finances behind closed doors.

Hariseldon
14:16:07
All that matters is the likelihood of a Recession – if there is one, then stocks are currently over-valued given the hit to earnings that would occur – if there isn’t one than stocks are fairly valued right now.  On the one hand you have excellent jobs, manufacturing, deficit numbers – all of which makes a Recession very unlikely, and on the other you have high inflation, tight job market (meaning rising wages) and a contracting GDP (which suggests stagflation).  Each argument balances the other creating an economic forecast stalemate, which is why you see the market stuck where it has been for so long.
TheProfessor1970
14:17:54
Hariseldon wrote:

All that matters is the likelihood of a Recession – if there is one, then stocks are currently over-valued given the hit to earnings that would occur – if there isn’t one than stocks are fairly valued right now.  On the one hand you have excellent jobs, manufacturing, deficit numbers – all of which makes a Recession very unlikely, and on the other you have high inflation, tight job market (meaning rising wages) and a contracting GDP (which suggests stagflation).  Each argument balances the other creating an economic forecast stalemate, which is why you see the market stuck where it has been for so long.
So sell premuims. 

Hariseldon
14:18:40

@TheProfessor1970 I have been – like crazy

Fox
14:18:58

Premiums pay the bills in 2020

Hariseldon
14:23:37

@EE I hold the probably very unpopular opinion that the Market is actually one of the few rational actors out there – It is in fact so rational that we see it as irrational – the imposition of regulatory control to push down overt greed aside, the market is a pure representation of supply and demand and while the story sometimes gets blurry, when you zoom out it always becomes clear.

Fox
14:23:52
be careful if you are selling premium now because it is an exceedingly crowded trade and history shows that volatility moves in clusters (i.e. high vol begets more high vol). short vol on SPX has less structural edge every day that people pile into 0dte and pricing becomes tighter. the realised moves have actually outpaced the implied moves since mid June. outside of SPX there are still many rich pockets of premium in liquid options on individual RS/RW names which dont have the same size as SPX so intitutions dont play there
Hariseldon
14:25:04
I’ve been posting all my premium sales on Reddit – but as I have mentioned I only sell premium on something i want to get assigned – my goal is to build up enough credit in premium to significantly lower the cost basis, but in the end, I hoping for the stock.

Pete
16:11:13

Pete
16:14:40
Andreas wrote:

@Izzy Yes, difficult, but it’s doable… My impatience where I entered longs and shorts at the wrong time was the problem for me… If I had waited another 5 minutes, I would’ve been gold on both AAPL long and NVDA short… 5 minutes is all it takes to go from serious money to hoping for a comeback, and leaning on your thesis, and sweating it all

If you are having issues with the timing of your trades ask yourself, “Why is it critical to enter right @#$% now.” It is ok to have stocks on your radar, but why right at this moment. Also ask yourself, “Can I  scale in?”

Pete
16:17:38
When you look at the SPY chart above, there was no critical juncture for entering a trade based on market movement before the FOMC minutes. The market had zero pace and all of the 1OP cycles were benign. The market was trapped in the first hour range. That means that all entries before the FOMC minutes had to have something super compelling in the underlying stock. 

Pete
16:31:02

@Amaya_trade The LEAP strategy depends on your (not Hari’s) market opinion longer term. We know Hari thinks it is a good time for the strategy. You also need to identify how much risk you (not Hari) are willing to take in the next few months. Hari is using a strategy where the cost of longer term calls are offset by selling shorter term calls agains the position. This would be a good time to read up on the strategy and to get familiar with it.  

Pete
16:36:06
If you see one of us taking a position, of course we think it is a good time to enter a trade. That is the only reason we would be taking it. Especially for swing trades in this volatile market, the better question is, “Do I feel it is a good time to take these trades.” If the market stages another leg lower are you comfortable with the risks? Ultimately, you are the one who has to manage the position. 
Pete
16:38:49
I am not questioning Hari’s market opinion. When I see posts of this nature it screams… reassure me that this is a good trade. You’ve already told me why, but tell me again. Very important for you to do the analysis on your end.
Hariseldon
16:41:47
On the LEAPS I am using a very specific strategy based on analysis I did where I ranked the stocks, I have a requirement in the amount of premium I can bank on those LEAPS and a method of monitoring them – plus rules on when to close them – there are most certainly not to be followed.

Pete
16:41:24

@Senthu You are trading the first 30 minutes in a directionless market

Hariseldon
16:43:44

@Senthu not sure why you closed CRISPR, seems to still be over the SMA 200 to me….either way SPY was directionless, doesn’t matter if it is 30 min or 3 hrs after the open, it just wasn’t a good time to trade

Zippy
16:48:21

@Senthu On TDOC, you had an opening high and then a swing low, but never a higher high, so there was not even the hint of an uptrend, plus the D1 is nothing but a range near lows and the opening break of the D1 range high failed. 

Hariseldon
16:49:09

@Amaya_trade look through my trading journal that is why it is public ,  see the stocks I chose and look at the their charts and the market together

Mister-Bin
16:50:17

@Senthu, the “wait 30 minutes” is just a default to help newer traders get their market bearings, but in reality it could take a shorter or longer time for the market to “show its hand”. Just waiting 30mins will not guarantee a solid trade

Hariseldon
16:53:11
Senthu wrote:

Thanks guys, I closed one because of fear of loss. What should I be doing next to improve?
Read the post about how to deal with Fear of Loss?

Hariseldon
16:53:19
It is all right there in the Wiki….
Zippy
16:53:51

@Senthu On CRSP the highest point of the D1 triangle (6/9 high of 75.42) that was broken upside offered a pullback entry between 10:10 and 10:20 ET, but it failed to hold and the M5 uptrend broke down. That’s the intraday picture. D1 for swinging it is still intact.

Hariseldon
16:55:16
Closing trades out of Fear of Loss either means your position size is too high or your confidence/self-esteem is too low.   You either can’t take the idea of losing on a trade, even if it is just one share, and that is a deeper emotional issue, or you are using too much money that you can’t afford to lose.  Figure out which one it is first.
Senthu
19:03:30

@Hariseldon I traded a 40 Euro position. Its definitely a low confiden/self esteem issue. I always struggled with it growing up poor and being bullied thourghout my life. When I tried to make this better financially, things happened(like Covid) to destroy my efforts. And these were things I couldnt control and I didnt know how to change it. I finally managed to get a job last year which was limited to 1 year, but still got a bully of a boss. Now am being let go after contract end and am trying to find a new one. I am more confident than before but definitely not confident as a financially stable person. 

Hariseldon
19:11:36
Senthu wrote:

@Hariseldon I traded a 40 Euro position. Its definitely a low confiden/self esteem issue. I always struggled with it growing up poor and being bullied thourghout my life. When I tried to make this better financially, things happened(like Covid) to destroy my efforts. And these were things I couldnt control and I didnt know how to change it. I finally managed to get a job last year which was limited to 1 year, but still got a bully of a boss. Now am being let go after contract end and am trying to find a new one. I am more confident than before but definitely not confident as a financially stable person. 

I hear you – well know this – all new traders and when I say all I mean everyone gets their ass-kicked by the market at first.  You are going to get knocked around, and you are going to lose a lot of trades.  Part of being a successful trader is in how you come out the other side of that.  Now the lessons taught here and that are written in the Wiki will certainly save you money, at the very least it will prevent one from having a full account blown apart, and it should also reduce the amount of time one has to spend getting whacked upside the head by the market.  BUT it does not eliminate it and that is a good thing – because this is the time when you learn from your mistakes, you get back up and you get better with each trade.  Because the market doesn’t give a shit if you are cocky or insecure, bullied or the bully – it is all the same to it.  So do not see those losses as defeat, they are lessons – and like all lessons you need to learn them.

Hariseldon
19:14:15

@Senthu hell sometimes I reread the Wiki and I wrote the damn thing – always a good idea

Hariseldon
19:23:02

@Senthu and btw – there was a point when I lived in a car, got up in the backseat, no breakfast and went to school where I was about as nerdy as you can get (I just needed a pocket-protector).  So as a kid and all the way until college I was a broke nerd, so I get it – but even then, with my head down into science books wearing hand-me-down raggedy ass clothes, I never for a moment doubted that at some point I was going to be more successful than any of the other kids around me.   So I will tell you this – confidence is everything, and you need it – especially in trading.  Someone said earlier that I trade fearlessly – perhaps, but it is only because I trade with confidence.  I am doing a public challenge, in front of god knows how many people, where I have to hit insanely high returns – but I agreed to do it because I know it can be done and I know I can do it. You can read the Wiki over and over, but more importantly you need to find your confidence  wherever you can get it from, but you need to get it in order to trade successfully.

Amerikaner
20:02:10

@Senthu Look into Discipline Equals Freedom by Jocko Willink.

Russ
17:00:22

@Pete Any feedback on swinging DE short? I entered today because it made a 52-week low and has been relatively weak to SPY on the daily, and was weak intraday at time of entry. It moved against me during SPY rally but didn’t break any significant technical levels to invalidate the trade (e.g. didn’t break HOD when SPY did) so I am holding overnight.

Pete
17:03:50

@Russ DE  still looks like a good short to me. It has been weak rel to the market the last two weeks. It is making a 52-week low when the market has staged a nice bounce in that time. 

Pete
17:14:55
I posted that RKT  looked good 5 min after the open and it did. Things soured quickly. It helps to know a little something about the company. In this case it is interest rate sensitive, and it was rallying with TLT. In fact, if you overlay the two symbols you will see a very tight correlation.
Pete
17:15:12

Pete
17:18:19
I am going to take down the TLT  chart. Just wanted to make a point that it is important to know what is driving the stock. 
Crux
17:19:32
My guess would be TLT makes more sense on a daily basis since the current issue revolves around interest rates
Pete
17:22:35

@Crux Yes. TLT is more important on a D1 chart. Unless it is breaking key technical levels on D1, the market does not typically pay too much attention to the intraday movement and the price does not change much. Today’s move was big for bonds and we are likely to see follow thru selling in bonds after that bear engulf and possible D1 bear flag (yes my alerts are drawn).

Pete
08:13:51

ExpatTrader wrote:

The 1OP on the 29th was not extremely helpful to read the price action of the SPY imo, is there something I’m missing? All I can see is that the price action was bouncing off that key 381.81 level and returning to it for the first hour. The 1OP could not keep up with the fast changes in direction and magnet of price action to the level. I am assuming a lot of people don’t trade when there isn’t alignment, but is there some other way to read the 1OP during this type of price action?
Read my market comments from 6/29 and look for the annotated chart I posted. 

Pete
08:14:28

Pete
08:14:48
That is how Fri played out.
Pete
08:29:36

@ExpatTrader Wed was a light volume pre-holiday trading session with mixed overlapping candles and we were trapped in the first hour range the entire day. That is a horrible set up for day trading. It is like trying to fly a kite when there is 0 mph wind. There is nothing wrong with the kite. Context is critically important and that is why I am spending time on these charts each day. 

Pete
08:32:38
Friday you had one little breakout you could have traded in the middle of the day. That was your window and it was a 30 pt move.
Pete
08:33:58
I would not have played the late day bullish div. If you had the right stock you could have tried a lotto but I would be wrapping up the week at that stage. The mixed candles near the hod and the prior day high would have kept me sidelined with an hour left in the quarter
Pete
08:36:01
Is there a lag? No. We are collecting data. The day is just starting. 99% of the volume before the open is garbage. It is not worth collecting or calculating. 
Pete
09:27:06

@ExpatTrader 1OP will work better somedays than others. The variable is overall market conditions. It is critical to get the context of the day. Today is likely to be a shitty low volume day. I hope I am wrong, but those are my expectations heading into it

Pete
08:34:57

@LooktotheLeft Pre-open gainer/losers is the only search running before the open and it start 60 min before

Pete
08:37:14

@LooktotheLeft Take a deep breath on the open, get yourself a fresh cup of coffee and when you return you will have search results. I can’t stress not trading the first 30 min strongly enough. Your opportunities will come. Be patient

Pete
10:55:01
Every trading day you MUST have some concept of what to expect from the market. Your opinion needs to have some basis and then you have to formulate your game plan. That does NOT mean that we are inflexible. We watch price and we look for opportunities. Today my opinion was based on the fact that we are coming out of a holiday, the action the last few days has been choppy, we tested the lod from Fri and there is news pending the rest of the week that traders are likely to wait for. All of those factors told me to expect a slow day with two-sided movement and little to no pace on light volume. If you don’t conduct this analysis, you start everyday expecting perfect trading conditions. You jump on trades early and then you wonder why your trades are not performing.  
Pete
10:57:54
Today there were some good stocks you could have scalped, but the operative word is scalp. You are not looking for big sustained moves.

Fox
10:59:24
when tech offers rel str at the open, and high beta tech offers rel str within that already strong sector, whilst its natural enemy sector energy is weak… high conviction long tech/short oil, be ready and hit it hard

JGregLive
17:14:27

@Andrew1 I can give a little color on this as your annual and monthly goals can be broke down to the “day”.  However most days are not created equal.  Sometimes you hit that goal early, some days you never hit it and there WILL be red days.   Take what the market will give you.  Some days its generous, most days it isn’t.  It’ll all average out in the longer time frame…

Hariseldon
17:23:48

@Andrew1 I trade if there is a good trade available – I don’t look at whether or not I hit the goal for the day – if the environment is good for a trade and I see one, I take it – 

Hariseldon
17:41:11

@Andrew1 not – I would not – I would trade half size if the market conditions suggest I should but not because I reached my daily goal.  You should not be looking at your daily goal – you should be keeping a journal online, and then looking at your win-rate, your profit factor and number of trades a day – if you put in your monthly goal, you will see what you need for those three metrics to reach it – and as look at you are on track on each of those you will hit your monthly goal, but looking at the goal on a daily basis is not something any full-time trader I have ever met would do

Hariseldon
15:54:22
SPY Weekly Options have continually been underpriced to its’ ATR.
Weekly ATR has doubled since September from $9 to $20.
A weekly ATM Straddle or OTM Strangle on SPY would have paid off almost every week during that period.

Hariseldon
17:23:09

@Joao there is a post in the Wiki on OBV and how to use it – like I always say, if you have a question, chances are there is a detailed answer in the Wiki

Hariseldon
18:15:01

@Joao you are looking for divergences between the OBV trend and the price trend

Hariseldon
18:15:30
that is sometimes (but not always, like with anything) an indication of a potential reversal 
Hariseldon
18:18:13
Very low volume on Futures (as one would expect), I wouldn’t read too much into the price action one way or another 

Fox
04:29:13
Hariseldon wrote:

“I Am Still Not Profitable – What Am I Doing Wrong?”

Truly honest thoughts that I hope resonate with members of this room. Learning to trade is simple. Trading for a living is extremely difficult for reasons Hari mentioned. I would just like to “gently” remind members that when you have your first green week, that is not the time to buy a big screen TV and family holiday, nor even to post about it in this chat room. Coming in learning the 1op method for 2 weeks having a big 10% day and thanking everyone for changing your life, then disappearing 2 weeks later without a trace… it hurts to see.

Fox
05:32:56

@TheSwoleTrader totally cant agree more! you just find yourself after 2 years just flat out not buying big green candles or selling big reds anymore, foregoing a long temptation in a weak market that is about to bearish 1OP cross at pdh thinking “wow was that really me piling into longs up there before?”

Fox
05:35:42
then even after progress, you still make new kinds of mistakes and lessons and deal with pressure from increasing size. its an eternal quest for self-improvement. i got my best results by simply cutting out “sugar trades”. like weight loss using the best trainer & plan but without removing crap from diet is still doomed 

Hariseldon
13:21:50
I think I’ll do a post on Exotic Options – Pete or Dave (or anyone), have you encountered or used these before?
Hariseldon
13:44:56
For example – imagine you have a $100 Strike Put and you bought it when the stock was at $100 – it expires in a month.  Over the course of the month it dropped down to $88 and went as high as $105, and on expiration date is sits at $101, about to expire worthless.  You didn’t take profit or a loss at anytime during the month.  But on the date of expiration, you get to use the “lookback” function – which allows you to cash it in at the best price it was at any time during that month (which would be the $88), so your option which was worthless is now worth $15 (the price it was when the stock was at $88) and you get that credit.  These are Lookback Options – which cost a higher premium than regular options obviously, but are one of the many Exotic Options Financial Engineers come up with for those that have the money to use them.  Nothing really that pertains to the way we trade, just a curiosity and something for the sake of knowledge (i.e. knowing what is out there).
Hariseldon
22:05:27

@Elephant Let’s say in that example above the buyer paid $10 for that option – if the stock never drops below $93 they would probably lose money. 

Hariseldon
02:00:49

@Marcel as I have said many times and wrote in the Wiki, specifically in the 10-Step Guide, it takes two years minimum to learn this – and that is if you follow the steps – spending months reading/learning, then months paper trading until you consistently hit milestones and then more months trading only 1 share until you repeat those milestones month-after-month.  So to ask yourself, “Can I do this?” Well that is like asking if you can pass the Final Exam of a class that you only attended 25% of the time.  No – you probably won’t pass the class.  But could you pass? Of course .

Russ
08:40:12

@Marcel I would recommend reading through this post, and considering buying the book and really reflecting on it as you look to jump back in. The Daily Trading Coach summary.

Zippy
09:10:09
Marcel wrote:

Hi guys, after some pause I think I’m ready to jump back in. I just wanted to ask how to cope with emotions. A lot of times to me trading seems hard and it is hard extremely hard and sometimes I think can I really do this ? But deep in me I know I want to do this I want financial freedom and better life. Not college or any other job seems like something that I would want to do.
Almost everybody would like financial freedom and a better life. You’re attached to the myth of easy money in trading. Once you’re comfortable with a regular old job for attaining your financial freedom (most everyone I know who is retired with their better life did it via a regular old job), you’ll be able to handle emotions in trading.

Hariseldon
12:41:20

@tf2 that is what the chart and candles are saying – but what is the story – Here’s what I see – twice now we had good economic reports, yesterday and this morning – but yet the market did not pop with them.   That suggests either – A) If those numbers were neutral or bad that we would have seen a serious dive, or B) Buyers are cautious, looking to see if they are getting the absolutely best price they can before engaging – Support is holding and every long Red bar is retraced, which tells me that if there is going to be any breakout to this range it will be to the upside – however, one could easily see a scenario of a downside break – that is not what this story is telling me, but that doesn’t mean it isn’t there.  So this story has me neutral to bullish, and on the lookout for a break to the upside on SPY, despite the low volume.   I trade that story until I see a different one emerge.    If I see a change to it, I don’t hold on to my previous narrative and immediately switch to the new one.  But that is how you look at the market as a story.

Hariseldon
16:24:52
st0rm wrote:

@Hari, question on the NVDA short at 2:54EST. The ticker was weak on the day but had RS and 1OP wasn’t doing much and SPY was still climbing. What tipped you off to go early – was it the engulfing red candle bouncing off VWAP?
SPY was going to hit some resistance there – I did not think it would get through on the first attempt – so I wanted something that would drop with it quickly – notice I only used 200 shares which is 60% less than normal size

Zippy
17:47:32
st0rm wrote:

…question on the NVDA short at 2:54EST. The ticker was weak on the day… 
The first break of a trendline in a defined trend (like NVDA at that time) tends to revisit the price where it broke the trend line and can often retrace the entire move and make a new low. So the price level where it initially broke the trendline upside was $145. if you shorted around 2:54pm, you had a minimum $1 of likely (not guaranteed) profit potential for around .50c of risk.  

ExpatTrader
06:58:34
I bet a lot of people have this: You have a strategy that works. You start thinking about how you can make it better. You start incorporating more and more ideas from other people, and somewhere along the line, what you’re doing doesn’t work anymore, and it’s almost like your mind has been erased. This is why it’s so important to take excellent notes on the process of what you’re doing. If you start to slip up, you can just go back and shift to a previous mindset, and try to take what worked from what you learned trying something new.
JayP
07:00:37
ExpatTrader wrote:

I bet a lot of people have this: You have a strategy that works. You start thinking about how you can make it better. You start incorporating more and more ideas from other people, and somewhere along the line, what you’re doing doesn’t work anymore, and it’s almost like your mind has been erased. This is why it’s so important to take excellent notes on the process of what you’re doing. If you start to slip up, you can just go back and shift to a previous mindset, and try to take what worked from what you learned trying something new.
Very sensible and I completely agree – I’ve started journaling all my trades, and the strategy breakdown for each one, and I’m trying to make sure i make it clear when to exit – especially if it turns against me (stubborn loss holder)

Auto
07:04:51

@ExpatTrader that is exactly me. I was very successful at the beginning of the year but then I took some large losses due to my swing trading and not cutting those losses early. I then realized that I would prefer to just day trade exclusively especially in this market and I started to lose sight of what I did to be successful and ran into a big slump. Now I feel I’m getting more to back on track. It’s frustrating as hell but I’ve have only been trading actively since April of 2020 so I should cut myself some slack. 

Auto
07:08:40
Most successful when I just use 1OP, price action, and technical analysis to trade. Keep it simple is what I think 

Pete
07:19:26

Cashgreen wrote:

Hey,  I LOVE your guys system, I was curious tho, I always hear this term “price action”
I am about to write my first article on price action. You can get a little taste of it in the Horizontal Support and Resistance article I posted. I will write extensively about price action in the next 6 mos. How you get from point A to point B is very important. https://oneoption.com/the-system/market-first/long-term-technical/horizontal-support-resistance/

Pete
07:26:56

@Electric Surfer The articles follow the systematic approach I use. It could one day be a book, but the online version will always be better because I can keep it current and add to previous articles with new examples. We are also archiving my daily charts that I post in the room in a special post.  

Pete
10:03:14
DELL  is a great short. I will post a chart. It has room to drop!!!
Pete
10:05:10
If you are looking for a swing to short, DELL would work. Go small to start and gradually scale in. This does not have to be all or none. I would like to see better volume on DELL, but the chart is good.
Pete
10:11:31

Pete
10:11:51
Lots of checkboxes marked on DELL 
Pete
10:18:46

@ExpatTrader Give it a little time. See what the bullish 1OP cycle does and how DELL reacts. If it retains rel weakness and SPY bounce is shallow and brief, then put the first leg on

Pete
11:15:54
The longer term D1 chart of SPY for starters. 1. The bounce off of the lod has mixed candles with overlap. That is a sign of weak trend strength vs the stacked red we saw early. 2. 1OP has a bearish cross pending. 3. we have seen nice ranges during the day and those ranges are established early. 
Pete
11:16:43
Does that mean I will get the pattern I am looking for? No. If we blast into the gap, I will adjust my expectations and I will start looking for some longs. 
Pete
11:19:20
We are two hours in with no trades and that is fine. If the market bounce was meager, we would have traded much earlier. That did not happen so we are still waiting to see where buyers are exhausted. The key is to patiently wait for your set-up. If you get the market pattern you want, it will yield a few high probability trades and you will make your money without forcing a bunch of marginal trades
Hariseldon
11:28:41
This is the move I mentioned – this tells me that the opening drop was in fact a necessary test of support which gives bulls further confidence to act on the bullish economic numbers 
Pete
11:38:07
You can look at the move today and think “I missed two nice moves”. I would not have changed anything. I did not want to chase the opening gap and go. If I would have done that, I would have been scrambling to cover trades on this bounce. I could think that I missed the bounce. I would not trust a bounce with overlapping candles and a strong D1 downtrend with a bear flag. The reality is that I have not lost money. I have good information and I am being prudent and waiting for my set-up.
Hariseldon
11:48:39
Why did I choose REV  as my only trade so far?
With SPY testing support, and capable of going either way I wanted a stock that was independent of the market – not subject to any dramatic shifts.
REV has high volume and support at the SMA 50 with room to run.
No matter the outcome – That is why I chose it.
Hariseldon
11:50:13
I want to give my thinking behind the trades and decisions I am making 
Hariseldon
11:51:09
If you notice they all relate to the market in one way or another – whether it is the overall thesis on the market, or the stock in relation to that thesis – the market plays a central role in every choice
Dave W
12:04:10
As i mentioned the other day i dont take a lot of trades since i only take the very highest probability setups  it takes a lot of patience and ignoring FOMO bit for me i find it the absolute best way to trade
Hariseldon
12:13:51
Remember – the more the market is driven by acute external news (e.g. Inflation #’s) the weaker levels of Support/Resistance become –
Hariseldon
12:13:51
Remember – the more the market is driven by acute external news (e.g. Inflation #’s) the weaker levels of Support/Resistance become –
Hariseldon
18:04:20

Hariseldon
18:16:03

@BennettN it depends – although, yes – traders, and especially newer traders, have a habit of over-complicating their charts, scanners, indicators, methods, well….everything.  Not that this isn’t complicated – it is, in fact so much so that there is no reason to over-complicate it.  I posted this because I want people to start thinking of the price action as a story. When you see it as a story it makes a lot more sense.

Pete
13:18:19
Sometimes you look like shit and you miss moves, sometimes you get what you are looking for right away and you call it quits mid-day. The key is to know what you are looking for and to wait for that set-up. Even if you never trade, you are true to yourself and you psyche will never be damaged. 
Pete
13:20:58
There have been days when I am trading where I missed an initial move and I did not want to join it all day. I eventually traded a bounce and made my money in the last 90 min. There are days like yesterday where there was chop most of the day. We did not get decent momentum either way until late in the day. (1OP started to have nice crosses). 
Pete
14:58:10
Sometimes you have to wait all day for your set up. If you know what you are looking for and you are patient, 99% of the time you will get your window. Forcing trades and chasing stocks is not the way. 
Pete
14:59:17
Did I feel like an idiot for missing the opening move down? No. I did not want to chase. That approach probably saved me money. 
Pete
15:00:04
Did I feel like a fool for not trading the bounce? Nope. That bounce was on borrowed time given the D1 SPY chart and I did not expect it. 
Pete
16:10:02
Stick with your game plan. If you are trying to get your win rate up you should not trade the first 45 min. Sometimes you might not trade for a few hours. Eventually you will get something you can sink your teeth into and you will know it is a good trade because all of the tumblers will line up. 

Hariseldon
16:25:23
Today you had: End of Quarter Rebalancing – Economic numbers that showed Inflation at the very least isn’t “runaway” Inflation, with a slight downtick, that may seem small, but when you consider this is the first reversal in a long time it is significant, you had a strong jobs report and even stronger report of household savings (which is a bit misleading as it also shows that people aren’t spending), which overall slightly reduced the odds market on a Recession.
It is all about whether or not there will be a Recession – If there isn’t then stocks are fairly valued and a good buy, if there is going to be one then stocks are over-valued as upcoming earnings will be lackluster – That is the whole ballgame right now.  
Hariseldon
16:26:11
Sure there are a million other things, but at the end of the day the more likely Institutions think that there will be a Recession in the near future, the more sellers will be in control, and the less likely the more they will buy.
Pete
16:27:54

@Hariseldon That is true. The impact of interest rate increases will not be felt for a few months. It will take time to filter thru. We also have not seen the end of the rate hikes. That is why I believe Asset Mgrs will be pretty passive until they have that info

Pete
16:29:25
I don’t believe that we will see a rally on good econ numbers (we’ve already had them), but I do feel that any weak numbers will do damage while we wait. 
Pete
16:30:20
The major news  that we have between now and the Sept FOMC are earnings (2 weeks  from now) and econ releases
Pete
16:31:06
We have to watch the earnings guidance. it will be critical and it will set the tone. It could be good or bad. 
Hariseldon
16:34:26
@Pete Interestingly – MU just lowered their guidance for next quarter but yet the stock bounced back up after the initial drop from earnings, which makes me wonder – how much is soft guidance baked into these market drops? Because it sure feels like that even though MU lowered their guidance they didn’t lower it as much as it seems the market thought they would.
Pete
16:35:07

@Hariseldon Yes I think it is going to be case-by-case. Tech has been hit harder than the rest. 

Pete
16:40:39

@jbtn I try to keep current on news. I follow price, but it is nice to know the backdrop. I read this morning that German unemployment ticked up because of immigrants from the Ukraine. They are competing for jobs. 

Pete
16:43:01
That is why I wrote the Market Long Term Fundamental analysis section of The System. You should know what is going on in the world. Today you needed to be aware of an econ release after the open and there is one Fri as well 
Pete
16:43:52
The key is to NOT get blindsided. 
Pete
16:45:12
If you read a headline “Russia Defaults On Bond Payments” your reaction might be very bearish. However, when you learn that they only have $2B in payments the rest of the year, you know it is not impt
Pete
16:47:22
I say it fairly often, trading is about awareness. You need to stay informed and then you watch price. Once the day starts I do not have anything on. No radio, no news feeds, not TV and thankfully no twins (at this stage of my life).
Hariseldon
23:39:30
Either way I will trade what I am given , but it would be rather bleak if tomorrow is red – The Econ numbers were some of the best we’ve have in months (albeit the bar for that standard is very low) – the end of quarter rebalancing occurred without any real drop, and we are entering July – if that can’t turn the market green then yeah – it is going to be very bleak indeed

Hariseldon
20:01:43

@wbachand86 yes, it would, I see it visually when I look at the M5, so that is why I didn’t draw the line – by looking at it, I can see where it is and where the support comes in off it.

Hariseldon
22:12:50
If you draw an upward sloping ALGO from the bottom of 6/17 to the bottom of 6/29, it puts Resistance exactly at $380.65, there is also significant Resistance at 3800 on futures.  Today’s high? $380.66.  It will be interesting to see if overnight futures is able to breakthrough that level and give us a gap-up tomorrow morning.
Hariseldon
22:21:50
Futures are definitely a bit more active in terms of volume than usual, especially given the upcoming holiday 

Zippy
09:25:12
BennettN wrote:

Btw I tend to get caught up in the “rules” of a trade and I’m not good at the art/feel side of things, so that could be where I’m unsure

Be very very careful of trading by “feel”. The worst thing I ever did as a trader was switch to a platform with a price ladder and I would get sucked into into the highs and lows of price moves because it “felt” like price was going to do certain things. Sometimes it worked and human selective bias ensures you remember the successes and forget the failures. I still use a price ladder to place orders but it took me years to stop focusing on it and keep my eyes on the price charts. Great stories are told when you stay focused on the charts. And if your strategy is based on the close of bars, DO NOT CHEAT. The most bullish or bearish-looking bar can close with a totally opposing signal. 

bobcla
09:27:53
Sorry, hit enter too early — but I’ve found this is hugely important for me. I basically never regret waiting for the close. I frequently regret not doing so

Fox
13:26:53

@Electric Surfer 

some overnight exposure working for me has been wide slightly otm put and call butterflies playing the reversal on QQQ or SPY with 3-5 days out. build them at least 5-10 strikes wide, slightly OTM when market is at opposite range. they retain theta much better than straight overnight CDS or PDS
Fox
13:29:22
@Andreas i wouldnt prioritise that unless you are comfortably making your daily gains in the day trades. this is the highest edge right now, way higher than any complex options spreads for someone learning them. its a luxury trade, like step 12 out of 10 in making steady income
Fox
13:36:10
@Andreas i hear you, i love learning new tools always. yesterday had one of my best days ever in futures. i have so many freakin screens and toys, all the tumblers for my broader market conditions said “risk off!” but it was Pete’s voice in my head “big red candle through there the prior day low, thats the short” that made me the money
Hariseldon
13:36:11

@Andreas in order to do a butterfly you need to truly understand what they are and why they can be profitable.    Briefly – you have a long Call – let’s say it is 100 Strike, and it cost $5, so if the stock hit 125, that call is worth $25 at expiration, you made $20, right?  But then you sell 2 125 strike Calls for $2 each.  So now the whole thing cost you $1 – and if it hits $125 exactly, those calls you sold would be worthless, meaning you keep the $4.  So now if it hits $125, your long call is worth $25 minus the $5 you paid, plus the $4 you got from the 2 calls you sold – so you are up $24.  Finally you get one more long Call, this one at strike 150 and it cost .40 – If the stock finishes at $125, you lost the .40 from that call, and you made $23.60 total.    The entire thing cost you $5 for the long call, minus $4 for the 2 calls sold and plus .40 for the other long call – So $1.40 for the whole thing.  And you made $23.60 on the trade – which is a 16.8 to 1 return.  That is best case scenario    Plug in different scenarios of where the stock could finish and you will see the different returns.

Fox
13:37:29

@Hariseldon precisely what makes it fun but ultimately a “luxury trade”, has no place in the bread & butter playbook

Fox
13:44:08

@Andreas i am an options nut & have lots of quanty toys, and i promise that the most timeless edge that can never be taken away is confidence to scalp .50 on 3000 shares something that’s in play using price action. everything else that works also includes the game of staying ahead of the algos before they find the inefficiency in the market that offers the (temporary) structural edge

Dave W
16:04:44
range bound days are very difficult  still have to find the highest probability trades and take early profits if you get them. I traded very little unable to find very many high probability trades   took GIS long  and EA & CCL short   took a quick profit in SIGA   so 1-0 for the day 
Pete
16:04:59
@Jerson. Yes bear markets are more difficult to trade for most people. The main reason is they are not comfortable shorting. It is almost un-American to root against the market. It is also why very few people bet the Don’t Pass Line in craps. They want to join the party, not bet against everyone. The price movement is also a little different. 
Pete
16:25:58

@DnJoe96 Knowing the SPY M5 1OP cycles is critical to what we do

Pete
16:33:08

Pete
16:35:17
The nature of AMD is that it is super choppy. Yesterday was the exception because it had news. When you have stocks like this you do not want to sell on or near the lod especially with the price action it was already showing you today. You had to wait for a bounce. You also should have waited to see what the SPY was going to do during the bullish cycle. If it took off, you could have had a big loss in AMD
Pete
16:43:19
For all traders. When you have light volume, mixed green and red candles with overlap and you are trapped inside the first hour range, it is best not to trade. Those are horrible conditions and the trade has to be super special to get you off the fence. 
Hariseldon
17:07:19
Collin wrote:

Hello chat, looking for some affirmation in my mindset real quick. My logic is this, after one or two hours I can tell it’s a choppy day, meaning I have a lower chance of being directionally correct. However, to me it seems the only place I DO have directional bias is at the top and bottom of the intraday range: I’m always right unless we breakout of the range. This mentality has been working very well for me but is it fundamentally sound? Of course today I was more interested in shorting RW stocks than buying RS at the bottom, but you get the idea
Pete
17:20:57
It is painful when I talk to some of you who are struggling and you are oblivious to the market conditions we are faced with. I spend a lot of time writing my comments and giving you the game plan. One of you is trading SPY lottos. That is a horrible strategy when we are trapped inside the first hour range all day. Those options are ice cubes on a hot Arizona highway. Even worse is when you do not use 1OP to time the trades. 
Pete
17:21:19

Pete
17:39:50
Right now (and I mean right now Thurs, Fri, Tues) are going to be brutally tough days to trade. The volume is light and the market is directionless. There is no pending news. Traders have one foot out the door every morning and if there is no movement they are heading to the links. Many people will leave early for the holiday. Friday will be deadsville. I am only around for 1-2 hours Fri. 

Hariseldon
17:28:10
Issues traders have, outside of being under-educated on method/strategy, is almost entirely steeped in mindset.  Many of you, if not almost all of you, have an immense amount of knowledge now about trading, methods, and strategy.  You have incredible resources to help with that (Wiki, Pete’s site, videos, running commentary, etc.) and many of you take advantage of it.  The issue that can’t be solved with a checklist is psychological.  Whether you are trying to hit a home-run with every trade, or are afraid to let your winners run or to cut your losers early, all of that is from the mental part of this job.   It is one of the reasons we are so strict here and over at RDT about the introduction of new methods – it is not that I don’t think other methods work, in fact just the opposite – I know they do!  I scalp, I use supply zones,  at time I will look at the cloud or BBandwidth, volume profile, all of it.  But I do not post those trades or talk about them. I can go all day about overhead supply, traps, volatility measures, etc..etc.  But that won’t help you.  The way I see it, outside of the informal social aspect, if it doesn’t help you, there is no reason for me to post it.  When traders have difficulty one of the first things they do is search for additional methods or indicators, thinking that will solve the problem.   And here’s the thing – we (by we I mean the Red traders here) have seen it countless times.  Go back a year and this room is filled with different names, but the conversations are the same, everyone asking about one new shiny object or the other.  It just doesn’t work.  You need to fix the real problem, and that is in your head.  Even something like not looking at the market first before making a trade is a mindset issue – you certainly know you should, but you don’t.  Why?  Because you are rushing into a trade, afraid to miss it – focused solely on the M5 and nothing else.  If you were traded in a slow, methodical way there is no way you wouldn’t look at the market before trading.  Each mindset issue is different, I have posted potential solutions to a lot of them, but nothing can be done until you first identify what the issue is and why you have it.

Pete
17:52:32
Last week we discussed selling some OTM puts. That strategy is great right now. RBLX, CRWD, PLTR  and GOOG  were mentioned. All doing good and a nice way to generate some income when the market is in a holding pattern. I would not go overboard with the strategy, but looking for stocks that have a higher low double bottom on D1 in the last few weeks is a great strategy. These stocks did not drop with the market and they have support. 
Hariseldon
18:19:09
Pete wrote:

Last week we discussed selling some OTM puts. That strategy is great right now. RBLX, CRWD, PLTR  and GOOG  were mentioned. All doing good and a nice way to generate some income when the market is in a holding pattern. I would not go overboard with the strategy, but looking for stocks that have a higher low double bottom on D1 in the last few weeks is a great strategy. These stocks did not drop with the market and they have support. 
Last week my wife sold OTM Puts on MRNA SHOP MU FDX ROKU NUE COIN SNOW QCOM GM CI  and AMZN – all expiring Friday.  Only COIN and GM are in danger of being assigned – but as with any Put we sell, I never sell a Put unless I want to own the stock at that cost basis – so I would happy to be assigned – my preference of course would be to collect premium every week and get assigned after I have banked a decent amount on the ticker, but still – each of those stocks are ones that I would like to own.

Pete
19:43:42

@Hariseldon Nice on the naked put writing. Stocks that are showing nice support and rel str should hold up well even if we get a market drop. The price action reveals that buyers are interested here.

Zippy
19:43:18

@DnJoe96  I repeat this a LOT here when people ask about what went wrong with trades and almost every time what went wrong is they entered near the end of price swing and then got stopped out on the pullback (what you called “a sudden reversal”). Try entering on a pullback, as Pete showed you. With your AMD short, enter on the close of a pullback bar to that descending trendline (11:30/11:35), off of which Pete recommended a short on the chart he posted for you. If you shorted the close of either of those bars, you took little heat on the trade. And if you can only handle a .20 loss on a $77 stock, you really need to size down and widen your wiggle room on a trade.

Hariseldon
21:51:58
Zippy wrote:

@DnJoe96  I repeat this a LOT here when people ask about what went wrong with trades and almost every time what went wrong is they entered near the end of price swing and then got stopped out on the pullback (what you called “a sudden reversal”). Try entering on a pullback, as Pete showed you. With your AMD short, enter on the close of a pullback bar to that descending trendline (11:30/11:35), off of which Pete recommended a short on the chart he posted for you. If you shorted the close of either of those bars, you took little heat on the trade. And if you can only handle a .20 loss on a $77 stock, you really need to size down and widen your wiggle room on a trade.

I agree – I think it would help everyone if you would expand on this a bit more? How would a trader tell the difference  between a pullback and actual shift in direction?  I’m sure one of the fears is that one enters on the pullback and then the stock doesn’t recover.  What method do you use to tell difference?

Shaggy
05:49:30
@jbtn – a couple of questions for after your trading hours. Are you calling out the trending EU indices and then capturing those stocks within those indices driving their strength/weakness or are you trying to capture the trend of the index? If the latter, how do currency movements come into play (e.g. UK, Swiss, EU) – do you hedge, or are forex gains/losses part of the edge? I have adapted the RRS indicator to LSE/DAX etc in the past but have not found the same level of opportunity as there is in the US – would be interested to hear if you think your approach has a defined edge or if it is something more experimental at this stage?
jbtn
05:56:44
@Shaggy Hello. Lately I’ve been trying to just catch the indices itself – be it futures or CFD contracts. I do not look at currencies at all. I’ve got 10 indices to choose from. There will be at least one that is utterly weak and will go down (look at Netherlands at open). I’ve also captured stocks  (German stocks mainly), but I am trying to learn trading purely indices right now.
jbtn
05:59:43
Not looking at all into currencies as I’ve got no monitor space and I am constantly switching tabs and trying to keep an eye on around 10 indices. Baseline for RS/RW is /ES futures. Also using other technicals that allow me to identify trends (be it Heiden Ashi or MA’s) – then I can compare many indexes: RS/RW towards ES, current trend (is it choppy? is it pure up? pure down?) and pick something nice.
jbtn
06:01:35
Also if I am trading lets say two major indices (so that’d be UK, France and UK – others are minors for me). I also keep eye on VWAP. Small bounce on DAX and FRA was off off France’s refusal to go below VWAP – there are many small things when looking at those indices that can help in trading.
jbtn
06:02:05
They are intertwined and there are many little things, but RS/RW is the way. Treat an index just how you’d treat a stock.

willbeing
08:43:14

@MikeB All Scanner descriptions are in the manual or visible by clicking the ‘i’ icon when viewing a scanner on the new OS. Pop+ (bull and bear) stocks were on PopBull/Bear the day before and continued to have follow through (trading higher/lower than previous day)

willbeing
09:19:27

@ExpatTrader Regular symbol search is alphabetical I believe. Preconfigured scanners are sorted by $ or % change depending on the scan. This was determined by Pete and his developer years ago and defaults to the same on Pro if I’m not mistaken. Custom Search results are also alphabetical. We plan to implement a sort feature soon to allow sort by % change 

2022-06-28
Mark As Read

willbeing
08:49:08

@Agree… 1OVol is a measure of average volume. The blue bars indicate above average volume when positive (up) and below average when negative (down). The chart area is bound to a range of 200%, and thus bars ‘max out’ when the volume is >/< 200%. This is for practicality: Without doing this, smaller bars would be difficult to distinguish (because they would shrink proportionally to the height of the largest bar) and volume outliers beyond 200% are not treated much differently when trading RS/RW

willbeing
08:55:20

As with everything Pete included in the OS web app, the indicators are meant to provide EXACTLY what we need when trading this strategy, nothing more, nothing less. Average volume is a critical aspect of evaluating price action

willbeing
09:05:49

That said, I admit the elegance of its simplicity is something I’ve gradually understood. It takes time to trust so few tools when there are so many shiny indicators you can find or code, but Pete knows what he’s talking about: Everything we need is in the apps, docs, and community. I don’t mean to sound fanatical here, I just hope this helps other novices struggling to embrace this system: Trusting his word will only help accelerate our learning curve.

Pete
09:21:46

@Agree… Blue bar > zero line = > ave volume. blue bar < zero line = less than ave volume

Zippy
16:32:03

What entices short term stock and futures traders to enter a position? The belief that price will move in their favor at some point and they can take a profit. Most traders enter a position believing that price won’t move too far against them before it moves in their favor. Logically, if you thought you could get a better price on entry, you would wait for that better price. Traders who manage their risk tightly will take a loss when the price movement they expect fails to happen and price instead breaks a key level that skews their acceptable risk/reward ratio on the trade.

Zippy
16:32:33

A losing position is a normal experience for all profitable traders. A loss is not a problem unless you convince yourself to hold beyond the price level where your original reason for the trade no longer makes sense. Attempting to avoid all losses is one of the main reasons most retail traders fail.

Zippy
16:32:47

How do you know when to take a loss? Before you place an order to enter a position, if nothing else you should know 3 things: 1) How much you are willing to risk on the trade, 2) the price area where your reason for entering the trade would no longer make sense because further adverse movement would be more likely, and 3) based on the first 2 things, the maximum size you will trade for this position. 

Zippy
16:33:07

Some traders use hard stop loss orders in the market, others use mental stops, some wait for price action to evolve and exit the trade when further adverse movement is more likely than favorable movement, and some have no idea when and how to take a loss because their belief that price will go to a certain profitable level is so strong that failure never entered their mind. 

Zippy
16:33:19

But even traders with a concrete stop loss or a solid plan can lose logical focus in the heat of a trade. Champion boxer Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” It’s common for traders to move or cancel stop loss orders, or fail to honor their rules for when to take a loss. When this happens, the growing size of an unrealized loss can cause pure fear to take over, leaving the trader with no idea what to do. They may even think “I can’t take a loss here because I’ll lose too much money”. What would cause such an irrational thought? The belief that an unrealized loss isn’t truly a loss, meaning there is still hope price will come back.

Zippy
16:33:35

This can lead to a common scenario that most traders have experienced at least once. They hold a losing trade until the pain is unbearable, and finally take a big loss. Then they watch price move back to their entry level (and sometimes more). A trader who experiences the pain of the big loss followed by the pain of “if only I had held on a little longer” may decide that holding until price comes back will be the way to go in the future. In fact, this strategy can work beautifully when there’s a well-established trend and you’re trading in the direction of that trend, and you’re holding through a larger-than-expected pullback in that trend. 

Zippy
16:34:01

But when trading against the trend, or when the trend reverses altogether, many traders with no exit plan, or who abandon their plan in the heat of the moment find themselves in that uncharted emotional territory where they lose the ability to think rationally. They often lose the ability to see what’s right in front of them as they look for reasons to keep holding.

Zippy
16:34:36

This is why it’s so important to know in advance what you’re willing to risk on the trade and what a failure would look like, which helps you size your position accordingly so that taking a loss with that size and at that price level is fully acceptable to you and comfortable for you.

Profitable trading is trading with odds in your favor and capital preservation (both physical capital and mental capital). You want to be the Casino, not the Gambler.
Zippy
09:22:12

@AriS Long ago when I was beginner, an old experienced trader who had been trading for a living for many years told me to size up relative to the growth of my account. He was a futures trader, so he said trade a single contract until you double your account, then trade 2 contracts, but if adding that size changed how you were trading and you took more losses than expected, size back down.

Hariseldon
09:22:56
Zippy wrote:

@AriS Long ago when I was beginner, an old experienced trader who had been trading for a living for many years told me to size up relative to the growth of my account. He was a futures trader, so he said trade a single contract until you double your account, then trade 2 contracts, but if adding that size changed how you were trading and you took more losses than expected, size back down.

Very very true

Pete
10:12:01
There is so much valuable information that we glean from the first 45 min of trading that it is worth waiting to see what happens. I had an early opinion and it was wrong. The programs know what traders want to see. After 40 min of trading, the landscape looks completely different. Sure, you will miss the occasional gap n go, but those are pretty rare and you will not be trapped by moves like this one 
Pete
16:11:33
The key today and most days is to remain patient. The first 30-45 min are filled with information. Once we knew we were dealing with a bearish gap reversal we knew which side to favor. 
Pete
16:14:38
Getting on the wrong side of a massive move like this early in the day does serious damage. First of all it ruins your psyche. You are watching the market fall apart and you know you are on the wrong side. You look for good exits for your mistakes and there aren’t any. The selling is relentless. If you are a seasoned trader, you recognize you are on the wrong side and you short /ES while you adjust. New traders take longer to get to the sidelines and once they bail they are exhausted and they have lost money. The last thing they feel like doing is to take short positions or look for them. Unfortunately, that is exactly what they need to do.
Pete
16:16:02
So they lose a lot of money and they never recover because they stop trading. The worst thing they can do is to think that somehow they were still right and they start buying bounces. 
Pete
16:16:31
Those are the risks of trading early. 
Pete
16:18:40
Most of you sat patiently to see if we were going to get follow through to that long green bar. When we didn’t, things soured quickly. You calmly realized that your patience paid off and you started looking for opportunities on the short side instead of worrying about how much money you lost on that opening move. As the long red candles continued to stack you could short knowing you were on the right side. The bounces were minor and you were able to stick with the positions
Pete
16:27:34
If you got trapped on the open today, don’t beat yourself up too badly. It is only one day and you can learn from this. Promise yourself you won’t do it again and that there is no trade that you have to rush into during the first 45 minutes. Gather information, get a fresh cup of coffee and plan your first trade of the day very carefully. 
Pete
16:31:52
So if you are ever going to trade an opening gap (highly discourage this), don’t chase it, fade it. First of all you need signs that the gap is going to fill (stacked candles instantly). 
Pete
16:34:29
The reason you can be more aggressive with these is because there is a lot of room to run before the gap is filled (support). Secondly, the low from the prior day could be breached and there is even more room to run. The momentum is set. If you are ever going to fade a gap, you want to fade gaps up when the longer term market trend is down and you want to fade gaps down when the longer term market trend is up. You are getting on the right side of the market.  
Pete
16:35:42
When you chase a gap and go, much of the move has already been exhausted just by the gap itself. How much more room does it have to run? This is exactly the opposite when you fade a gap. 
Pete
16:36:29
Again, this is NOT a practice you should adopt. Waiting for that information the first 45 min is always best. Even on a gap reversal you do not usually know for 30 min that it is going to happen.
Pete
16:39:26

@Snakebight Fade is another term for going against the grain. In a gap up you are shorting (fading) the gap up betting it will fail.

Pete
16:41:32
Today you did not know we were going to be in a full blown reversal until the 3 red candles took out the lod. That was 40 min into trading. Then it was clear we would fill the gap. You still did not know what was going to happen at lod from Mon, but I explained why I thought we would take out that level and why it was not going to be a fake.
Zippy
16:42:23

@Pete has a really nice basic rule about large red or green bars and their midpoint holding. Why is that rule effective? Because if price retraces past a certain point, why not shoot for a full retrace and see what happens, and then if that fails, let’s see if we can close the gap, and then if that fails… Basically this is a Bear market and smart Buyers will wait and see just how good a price they can get once key levels start breaking down.

Pete
16:42:32
When we took out the lod from Mon on 3 stacked red candles we knew this was more than to just trigger sell stops. We had follow through!
Pete
16:43:02
The rest was history and buyers put their wallets back in their pockets

RAK
17:16:03

Yes i was curious how to distinguish the difference between a bearish divergence and a bullish uptrend on the 1OP indicator as well. I was watching it at the time expecting the market to go on a bullish run

Pete
17:19:11
RAK wrote:

referencing the indicator at 10:45am
You don’t even have to look at the indicator. When you see stacked red candles consecutively with little to no overlap you know the trend strength is incredible. That is when we expect to see bear divs

Pete
17:22:02
Pete wrote:

I am not rushing in to buy this SPY bullish cross. We are too close to testing the lod from Mon and after a heavy round of selling with stacked red candles we can expect a bear div. If we spend more than 40 min here, I will be inclined to look for a bounce 

Pete
17:24:32
@RAK. That comment was posted right on that bullish cross you are referencing. We need price confirmation before we trade a 1OP cross. We did not have anything remotely close. The best we got was one little green candle that was instantly reversed. 1OP crossed back down and we got the next leg of the market drop.  
Pete
17:27:11

@RAK All clear? I also posted a chart after the close. The bullish 1OP cycles were whimpy. No market lift. There is information in those cycles. It was a sign that the selling pressure was incredibly strong

st0rm
17:31:14
How do others here decide between tickers with similar setups but big price differences? Today I had to choose between big 200+ tickers like HD and smaller ones like COIN, based on the number of shares I could afford and the movement I expected.
Pete
17:33:11

@st0rm I look at the price patterns D1 and M5. I would always go with the better chart

Pete
17:33:41

@st0rm The more checkboxes, the better my odds

Hariseldon
18:01:12
st0rm wrote:

How do others here decide between tickers with similar setups but big price differences? Today I had to choose between big 200+ tickers like HD and smaller ones like COIN, based on the number of shares I could afford and the movement I expected.
Oh I was going off this – what did you mean by shares you could afford – doesn’t paper trading alleviate that and let you just look at the set up? Sorry – just confused.

Hariseldon
18:05:32

@st0rm you should focus on win-rate and the set-ups first – and then once you have that down, move over to simulating position sizing

Hariseldon
18:20:20
Despite the size of the move – the volume on SPY was at or just below average today – unusual given the magnitude of the drop
Hariseldon
18:23:31

Hariseldon
18:24:13
Also of interest – we have already seen more “down days” in 2022 than in all of 2021 – and more day being 1% or more down since 2015 and the year is only half over
Hariseldon
18:37:14

While today’s price action and subsequent chart leaves no other interpretation but a Bearish continuation – the lack of volume today on such a large move is very telling.

That feels more like isolated panic from the Consumer Con #’s. Bullish sentiment was at a high point starting the week – and most Bulls expected another 3-7% out of this move before we resumed the Bearish trend.  I can’t see a scenario where they just threw their hands up and said, “oh well…maybe next time” – then again I may very well be talking myself into a Bullish thesis
Hariseldon
19:10:28
Obviously all just speculation and while you should form your thesis you need to be nimble enough to change it quickly – and the GDP numbers tomorrow will be interesting, but no matter what the number is, it can be seen as good news or bad – depending on the lens you use.  So the number itself is probably less relevant than the sentiment of the Investing community that wants to interpert it.

Hariseldon
01:18:13

@BennettN I can only tell you what price is for me – it is the ebb and flow of a stock in real time.  There is a cadence to every ticker, sometimes that cadence is continuous (hence when people say they “know” the stock because they traded it so often before) and sometimes it is re-established each day – 

For example, a rarely discussed aspect of trading – the speed in which the price is moving and combined with the tightness of the bid/ask spread.  TSLA for example moves fast with a wide spread, whereas as HD moves slow with a wide spread, PFE moves slow with a tight spread whereas OXY moves fast with a tight spread, you can see the volume on the red bar and green, and the with SPY in the background see bar for bar how the two are moving together, etc.  Technically defined “price action” is the movement of the price over time as plotted on the chart – and reading price action is the foundation of technical analysis.  For me it is much more fluid than that – it is the rhythm of the stock 
BennettN
21:29:12

@Hariseldon Would you be able to explain your thought process for adding and exiting your DDOG trade from 6/24? You were able to turn that one into a win, and I’m positive I would have taken a loss with the same entry. The following things would have spooked me out: SPY compressing, M5 RW on RealRelativeStrength, M5 engulfing candle and HA reversal at 10:25, and not tons of room to D1 resistance. Just wondering how you read it differently. Thank you!

Hariseldon
22:25:38

BennettN wrote:

@Hariseldon Would you be able to explain your thought process for adding and exiting your DDOG trade from 6/24? You were able to turn that one into a win, and I’m positive I would have taken a loss with the same entry. The following things would have spooked me out: SPY compressing, M5 RW on RealRelativeStrength, M5 engulfing candle and HA reversal at 10:25, and not tons of room to D1 resistance. Just wondering how you read it differently. Thank you!

It was a fairly quick trade, I bought it at 10:15, added at 10:28 and sold it at 10:35 – you can’t let a single red candle spook you out of a trade, unless of course it is a news driven reaction

Hariseldon
22:34:51
Kelly G wrote:

It feels like more downside. 
@Kelly G if that is your thesis that is fine – even though the admonishment of “Trade what’s in front of you!” is used often, every trader has a bias on where they think the market is going to go.  As long as you have some solid reasons behind that thesis and most importantly – you are willing and able to change your trading when presented with counter-evidence.  

Many time people have a thesis on the market and they become so stuck to it (I am guilty of this as well) that despite evidence that the thesis is wrong staring them in the face, they refuse to change how they are trading.  
Hariseldon
23:00:43

@BennettN since I did not trust the market (which should just be a standing caveat these days I suppose) I increased position size, taking advantage of the momentum the stock had, in order to reach my target profit sooner – and I also did not like that red candle, not enough to exit, but enough to take profit faster.  

But in the end I was playing the price action and felt that DDOG was not going to continue going up – and in fact I exited pretty much at the HOD, and high point since.
Hariseldon
23:43:58

@BennettN I am very much a price action trader – it is one of the only things I like about ThinkorSwim – the Active Trading Ladder – using that ladder I able to watch the price movement second by second – Practicing, using a paper account, on using a trading ladder is excellent training to better get a feel for price action .

Pete
10:56:12
The disadvantage to posting a symbol is that we might not like it. You could be embarrassed for a moment and it might make you sad (or angry). If you don’t post it, you can do the trade and if it goes south you will also feel sad. The upside is that you learn why it is not a good pick and so does everyone else.
Pete
11:00:19
There are a lot of “tender” feelings in here. It runs the spectrum from newbies to Featured Traders. There are many great concepts, but I have to keep everyone focused on the searches we have at our disposal, 1OP and trading stocks with relative strength. Every time that we stray we lose focus. 
Pete
11:02:56
I can’t be in the room much. I MUST focus on content and improving what we have. This chat room was built on Market First, Stock Second, 1OP, relative strength and the edge that we have trading stocks. If I let this chat room drift away from those core concepts it will be ripped apart. I won’t let that happen.

Hariseldon
12:56:54
If one is going to trade this crappy market it requires either an incredible amount of patience or a very quick trigger finger – and the trick of course is figuring out which 
Hariseldon
12:57:42

and if one is going to trade this market is constant pain, well….lol, good luck!

Hariseldon
16:04:52
jbtn wrote:

Hari, why did you call that SPY reversal? As in what was the basis? Just “we’re going to bounce from lows of the day” because of the choppy price action and indecisiveness?
When you are in chop with no real volume or catalyst for a breakout – go by Newton’s third law

Fox
13:27:01
there was a lot of index rebalancing this past week and before 30 June. If yr wondering what happened to IWM today given the lacklustre action on ES and NQ– there are now many more oil names included in the small caps index after the latest rebalancing. So as a whole the Russell is now much more heavily weighted with oil names & biotechs than before. 

Hariseldon
18:12:35
From GS:
Profit margins for the median S&P 500 company will likely decline next year whether or not the economy falls into recession. Our model points to a 70 bp EBIT margin decline next year for the typical S&P 500 company in our economists’ non-recessionary base case, and a 130 bp compression in a recession scenario. In contrast, analyst estimates show the median stock’s EBIT margin expanding by 60 bp next year.
Consensus margin forecasts suggest that earnings estimates are likely too optimistic. Analysts expect companies in nearly every sector will expand margins in 2023 relative to 2021. Consensus estimates are typically revised lower, but our model implies that larger cuts than usual are warranted today. Assuming no change in expected revenues, the margin compression we model would reduce the median stock’s expected 2023 EPS growth from +10% to 0%.
While investors are focused on the possibility of recession, the equity market does not appear to be fully reflecting the downside risks to earnings. The S&P 500 decline this year has been driven entirely by falling valuations, which in turn have moved in line with rising interest rates. As a result, the equity risk premium remains close to where it started the year. While rotations within the equity market have signaled expectations of slowing growth, index valuation does not appear to be providing a buffer for the uncertainty around the path of future earnings.
Hariseldon
18:12:51

Rising borrow costs will also weigh on profitability, though the Energy sector will be a tailwind for aggregate index margins. For index investors, the largest constituents will also be key: The 10 largest S&P 500 companies account for 19% of aggregate earnings, and net margins for these companies are projected to rise by a median of 30 bp in 2023. As a result, index margin and EPS estimates face less downside risk than those for the median stock. Our base case forecast, assuming no recession, shows aggregate S&P 500 net profit margins remaining flat in 2023. Consensus estimates embed margin expansion of 30 bp.

Downside risk to earnings estimates increases the value of earnings safety. We continue to recommend investors focus on stocks where they can be relatively confident in the forward trajectory of earnings, including firms with stable growth and the Health Care sector, which has grown earnings in each of the last several recessions.

Pete
16:14:20
I am not sure how Dave W found CALM ,  but he never gives up and he keeps looking. I really like that chart. I was able to find it on a search I have shown you. Nothing too complicated.
Pete
16:16:12

Pete
19:34:25
el_brento wrote:

@Pete or @Hariseldon how did you know, or at least anticipate that Friday was only going to have movement in the first part of the morning and remain flat for the rest of the day? pattern recognition from similar situations?  

Yes. That pattern has been typical of a gap and go recently. That could change in the future. The only way you know it is to study charts of the SPY every day.

lilsgymdan
19:42:04
Seems like it would be beneficial to look at the last X number of spy days and categorize them
Hariseldon
19:47:57

@lilsgymdan I agree – but then again I categorize everything 

Michael C
00:41:39

ExpatTrader wrote:

using the 1Op on the SPY 5M, that should be my main signal for trade entry, not the compressions themselves! 

This didn’t sink in for me until the two weeks.  Now I wait to be synced up with SPY and I’m so much more confident in my trades because typically the price doesn’t immediately move against me.  If it does, usually that position has lost it’s RS/RW or didn’t have enough of it.
ExpatTrader
11:13:02

The key to understanding the price action always comes back to the SPY. Catching those critical moments where the SPY tells you it’s reversing (double top, strong bar, ETC.), continuing (level break confirmation), or using the 1Op on the SPY 5M, that should be my main signal for trade entry, not the compressions themselves! Kind of a nice epiphany that finally sunk in today while reviewing, and maybe a bit more explanation as to what “market first”-a phrase that could be interpreted in many ways-means to me today in my evolution as a trader. What does “market first” mean to you?

2021-07-23
Mark As Read

Wu
10:08:38

@Pete what is your best tip at practicing patient I seem to struggle with that.

Pete
10:09:26

@Wu Turn your screen off for the first hour

Hariseldon
10:11:12

@Wu I don’t know if this will help for you, but when I started trading I had the same issue – open an account with a small amount of money – doesn’t matter how much, but small amount, make it a cash account – a few hundred, few thousand, whatever “small” is to you – and do your “impatient” trades in that one.  Do you real trades in your main account.  At the end of the month, compare the two, and the win rate as well. 

2021-07-23
Mark As Read

Hariseldon
11:07:09
A suggestion for questions – instead of just asking – “Where is your stop?” or “When will you take profits?”  – Try, “I am thinking my stop on XYZ is $ABC, because support is at $abc.  What do you think?”

2021-07-23
Mark As Read

Hariseldon
15:23:56
A very simple suggestion – many of you are staring at a screen for hours and hours straight – studies have shown that if every 20 minutes you look at something that is around 20 feet away for roughly 20 seconds (not sure why it is all “20”) it improves sight and fatigue.

Hariseldon
13:14:31
One thing I am noticing on Reddit is that people don’t seem to get the concept of “Paying Yourself” – If Day Trading is a job you need to pay yourself a salary, and that salary should be consistent and dependable .  Obviously the higher your win rate and more predictable your profit is, the smaller the range of + or – each month you can expect.  Some people take money out each week, others each month (I do each month) and leave the base in.  Some stay at the same base all the time, and other reinvest some portion of the profits (I increase the base 15% every six month).  But you need to treat it like a business with a business plan.   And like a salary, having “bad months” is not an option when you need to pay the bills, which is why high probability trades and setups are key.  I think sometimes we lose sight that this isn’t about 1 day or one good run, it is about a consistent income.

2021-07-22
Mark As Read

Pete
13:24:37

Pete
13:25:14

@roman This is the set up you want for shorts. 

2021-07-22
Mark As Read

BobG
14:13:18

@Dave W For your SNAP spread, is half the debit your stop and did you do the time spread because of the earnings tonight?

Dave W
14:17:45

@BobG time spread is the name for a calendar spread 1 week apart (over earnings)  the strategy relies on time decay & IV crush impacting this weeks calls more than it does next weeks so once earnings are announced there should be a larger difference between this weeks calls and next weeks calls   no stop

BobG
14:19:17

@Dave W So you’ll exit sometime tomorrow?  Especially if the short call is itm?

Dave W
14:22:06
probably  i have to see what the stock price does   generally i take profits right after earnings when the IV crush occurs   if SNAP trades near where it is now after earnings i can buy back the short call cheap tomorrow and hold the long calls if i like the stock long and i will haver the calls very cheap   there are a few exit options i have
Dave W
14:28:59

@BobG one criteria you have to look for on a time spread is the current weeks IV vs next weeks IV on the strike you use

Pete
14:41:27

@Dave W Do you take into account how much the stock has moved previously vs the expected move off of PreEarn Options?

Dave W
14:52:46

@Pete… I do look at the expected move vs the normal move since that gives some help when deciding if the disparity between this week and next week will widen

Dave W
15:02:50

@Pete on time spreads if the move is smaller the delta on the options after esarnings will be lower so there will be more time decay available 

Warsatan
16:36:54

@Dave W  how long did it take you to be consistent and feel confident that you “made” it?  I watched your video and you mentioned how you started out with “sweating bullets” when opened a vertical spread .  I could be related to that a few weeks back with my first CDs. 

Dave W
16:47:00

@Warsatan when i went to full time trading it took me about 2 to 3 years to become consistant. I had Pete as a mentor so that sped the process up by a lot. For most traders it takes quite a while. Also switching to full time from part time when you have an income from a job really changes your mind set and if you were profitable before going full time there will likely be a time when you arent profitable after going full time so be prepared for that

Hariseldon
16:48:26

@Dave W curious – was it a psychological shift for you? In a “if I don’t do well, I can’t pay the bills” kind of way?

Dave W
16:48:48
yes
Hariseldon
16:49:26

@Dave W that must have been difficult at first to stick to your strategy but yet having that in the back of you mind (or front of your mind).

Dave W
16:49:40
kind of like going from paper trading (worthless) to live trading. Your mind set and emotions come back into play
Hariseldon
16:51:21

@Dave W it is one of the main things people on Reddit don’t get (and they don’t get a lot of things) – but that this becomes their job, they need a salary, health insurance, etc.

Dave W
16:52:04
When the concern about your P&L because that is now your main source of income it can ocverride your technical trading and that is disasterous
Dave W
16:56:56

@Bgib some advice i got was to treat trading like a video game and try to block out the money aspect. Just trade technicals (charts) it helped me when i started trading full time

Dave W
17:00:36
I try to emphasize that any trading and especially trading for a living is extremely difficult and most people cant do it successfully. It takes near obsession with trading to make it. You have to love it and looks at tens of thousands of charts until you can internalize the technical setups and strategies. When i started trading with Pete he would pont sometghing out on a chart and my reaction was how the hell did he see that and then how come i didnt
Shark
17:04:28
thats most traders who are passionate about trading want. Its what i would want one day. Thats why i started tracking trades, truley tracking to find wholes in my trading and try to imporve. Im 22 days in and would like to see the numbers on day 100. I want to prove to my self that i can be consistant in more than just a bullish market . I would love to go full time but im still a ways out but i see the light.
Dave W
17:05:04
The draw downs are hardest times to get thru not because of the losses but because of what it does to your confidence. That is why your win ratio being 75% plus is so important. It will help you continue thru those times instead of giving up

Pete
17:16:41
Much like a card player flips cards to practice counting, I have spent hundreds of hours scrolling back a random number of days and then advancing the M5 chart one bar at a time. I try to predict what would happen next. No cheating. When you think a good trade is setting up you have to write down why and what your game plan is. entry/exit/stop. if you are honest with yourself it is an excellent exercise. There will be times when there is no trade and you do not have a good market feel because the market is trapped in a range. That is fine. That information is useful too
Pete
17:17:36
I don’t do this for stocks much, I do it for the SPY. The chart patterns you learn in books will really sink in. 
Pete
17:18:00
You will also hone your skills in learning how to interpret the 1OP indicator

2021-07-22
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roman
17:17:43
Im sure this has been gone over and over. I probably  missed it. Say you have a great stock, say its even petes pick of the day, you have a deep valley in the 1OP and a cross. Are we trying to buy at the 5min support of the stock with a limit order? I need an idea of the common entry procedure .im not so goodbqt scaling in seems to play with my emotions 
Pete
17:27:36

@roman if I have a deep 1OP cross pending and I feel that market support is close (prior day’s low or low of the day or other support is near) or If I see candles that are starting to tell me that support is near (tiny candles bodies, tails underbody, overlaping candles, mixed candles, marginal new lows) I will cheat and buy the stock before the 1OP cross if the stock is extremely strong (moving higher when market down and thru resistance D1 on heavy volume)

Pete
17:29:50
As you can tell the answer to Roman’s question has multiple facets to it. THERE ARE NO ABSOLUTES. When you frame a question you have to put it into context. 
Pete
17:34:35
To me trading is about awareness. Great quarterbacks know how to read defenses, but for a second or two their back is turned to the field. When they turn around to throw they are able to analyze conditions in a split second. I feel trading is very similar because conditions are always changing. 
Pete
17:35:50
Preparation is a large part of that awareness. Good quarterbacks know if the set up is good or if they should throw the ball away and wait for the next down

Warsatan
18:38:23

@Shark what’s your timeline so far to get to this stage? 

Shark
18:40:41
ive been trading and learning from pete and the group for about 2.5 years now. Lucky that i found them first and built a good foundation from the start. I havent had to waste too many years losing money first.
Warsatan
18:44:10

@Shark Thanks !congrats with the milestone and being consistent!    just trying to gauge where i’ll be in this race.  Still on the left side of the bell curve at the moment. 

Shark
18:51:44
Warsatan, you can only make yourself learn so much so fast, experience will have to pay its toll.  It can be overwhelming, brain feel like mush, think that there are just too many variables to consider.. there are alot but dont over complicate things, keep on going and then they just all start to click. Ask questions and try not to develop bad habits. I highly recommend keeping a log on the trading day, trades, why you entered them, why they failed. etc.. My consistency has slowly increased overtime due to my not getting in every momentum mover that pops up, But looking at the long term trend and trading on the right side of that and the market intraday.

2021-07-22
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Dave W
21:52:05

A note about cds  you arent necessarily looking for the stock price to stay below your short strike, many times it will move thru the short strike and you will still realize a nice profit. The cds is more about entering at less than 50% of the spread then if the stock price moves up you will book profits whether the short strike goes in the money or not. The short strike will still suffer larger time decay than the long strike gaining you a profit. If you think the price is going to go thru the short strike quickly then taking straight calls is a better trade but since we dont know that generally putting on a cds is about mitigating any loss in the event of a pullback or sideways move. In tese cases you can still ralize a profit on the cds when the straight calls would suffer a loss. I hope that gives you a better understanding of the logic behind choosing a cds

Dave W
22:14:57
the short strike is the call sold (thus short strike). The long strike (call that was bought) will suffer less time decay and the short (sold) strike will suffer larger time decay. The way i phrased it was correct
Dave W
22:30:40
the strike you sell (the 365 call in the example you cite) is the short strike since it is sold thus short. The atm or call you buy (360 in this case) is the long strike, You have the terminology backwards, Options that are sold are always the short strike when you open a poision

2021-07-22
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Hariseldon
23:25:18
I agree on the double meaning of “short”, it can be confusing 
Hariseldon
23:27:11
but if you think of options as actual contracts, when you’re “long” an option, you own that contract, you bought it.  When you’re short an option, you sold that contract  (hence why on your platform it shows up like -1, with a negative sign)
Pete
07:38:33
When you buy a put you are long a put. Even though it is a bearish position, you are long a put. If you sell a put you are short a put. This is a bullish position. When you buy a call you are long a call. When you sell a call are short a call. When you buy a closer to the money option and you sell a farther out option you are short the spread. When you sell a bullish put spread you are short a put spread. When you buy a put debit spread you are long a put spread. When you sell a bearish call spread you are short a call spread. When you buy a call debit spread you are long a call spread. This is standard industry vernacular and you should learn it. It makes communicating much easier and it reduces confusion. 
Pete
07:41:21
I think spreads are perhaps the most confusing for traders. The action you take on the closer to the money option determines if you are long or short the spread. If you bought the closer to the money option you are long the spread. If you sold the closer to the money option you are short the spread. When you receive a credit you are short the spread. When you pay a debit you are long the spread. 
Pete
07:43:50
If I bought the ABC July (23) $100 calls and I sold the July (23) $102.50 calls I am “long the ABC July (23) 100/102.50 call spread. If I sold the XYS July (23) $100 puts and I bought the July (23) $97.50 puts I am short the XYZ July (23) $100/97.50 put spread. 

Dave W
17:41:36

Trade the market not what you think it will or should do. Write that down and remember it

2021-07-20
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Dave W
12:05:34

Remember it isnt whether the trade is working or not what is important is whether it was a good technical trade or not. Getting wins on bad trades puts you in a a poor mindset  

Hariseldon
12:10:35
Around 15 years ago my friend went to Vegas and won $75,000 on Baccarat.  He made around 125K a year so this was a big deal for him.  2 years later he was broke and divorced.  Winning that money was the worst thing that ever happened to him.  Extreme example of the lesson Dave is stating right now.

Pete
13:37:41
I know we are not big on fundamentals, but I do have a group that I do NOT like. Restaurants can be hurt on so many fronts. 1. Wages are rising and that is the biggest input cost 2. Food costs are rising and inflation is rising 3. Workers in many states are walking out and restaurants can’t find employees. 4. Delta variant is on the rise. Input costs will rise for sure and it is questionable to what extent consumers are willing to pay them. The walkouts and Delta are less of a concern, but could spark selling pressure. Just some thoughts on this group

2021-07-19
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