/biz/ - Business & Finance

People talk about muh analytics but remember that one of the biggest things people neglect is human psychology. EX, when NVIDIA posted earnings, intel got left behind, actually, it dumped. But, despite any good news, intel was viewed as a good way to buy in to the hype due to a shitload of FOMO so it rebounded from $27 to 32 in a few days. Then keeping in mind this is FOMO, you can quit while you’re ahead. Guess what, since it was just a bunch of people freaking out and buying it’s now dipping. Two biggest pieces of advice is human beings are irrational and quit while you’re ahead.

>>55199273
I don’t use analytics anymore, but I’ve heard that you’re not supposed to trade news cycles. What you’re saying about NVIDIA makes sense but wouldn’t that be news based trading?

>>55199301
Kind of. AI is the new normie buzzword like crypto or web3 or metaverse. This is more like a social contagion than a news cycle. At the end of the day it’s gambling though.

>>55199387
Interesting. Are you an experienced/ profitable trader?

I sure wish I knew. I’ve only ever made big gains in crypto but it’s just hell out there in the crypto world right now. Please some kind anon tell us how we can understand the options market. Surely there must be some way to gain an edge out there.

>>55199227
>$112

Literal lunch money

>>55199227
i ordered some sushi the other day and the bill was more than you profit OP.

>otoro
>uni
>ikura
>unagi
>sweet shrimp
>soft shell crab
>crab legs

I think you should probably get a job flipping burgers. you'll make more in a day than that in a week

>>55199474
The point isn’t the money the point is whether I can sustain a profit or not.

>>55199440
Profitable from dumb luck, I was able to time some regional bank stuff (a crash and then a small rebound) and the chip stock boom from NVIDIA. I've been doing it a while and this was my big break.

>>55199301
>but I’ve heard that you’re not supposed to trade news cycles

just do the opposite of everyone else

>>55199519
So would you say you have a decent amount of experience trading

>>55199474
Does it make you happy that your lunch bill costs more money than I made with a $120 worth of trades?

>>55199546
3 years which in the grand scheme of things is nothing.

>>55199557
Considering I have 3 weeks of experience I don’t mind taking advice. Would you mind giving your opinion on a few of my recent trades?

>>55199555

So many ignorant motherfuckers in this thread. I get you OP, I’ve been wanting to do the same thing. Just trade one options contract at a time until I get really good. What these dumbasses don’t understand is if you can’t Win all the time trading 1 contract you can’t win trading 50. No point in scaling it up until you can prove that you can win all the time on a small scale. I’d like to be able to do the same thing but I just can’t come up with any strategy that isn’t just a coin flip.

>>55199656
I ageee with you about pacing yourself but I trade 3-4 options a day. Statistically speaking if you have an edge the more trades you take the more likely you are to be profitable.

>>55199699

Ok this is good advice- so you buy like 4 and then hope a couple of then get stopped out and a couple of them go on a run?

>>55199726
I don’t know if I would be taking my advice, my trading setup is really ghetto but because I’m a robinhood sped I buy all my options for the next day right before the market closes, usually 2 or 3. If my stop losses are good then all it really takes is one of the stocks doing well to break even. When I took stats in college I remember learning that the more samples a statistic has the closer the population will be to the true population mean. Therefore more contracts would give you a greater chance of trading at your true chance of success.

this song is all you need OP
https://www.youtube.com/watch?v=7hx4gdlfamo

>>55199755

Ok that makes sense, just buy several different things with a stop loss so your losses are limited and you hope that one of them goes on enough of a run to cancel out the losers and leave you in profit every day. How are you picking the companies though? Or are you really just throwing darts at a dartboard?

>>55199755
How are you picking these stocks and what type of options are you using

>>55199800
I pretty much only trade trend line breaks/ retracements and support/resistance levels. The truth of the matter though is that I shouldn’t really be giving advice because I’m not a profitable trader.

>>55199797
See
>>55199814
It’s impossible to be profitable king random trades

im up 100% in 3 months, put money into fubo calls before earnings and put it all into ccl before earnings on the 22nd, both ran up, took me 2 years to figure out to just buy calls one month before their earning if you think theyre going to do good and you get free money

>>55199699
>Statistically speaking if you have an edge the more trades you take the more likely you are to be profitable.
first off, checked
The only thing you should take away from your statement, which is in a sense true, is that your net risk should always be so small that you can "afford" to lose enough times such that random variance can't blow you up. But even then, your particular method might only work in certain market environments. So if the market environment shifts, your method could become a 90%+ lose rate overnight. I learned this the hard way in 2018 buying dips w/ options. Make a fuckton of money as long as everything difted up, then got taken to the cleaners when the real vol shows up. There's plenty of ways to make money fast that will lose everything just as fast when the market environment shifts. So be careful getting overconfident on a method that seems to do really well initially, it could wind up blowing you up.

A good rule to have IMO is if you take over a certain # of losses in a row, or over a certain $ amount of risk, you assume it's not due to variance and stop trading immediately. Maybe the market environment has shifted? Maybe you're just getting sloppy? Maybe you did hit a bad streak purely due to variance, but it's got you on tilt? Then you sit out and watch for a few weeks to recalibrate and basically paper trade the method to see what's going wrong and go from there. Better than getting blown up.

>>55199755
>When I took stats in college I remember learning that the more samples a statistic has the closer the population will be to the true population mean
again this is true but there's a problem: correlation. In stocks it's often measured as beta, i.e. return profiles are benchmarked against the SPY and turned into a ratio. Assuming all the stocks you trade are the same beta, over the long run there's essentially no difference than just having a position of equal size on the SPY. In the short term there will be naturally greater variance but only due to things we cannot foresee or predict - so there's more random variance which makes the statistics "more robust" in that sense, but random variance is the last thing you want to rely on for a trading method. Edges are cut on information asymmetries that you discover where others simply assumed random variance.

>>55199890
I like the advice you give, but I’m curious about how market shifts will affect my trading strategy. The only trades I really make are trend line breaks/ retracements and support/ resistance. All time I’ve traded 22 options with 6 positive trades, 12 negative trades, 1 positive open trade, 2 negative opted trades, and 1 neutral open trade. Over the past week I’ve had 4 positive and 4 negative, with 2 negative open, 1 positive open, and 1 neutral open.

>>55199814
>truth of the matter though is that I shouldn’t really be giving advice because I’m not a profitable trader.
and the reason you aren't profitable is because what you are doing doesn't have an edge. You are using leverage (i.e. paying for the right) to trade random variance. Options have embedded leverage. You are borrowing collateral and paying for the right to do so using a system which may as well be a 50/50 coin toss. You are guaranteed to lose money unless your edge *at minimum* covers the cost of capital. Which is generally somewhere between 10-20% APY for short term options. So with absolutely no edge, if we did enough trades at a 50/50 coinflip chance and zoomed out on the PNL chart, it would be a straight line down with occasional bumps on either side due to variance.

>>55200001
But does that account for risk/reward? How would you recommend trading without leverage?

>>55199981

Not the guy you quoted, but if you're trading options, then market volatility will play into your Theta correct? There's way too many factors trading options imo. I think it's a rich persons game if you want to make consistent money with options. Most trading strategies are designed for accounts at $30,000 plus. If you're coming in with $500, you have an extremely high chance of getting wiped out. The market is designed in a brilliant way to gate keep poor people out. Even the PDT rule gate keeps poor people.

>>55200038
I agree with you except for the part about money. While it’s true that option premium costs make it difficult for smaller accounts to get started I started trading option contrac to rhat costs no more than $10 and slowly grew it to $60 as I become more confident. I don’t personally think option dare the complicated they just take a hit of learning. The common stat that 90% of day readers never make it is actually deceivingly generous. Only 1% of people can bench 2 plates, despite the fact that it only take a few years to accomplish.

>>55199981
>how market shifts will affect my trading strategy
There's no "perfect" strategy that always works. Even the best traders hit dry patches. There's some strategies that will be decent most of the time but not the best in any particular environment, and there's those that only really work in particular market environments but do really fucking well. Some traders can switch between a few strategies if they think the environment has shifted, some just pick one strategy and stick with it. There's no one size fits all solution, you will have to find what works for you. Basic template: you have some money you put toward long-only trend following (i.e. DCA strat on crypto or stocks), and some other money you use to do pivot trading (i.e. support/resistance sort of shit). The first strategy is practically braindead, takes very little effort, and as long as you are riding a longer term trend, makes money effortlessly. The second strategy takes considerable effort and focus, won't do very well in trending market environments, but conversely should make decent money in choppy volatile environments. The performance of both strategies combined compliments one another and gives you a way to make money in *any* environment. Just an example.

>The only trades I really make are trend line breaks/ retracements and support/ resistance
You'd be surprised how sometimes really simple things like this can work. The bigger question is: where do you place your stop? Where do you place the TP? How do you calibrate risk and probability of success? These are the most important questions with any trade method. It's difficult to answer all of those questions using memelines alone. You need a bit more information.

>>55200089
Here’s a shitty screenshot of my trades for the day. I get what you're saying about trends and support/ resistance. I don’t usually enter a market unless I think I know where the price is going. I trade support and resistance in only high volume consolidating markets on a month scale or higher. Any lower timeframe and the money I make won’t be worth the risk.

>>55200023
yes, see the tradeoff with options is you can get massive risk/reward, but at the expense of probability of success which is the other side of the risk/reward equation. The further out your strike, the cheaper the option becomes, the less net risk per contract, and if you are buying calls the reward is always theoretically infinite, so... yeah, OTM calls look attractive in that light. And they can be, in very specific contexts. The tradeoff is: those calls are priced so cheap because the market has already priced in the expected volatility of that stock. i.e. it's a written check that cannot be cashed. Now maybe the market is wrong? But who is on the other side of that trade. Who is writing those options, supposedly willing to give you free high RR trades? You get the high RR, and they get the high probability. When you net it out, it's all priced at zero sum, minus funding costs (i.e. short term interest rate + a premium, payed to the option seller who is lending you collateral).

When it comes down to it, all options that are sufficiently liquid boil down to:

(exp profit * prob profit) - (risk * prob loss) = 0

Because market makers have algorithms automatically making those markets using black scholes and multiple proprietary ways of estimating forward vol (IV). Since they have super advanced models, in a sense they have an information asymmetry even there, further exacerbating the negative embedded edge.

It's possible but very difficult to use short term OTM options profitability I would say. Any edge that comes out of them is very short lived given their inherent volatility. And you're always playing with something which is on fire and burning value like mad.

>>55200171
That’s interesting to keep in mind but I don’t trade solely RR.
>>55200171

>>55199227
Do long holds. Long holds based on market cycles have been the only thing that have ever made me meaningful amounts of money in all my years of trading, particularly with crypto.

>>55200204
Do you trade crypto with leverage

>>55200128
Okay so you're trading stocks. I'll go ahead and say shit is tough. Of course I'll be biased, I have made all my money trading mostly crypto. Crypto definitely feels more "dumb" like there's more actual human making dumb decisions all the time (i.e. getting liquidated on 100x leverage lmao). That's where I found my edge although it looks like I'm going to have to pivot to stocks because it's the only game in town currently.

Stocks are largely just fucking algos rebalancing portfolio allocations, or hedging collateral against options. Their big moves are often around data releases when markets are closed. And fuck trying to predict data releases or market reactions to it, although many traders clearly do it.

Since stocks are so heavily controlled by algos, TA (in my experience) simply does not work on them as well or as often as crypto. The name of the game is flows and predicting sort of the inputs that go into the algos which drive their systematic buying/selling. There's so many fucking layers to dig into to decipher the moves, it's way more complicated than crypto which is just like "gary gensler took a picture of himself shitting on twitter, now my shorts are printing".

>>55200255
> There's so many fucking layers to dig into to decipher the moves, it's way more complicated than crypto
I don’t agree on this point. Stocks are not as hard to trade as they seem. The algorithms you’re talking about do affect the market but they don’t do it all that often. What you’re probably talking about is the stop losses and take profits set by day traders at similar levels. The funny thing is I don’t know if I know how to trade stocks. Ive only lost money overall, but all of it I lost before I knew options had time decay. Since Ive cleaned up my trading I’ve been having a lot more good days, today being my third consecutive day in the green. I guess only time will tell.

>>55200204
> Long holds based on market cycles have been the only thing that have ever made me meaningful amounts of money in all my years of trading
same. Either I'm too stupid or short term trading is basically as zero sum as it gets, plus an embedded negative carry. I've made very little trading short term. But at least I'm patient and good at strategy. Play to your strengths.

>>55200306
okay let me give you an example. Do you know what NFP is? It releases once a month, typically on Friday, and can set the tone for a weekly close that follows through into the next week. For the past 14 months, NFP numbers have come in hot. So how did the markets take it? All of last year, they HATED it - because it meant the FED was going to use those hot numbers to justify being tightassed. And they did. Stocks fell on almost every release last year.

Past few months, NFP numbers coming in hot. Stocks RALLY LIKE CRAZY. Why? FED already signaling a pause, economy looking strong... "where's that recession everyone was talking about? Holy fuck I am underallocated - have you heard about this AI shit bro? It's gonna accelerate economic growth and sheeeit" *begins algorithmically buying*

>>55200353
Part of being a good day trader is being able to spot fed fuckery. Unfortunately I’m not that versed in liquidity grabs but I know a few patterns which are used to trick beginner traders into exiting the market, such as the volatility contraction pattern and the false consolidation breakout. Additionally, huge buys and sells by hedge funds and banks cause gaps in the market which are 90% likely to be filled eventually. I wouldn’t say that it necessarily over complicates trading stocks but more so shifts the environment.

>>55200411
please spot the so called "pattern".

>>55200469
Stocks make nice easy patterns. Crypto is weird and volatile to me.

>>55200318
>short term trading is basically as zero sum as it gets
I wouldn't say it's completely zero sum, but even if you manage to make a sizable amount from swinging you still gotta hope that the IRS doesn't rape you too hard for it.

>>55200469
I wouldn’t trade the pattern until I had confirmation of price movement bc the price action is literally on a precipice

>>55199227
the game changes when you got a couple thousand $$, it changes even more with a few tens of thousand, and even more when it is in the hundreds of thousands. please dont pretend for one microsecond that you would have the tolerance to do whatever trading scheme you're using with a 100k portfolio... it does make me wistful though.......

>>55200657
Maybe so but I doubt $100k means nearly as much to an experienced day trader as $500 does to me. I almost quit trading when I lost $230 in a single week.

>>55200559
>*blocks your path*

>>55200676
it is good that you're investing and i hope you win and keep winning
on that chance that you do make a mistake i hope you make it early, it doesn't hurt, and you learn from it
t. I'm Ray Dalio

>>55199656
>So many ignorant motherfuckers in this thread.
>I’ve been wanting to do the same
>you can win all the time
Great

>>55199227
Best advice you'll get:
Aim for a realistic ROI, like 6% per week, that's 288% per year. You can find all kinds of opportunities where an asset will either go up or down 2%, leverage that with 3x and boom; you've made your profit for the week. Always set close orders for your target price, even if you think it could do more than 2% just stick to that, never become impatient.

100% or more in a week is degenerate and you'll lose it all before next month.

>>55202014
>a realistic ROI, like 6% per week
never change /biz/

>>55202014
If you're 24 with $40k and you make 6% per week on investments.
>Year 1
$40k >> $152k
>Year 2
$152k >> $577k
>Year 3
$577k >> $2.1mill
>Year 4
$2.1mill >> $8.3mill
>Year 5
$8.3mill >> $31.6mill
>Year 6
$31.6mill >> $120mill

By 30 years of age you've made it by doing 6% per week.

>>55202029
In a market where over leveraged 18y/o's on Adderall can make >400% in a week then lose it all before Sunday... Yes, 6% is very realistic.

>>55202058
If you lose it all before sunday your ROI is -100%

>>55202058
>let me pull some numbers from my ass real quick

>>55199227
No need to fret noob, but it's time to up your research game. Once you dig into the world of RWAs, you'll realize the huge momentum behind tokens like Digix and Mni.

>>55202014
>realistic ROI
>288% per year

>>55199227

Hey op, I've been considering doing a course of some sort to learn trading..any resources you find helpful?

>>55199455
when you live in a cuck are yeah sure whiteoid