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Adjusting early/few times vs. adjusting at the end of the day

2 replies, 2 voices Last updated by Nick M 1 year, 6 months ago
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    • #15754

      Nick M
      Points: 24
      Rank: Newbie

      Thank you John!!

    • #15748

      John Locke
      Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

      Hey Nick,

      Sure, you’ll find times where the market trends in one direction all day where you may be better off adjusting as soon as a point is hit. However, more often you’ll find, the market reverses and an adjustment is unnecessary as well as detrimental.

      For the most part, market neutral traders are not educated nor experienced enough in these types of intraday moves to tell with any accuracy when which choice is better at any given time. In fact, traders often create losses on winning trade cycles through this type of adjusting. This being the case, over long periods of time, the majority of traders are much, much better off to simply ignore the extremes of intraday ranges and choose a “check point time”. The only exception to this would be if a trader is very proficient a day trading and is capable of effectively making those types of decisions.

      That said the specific check point time can vary (although actual results will differ from website trades). The important part is that waiting eliminates many of the poor in the moment decisions traders often make. It also reduces the poor execution that tends to accompany trying to force an adjustment at the moment when the market  pushing against an adjustment trigger.

      If you’re like most traders you’ll be substantially better purposefully avoiding adjusting outside your decision point time.

    • #15747

      Nick M
      Points: 24
      Rank: Newbie

      Hey John,

      I recently bought your Bearish Butterfly program from SMB. I was hoping you could discuss the timing of adjustments for the strategy and what would be the optimal approach to follow. Watching the program videos looks like guidelines (excluding expiration) point to making adjustment at 3:30 pm. Can you please discuss the relative merits of making and adjustment sooner in the day when adjustment criteria is met, vs. waiting until specified time such as 3:30 pm to evaluate what is needed?

      What I am the most curious about is if there is any value added in making an adjustment early: E.g. at 8:00 am RUT moves up and criteria is met for you to scale in 3/3. RUT may keep moving up and at 10:00 am the strategy meets the criteria to roll the lowest butterfly up. Would it be of any use to adjust sooner in a day right after criteria for adjustment is just met?

      If RUT is to for example keep moving down all day, a trader may make additional money when rolling down few times based on common historic T+O payoff diagram for the Bearish Butterfly. Otherwise, a trader may only adjust once that day possibly forgoing the chance to make money on each roll down. It may take some strong downtrend throughout the day for this to happen. Not sure, if the same benefits are possible/likely if RUT keeps moving up.

      I trade part-time so I will not be able to be in front of the screen all the time, but I should be able to set trade alerts or check metrics once in a couple of hours to make a quick adjustment most days.

      Thank you for your help!


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