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2021.06.09 – SESSION 24– GO ASK A TRADER

10 replies, 6 voices Last updated by Sherri Locke 1 week, 1 day ago
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    • #17512

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      The recording of the Go Ask A Trader session from earlier today is ready to view. Enjoy!

    • #17510

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      Posted for Kevin:

      Question: during Monday’s discussion on M34U John was talking about the RUT and mentioned that the IV was indicating that the RUT was going higher.  Was this observation based on the skew or something else?

    • #17509

      Dave Parson
      Participant
      @dparson55@hotmail.com
      Points: 160
      Rank: Newbie

      If there have been strategy guideline updates in 2016, when back trading prior to 2016, should we use the guidelines in effect prior to the 2016 updates?

    • #17506

      Dave Parson
      Participant
      @dparson55@hotmail.com
      Points: 160
      Rank: Newbie

      John,

      I purchased the M21 and Master Series classes and am getting a feel for the different strategies by doing a lot of backtesting, and in another forum post you mentioned the ONE daily (non-intraday) data that exists prior to 2011 may not be entirely accurate.  I didn’t notice an issue with this data while getting a feel for the bull and superbull during the 2005-2011 timeframe (they both behaved as I was expecting as far as daily price and IV changes as the trades progressed).  But maybe these more simple strategies do not expose the weaknesses in the data that you alluded to.  Could you describe the issues you have seen?  I was just about to start getting a feel for the BB, M3, and Rock during the down market between 2007 and 2009, and wonder if I am in for some issues trying to do this.

      Thanks!

    • #17479

      John Locke
      Keymaster
      @john-locke
      Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

      Ron RE m3.4u adjustments

      Thanks for the explanation on OTFI today. So the modification you are suggesting is reducing the maximum capital of the trade from $2500 per lot to $2000 per lot. Does this also mean that we need to modify (eliminate?) the previous rule that has us rolling in the lower longs if we are near max capital and near our positive data limit? It seems to me that this was a risk reduction strategy that may no longer be necessary given the reduced capital.

      An alternative may be to keep the trade’s max capital the same but consider the risk reduction rule modified to not allow more than $2000 per lot into the trade (regardless of Delta) until the market settles down.

      As usual, your thoughts on this are appreciated.

       

    • #17464

      Dan Shaw
      Participant
      @dkshaw@gmail.com
      Points: 697
      Rank: Freshman

      Hi John,

      Can you briefly discuss your use of Fibonacci retracements and how they help you in the market outlook sessions?

      • #17476

        John Locke
        Keymaster
        @john-locke
        Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

        Yes, thanks for the question Dan!

    • #17388

      John Locke
      Keymaster
      @john-locke
      Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

      Hi John,

      I was backtesting the 2021 April M3.4u and it is a very interesting trade to review. This is the one where ONE has two days of missing data at a very critical time. It is also the trade that you accidentally opened using an iron butterfly instead of a put butterfly. Through my studies, I have often heard you ask the question, “what could have happened” as part of the review process and this trade is filled with learnings. So I backtested it starting with a put butterfly in both ONE and OptionVue and compared them side by side with very different results.  I also did this with an iron butterfly vs a put butterfly. Here are the Coles notes:

      1. OptionVue’s T+0 line is unpredictable at times indicating a negative Delta in some cases when the market price is well below the tent. ONE doesn’t do this. In all cases, ONE indicates a positive Delta in this position as we have come to expect.
      2. OptionVue, at times, gives very different Delta values for an iron butterfly vs a put butterfly and that happened in this trade. At the critical moment, OptionVue indicated a Delta (7 vs 4) that forced a role back of the position for the iron butterfly while the put butterfly position only needed an adjustment that ended in a symmetrical butterfly.
      3. If one was using the put butterfly structure, as per the guidelines, the trade ends up under the tent going into expiry for a 2x to 3x gain on the trade depending on when one exited.

      Being a new trader, going into expiry under the tent appears to be a very subjective time. What are the trade probabilities? When should you exit the trade? What is the risk of allowing the trade to expire? All questions a GO trader can not yet answer.

      Having said all this, I was curious if you might revisit this trade and discuss your thought process as a trade, in this position, approaches expry (perhaps in your next Go Ask a Trader session?). Any other thoughts on this trade situation would be greatly appreciated as well.

      • #17395

        Ron van Steenoven
        Participant
        @ronvs@rvsa.ca
        Points: 297
        Rank: Freshman

        As a follow-up, I would like to stress that my real interest here is in the subjective nature of the near expiry decisions. As a “by the guidelines” trader (stage 3), do we “fight” the trade to the last day or do we sometimes need to use judgement to get out when the risks get too high? And, as a “by the guidelines” trader, how should we make that decision? The M3.4u course videos indicate that there is some subjectivity at times which I am trying to fully understand.

        Thanks John.

      • #17444

        John Locke
        Keymaster
        @john-locke
        Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

        Great topics Ron!

    • #17361

      Jenica Locke
      Keymaster
      @Holzschuh8Jenica

      We highly encourage PRO, GO, and Trading Performance members to post their questions and topics to be discussed in the REPLY TO text box below at least 48 hours in advance of this meeting.

      Click here if you would like to request a mini coaching session.

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