Escape's Options Trading Diary - Phase 2
Hello escape, I read this thread completely since morning. Lot of suggestions , lot of experience. Ok let me introduce. I am trading since 3 years and lost 3lakhs. Of course i lost in stocks trading intraday, trading futures and less in options. Iam just part time trader. I am opening account with Achiievers , it is under process. Thanks to soft trader in this regard. Since 3 months , iam reading all the materials and made lot of introspection. Why iam losing. I got some answers. If you dont mind i will discuss with you. Of course you have humbly requested suggestions from forum members.
First of all, i appreciate you, because you are maintaining trading journal. This is great positive thing and step in the right directoin.
Secondly, for the sake of Dan sir, you need not change , your trading style. Here iam not lessening Dan sir, i read his posts , he having great knowledge regarding options tradin.
Here the problem is YOU. Your trading style is fixed. It is scalping type. Accordingly you are having UNLIMITED brokerage account.
The execution of Calendar spreads and other option strategies are long gestation ideas. Of course minimum 1 to 2 weeks we have to open our positins to work the strategy . Our trading style will certainly not matches that one. So discard that idea.
After i reading your diary, I can say emphatically that, you lost not because of wrong in market direction. You lost due to HEAVY POSITIONS.
The big observation what i made is, You are trading ITM options with tight stoploss. This is very clearly suicidal. My logic( I benifited ) is by trading ITM calls with out giving enough room to price fluctuation, you are trading against your better interests.
Minimum allowance should be given to nifty , ie 20 to 30 points. Of course your scalping type trading personality may not accept this long head room.
My solution is, you trade OTM options having Delta of 0.3 to 0.2. So that you could give more room to nifty to turn in your directin. Or you could limit to ONE LOT ATM calls. Any how your is Unlimited brokerage. So trade OTM options so frequently that you can make all small profits. Down side risk is less with OTM calls. More over , you are simple trading intraday so you need not worry about decay. That decay will be discounted in opening itself. One more advantage is the Calls of 20 rupees and 30 ruppes have great liquidity. We never had slippage. For scalpers this is great relief. This relief you never get in ITM options.
My main point is , with least distortion of our core trading personality, we can trade as i said. Comple transformation as strategy trader is simply MISFIT to you. You and your tarding style should synchronize.
Finally , i wish to made simple recommendation which suits your trading style.
Follow covered call strategy. This can be done in scalping way. Buy ITM or ATM calls and Sell OTM calls. After all you are free from brokerage. Exploit the market. This is low risk.
Ok , iam sorry if i hurt you, and i am not good at explaining. I got experiencing after losing only. What i said is profitable to me, i hope you will also get benefit.
Wish you happy trading
First of all, i appreciate you, because you are maintaining trading journal. This is great positive thing and step in the right directoin.
Secondly, for the sake of Dan sir, you need not change , your trading style. Here iam not lessening Dan sir, i read his posts , he having great knowledge regarding options tradin.
Here the problem is YOU. Your trading style is fixed. It is scalping type. Accordingly you are having UNLIMITED brokerage account.
The execution of Calendar spreads and other option strategies are long gestation ideas. Of course minimum 1 to 2 weeks we have to open our positins to work the strategy . Our trading style will certainly not matches that one. So discard that idea.
After i reading your diary, I can say emphatically that, you lost not because of wrong in market direction. You lost due to HEAVY POSITIONS.
The big observation what i made is, You are trading ITM options with tight stoploss. This is very clearly suicidal. My logic( I benifited ) is by trading ITM calls with out giving enough room to price fluctuation, you are trading against your better interests.
Minimum allowance should be given to nifty , ie 20 to 30 points. Of course your scalping type trading personality may not accept this long head room.
My solution is, you trade OTM options having Delta of 0.3 to 0.2. So that you could give more room to nifty to turn in your directin. Or you could limit to ONE LOT ATM calls. Any how your is Unlimited brokerage. So trade OTM options so frequently that you can make all small profits. Down side risk is less with OTM calls. More over , you are simple trading intraday so you need not worry about decay. That decay will be discounted in opening itself. One more advantage is the Calls of 20 rupees and 30 ruppes have great liquidity. We never had slippage. For scalpers this is great relief. This relief you never get in ITM options.
My main point is , with least distortion of our core trading personality, we can trade as i said. Comple transformation as strategy trader is simply MISFIT to you. You and your tarding style should synchronize.
Finally , i wish to made simple recommendation which suits your trading style.
Follow covered call strategy. This can be done in scalping way. Buy ITM or ATM calls and Sell OTM calls. After all you are free from brokerage. Exploit the market. This is low risk.
Ok , iam sorry if i hurt you, and i am not good at explaining. I got experiencing after losing only. What i said is profitable to me, i hope you will also get benefit.
Wish you happy trading
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Hello Sunny_ndl, appreciate for going through thread, observing my weakness and giving suggestion. I really appreciate and there is no question of hurting. I'm here to find out my weakness and work on it to strengthen them.
By keeping track of trades in journal, it helps me to understand how much I've gain or lost in trade. Also sometime I go through chart and trades and wonder if something better can be done.
Regarding moving to Phase 3, yes it is planned activity. I have started with Phase 1 (with one lot restriction, control loss), moved to Phase 2 (with two lots restriction, increased my exposure and capital, end month with some gain). As per plan for phase 2, I'm suppose to be in phase 2-3 quarter. The main reason for not using strategies were unlimited Risk created because of Shorting. With "Calendar Spread" strategy as suggested by DanPickUp, it fits with my style i.e. not to expose directly with Unlimited Risk. I'm convince with DanPickUp and hence going forward with it.
As per current Plan, hopefully I'll move to Phase 3 by end of this month, I may keep Phase 2 running along with Phase 3 for another 2-3 quarter or so. Another reason to move to Phase 3 is that in future, I may not be able to dedicate more time for trade. So instead of smaller time frame, I wish to trade using longer time frame.
Regarding your observation for my loosing trade, yes you are correct. Most of time I over-trade, mostly during last hour. As I have unlimited brokerage plan, it may be one reason for this too.
Regarding trading with ITM, you are correct. I need to think more on this and may move to OTM.
Reason for trading ITM Option is that I have restricted myself to trade only two lots mostly. If I go into OTM with Rs 20 or Rs 30 priced lots and 2 lots, I may end day with smaller gain/loss. So in case if I move to OTM, I have to increase lot size.
Regarding "Covered Call" strategy, let me start with little safer Neutral strategy like "Calendar Spread", then later on based on observation and learning curve, can move to high gain/risk strategies like Bullish or Bearish strategies.
For unlimited brokerage plan, it is based on my requirement and inputs from Soft_Trader and other forum members.
Also would appreciate if you can disclose your finding for your earlier losing trades, what is your strategy for correcting them. You already have read lots of materials, got some answers. It will help me and others to avoid those mistakes and learn something from you.
:thanx:
Regards,
Escape
By keeping track of trades in journal, it helps me to understand how much I've gain or lost in trade. Also sometime I go through chart and trades and wonder if something better can be done.
Regarding moving to Phase 3, yes it is planned activity. I have started with Phase 1 (with one lot restriction, control loss), moved to Phase 2 (with two lots restriction, increased my exposure and capital, end month with some gain). As per plan for phase 2, I'm suppose to be in phase 2-3 quarter. The main reason for not using strategies were unlimited Risk created because of Shorting. With "Calendar Spread" strategy as suggested by DanPickUp, it fits with my style i.e. not to expose directly with Unlimited Risk. I'm convince with DanPickUp and hence going forward with it.
As per current Plan, hopefully I'll move to Phase 3 by end of this month, I may keep Phase 2 running along with Phase 3 for another 2-3 quarter or so. Another reason to move to Phase 3 is that in future, I may not be able to dedicate more time for trade. So instead of smaller time frame, I wish to trade using longer time frame.
Regarding your observation for my loosing trade, yes you are correct. Most of time I over-trade, mostly during last hour. As I have unlimited brokerage plan, it may be one reason for this too.
Regarding trading with ITM, you are correct. I need to think more on this and may move to OTM.
Reason for trading ITM Option is that I have restricted myself to trade only two lots mostly. If I go into OTM with Rs 20 or Rs 30 priced lots and 2 lots, I may end day with smaller gain/loss. So in case if I move to OTM, I have to increase lot size.
Regarding "Covered Call" strategy, let me start with little safer Neutral strategy like "Calendar Spread", then later on based on observation and learning curve, can move to high gain/risk strategies like Bullish or Bearish strategies.
For unlimited brokerage plan, it is based on my requirement and inputs from Soft_Trader and other forum members.
Also would appreciate if you can disclose your finding for your earlier losing trades, what is your strategy for correcting them. You already have read lots of materials, got some answers. It will help me and others to avoid those mistakes and learn something from you.
:thanx:
Regards,
Escape
Hello escape, thanks for taking in right note.
I hope you are aware of your strategies and their profitability and time it takes work such strategies etc. In trading 70% of goal is discovering what type of trader we are. This where our comfort levels are high. Personally i know delivery based stock trading yields better results than intraday. But i can not trade them because i can not control the urge of trading so often. Trading once in week or month , does not suit my personality.
OK i hope you better have other brokerage account for your PHASE-3. Because RKSV proves very expensive. Unless you trade daily 5 lots , RKSV not matches your requirement.
OK, Wish you all the best and thank again for taking suggestions in right context.
Bye sir
I hope you are aware of your strategies and their profitability and time it takes work such strategies etc. In trading 70% of goal is discovering what type of trader we are. This where our comfort levels are high. Personally i know delivery based stock trading yields better results than intraday. But i can not trade them because i can not control the urge of trading so often. Trading once in week or month , does not suit my personality.
OK i hope you better have other brokerage account for your PHASE-3. Because RKSV proves very expensive. Unless you trade daily 5 lots , RKSV not matches your requirement.
OK, Wish you all the best and thank again for taking suggestions in right context.
Bye sir
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