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Michael, et al,
This gets a little more complicated in exchange for
a higher probability trade by using the future to time an OEX entry or to trade
the futures themselves. On the left side of the chart is Clyde's version
of market profil or Price Distribution Analysis. Today's open was below
Tuesday's value area low, so I am looking to short a rally to test Tues va low
or point of control. SP was so weak it could not even reach the va low so
with negative volume and issue trends and waiting for synchronization of the
system components things came together at that high TICK. It is also
helpful to use the 24 hour emini for perspective. On the @ESH3 it was
manifesting a "sell the midpoint and fib retrace channels". It was also
accompanied with a steady negative Chande Mkt Thrust. Bill Blau's TSI
picked off an entry on the short side when it rallied to the zero line and then
crossed below. The times on that chart are in Pacific so add 2hr for
Chicago and 3 for NY. You can see that the TSI zero crossing was
coincident with the short entry time on the other charts. I'll make one
more post using the older sets of pivots.
bobr
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
BobR
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Wednesday, January 08, 2003 3:16
PM
Subject: Re: [RT] setups
Michael,
Even though the OEX has taken backseat in my
trading room, I still keep some charts on it. Today the CBOE call and
put trins were in a bearish configuration after 10:05 AM ET. Prior to
that they were mixed. Tick hit less than -600 but a long was
avoided because of the 30 minute rule and the cboe trin config and the breadth
information. So with this setup a long trade was avoided until the OEX
hit an upper distribution(red arrow) and turned south, everything was in sync
for a short, even a +800 TICK. Another rule was to buy puts at the top
of the hour +,-10 minutes depending on tick and prem and some breadth info(in
the posted system it was an intraday McClellan Osc). I'll make another
post following this one showing a more sophisticated layout. There would
have been no problems taking 5 points out today.
bobr
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=beeline@xxxxxxxxxxxxxx
href="mailto:beeline@xxxxxxxxxxxxxx";>Michael
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Wednesday, January 08, 2003 2:26
PM
Subject: Re: [RT] setups
Bobr, thx for the email I trade options (on a
non US exchange ) & found your post useful...
one point I wld take issue with as being
a bit simplistic (from my experience) however was point 9...specifically
......
"Once you get the one point gain, don't
give it back. Move your stop as the option goes more in the
money."
This sounds nice in theory, but most here are
familiar with the concept of slippage in futures trading ....but in options
trading slippage is worse & can be much worse, than that in futures
trading in my observations anyway (& more so in short dated
options trading which is what you seem to be recommending
here....ie.. "If the trend
is strong and with your trade you can play closer to the
close. This is more significant during expiration week which gives you
the best trades because of the gamma
effect.")
I
realize you were only outlining these pointers from memory of an old system
so my comments may be unfair also you are referring to strongly trending
issues so this adds to the odds of success for your method &
makes slippage less of an issue..but obviously even in strongly trending
stocks you do get corrective retraces ..So I thought it
worthwhile pointing out ...also by my penning this email,somebody may be
able to show me why slippage is not such a big issue in trading US options
trading(I have only traded on the Aust exchange) if so I wld be interested
to read the explanation & may switch exchanges if true...but (in my
experience)the concept of Implied volatility combined with short dated
vehicles...not too mention large spreads in most issues normally can result
in very savage pullbacks in the option bid/ask in a v.short time ..if the
basis stock has a quick retrace/pullback etc..fwiw.
Despite these negative issues I
still find options trading worthwhile..but I have learnt only to trade
sparingly here & when odds are in my favour (I realize your list of
rules above were also towards that end btw & I concur ...but thought it
worthwhile mentioning one of the negatives that you appeared to oversimplify
..(imo))..I think overall (& I realize this is not a revelation)..but
most options trading is more suited to position traders, due to concepts
like wide bid/ask spread & other factors some which I have mentioned
above while futures more suited to daytrading....But if you feel you
have a trading advantage in derivatives ..due to system or whatever I guess
that can help to even the score & keep you daytrading options vs
futures.
Thanks
MichaelO
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=bobrabcd@xxxxxxxxxxxxx
href="mailto:bobrabcd@xxxxxxxxxxxxx";>BobR
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Wednesday, January 08, 2003
7:08 AM
Subject: Re: [RT] setups
Here is a rough draft from memory of how I
traded it a few years back. Some may recall statements being posted
on rt.
It is a discretionary, read not proprietary
and not coded, system. Thus it may be difficult to duplicate, but
here goes:
Requires a realtime datafeed, online broker
with discount commissions, and realtime OPRA with no funny stuff like BMI
used to do with options..Set up a chart with the 5 minute OEX in subgraph
one. TICK in subgraph 2 with 5 lines at zero, +400, -400, +600,
-600. Put the PREM in subgraph3 with the fair value, buy level, sell
level lines, updated each day. The CNBC levels worked good, the
w.programtrading levels didn't and seemed to be more useful for breakouts
than cycletrading.
1. Determine the daily trend of the OEX
midpoint, or the pivot trend, has it been going up or
down.
2. Make entries using at the money or one
strike out options in the direction of the trend, but make the
entries on pullbacks against the trend, thus your entries are in sync
with the MM's and not the general public.
2a. Trades can be made against the trend with
lower expectations of profit.
3. Apply classical pivots and fib pivots to
the OEX. Use a combination of the standard daily pivot and S/R
levels along with the FibonacciTrader half range, 0.618 range, range
levels for "fuzzy" entry levels, meaning close enough is good
enough. Some days the standard S/R levels are hit and other days the
FT levels are dominant. Seems to very depending on whether everyone
is trading or if there is a holiday period coming up or just
finishing.
4. Wait ~30 minutes after the cash open to
make the first trade.
5. Visualize a time sector at the top of the
hour and bottom of the hour(using a circular 12 hour clock).
6. Enter puts in the time sector
at the top of the hour and enter calls in the time sector at the
bottom of the hour. This puts the odds in your favor of being
profitable for a short period of time. You might use a fast
oscillator as price approaches an S/R level, I didn't.
6a. Toggle the bid/ask quotes during the time
sector and watch for a change or peak in sentiment.
7. Monitor the TICK and PREM to determine the
quality(inhalation/exhalation) of price trend during those sectors and as
confirmation of intraday trend change. There is a dominant 30 minute
half cycle in existance on many days.
When the power players are in
the game, the sector is wide(~+,- 10 minutes) and you can see money
coming in and leaving at the top and bottom of the hour plus minus about
ten minutes. When the sector is narrow(~+,-6 minutes) and the prem
and tick are inconclusive the trend is weak and there might not be enough
followthrough to be profitable. Put entries on strong
bullish days come after the top of the hour, and on weak days the
deterioration begins before the top of the hour. Likewise for calls
at the bottom of the hour.
8. Trade 5 contracts to start with and
set a minimum daily goal of $500.
9. Look for a one point gain from the
Ask entry to the Bid exit(only trade long calls and long puts). Once
you get the one point gain, don't give it back. Move your stop as
the option goes more in the money.
10. Don't hold overnight, and
especially don't hold over weekends or holidays to avoid time decay,
volatility change, and premium adjustments.
11. Increase the number of contracts as
the account grows.
12. Don't overtrade, two to four
roundtrip trades would not be overtrading.
That's pretty much it. Grind it
out day after day. Use stops based on the option premium.
Since you are daytrading, time decay will not be significant unless you
get into or out of a trade too close to the open or close of the day when
they are adjusted. Be wary of premium changes on Friday close and
Monday open. Thus wait at least 15 to 30 minutes after the open and
be careful going into the close. If the trend is strong
and with your trade you can play closer to the close. This is
more significant during expiration week which gives you the best trades
because of the gamma effect. Just be sure you know what you are
doing and what the name of the game is. No doubt there will be
controversy about this system, and it could be improved with additional
timing tools.
bobr
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Ray
Raffurty
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Sunday, January 05, 2003 3:08
AM
Subject: Re: [RT] setups
Hi Bob,
You wrote "<FONT face="Courier New"
size=3>I had an options system that could quintuple the account in 5
weeks of OEX trading. It was so boring I quite trading
it.
<FONT face="Courier New"
size=3>
Sent it to
me {;-)
<FONT face="Courier New"
size=3>
Good luck
and good trading,
<FONT face="Courier New"
size=3>
Ray
Raffurty
<BLOCKQUOTE
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=bobrabcd@xxxxxxxxxxxxx
href="mailto:bobrabcd@xxxxxxxxxxxxx";>BobR
To: <A
title=MedianLine@xxxxxxxxxxxxxxx
href="mailto:MedianLine@xxxxxxxxxxxxxxx";>MedianLine@xxxxxxxxxxxxxxx
; <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Tuesday, January 07, 2003
2:19 PM
Subject: [RT] setups
OK, this is the setup I am looking at for a long
exit/short entry. Todaymarks the 4th day of a positive NDX
net percent up down volume (up -down)/total. A lower high on
the 4th bar of a 4 bar set with a higher highon the NDX may be a
prelude to a down day the next day...at least that isthe thesis
being examined. Perhaps it is reinventing the wheel,
butdiscovery sure is fun as is the journey. I had an options
system that couldquintuple the account in 5 weeks of OEX
trading. It was so boring I quitetrading it, |;-)
.bobrTo unsubscribe from this group, send
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