The Supertrader, round 3

https://www.tastytrade.com/tt/shows/must-see-tt

Episode 2014-02-12

Great interview. My 3 takeaways:

1. Get a buddy. Trading as a group has a multiplying effect.
2. Trade mechanically. Don't think about the position; analyse the position and treat it accordingly.
3. Keep it simple. Tarting things up with charts and analysis just makes it harder.

Bonus round: Trade what works for you. Duh, but sometimes you have to be reminded.

For some reason I think I had a different takeaway, bringing it to 4. I'll have to watch the video again. Planned to do that anyway.

Trading update

I still have a ton of proto-posts to get done. Nevertheless, bit of an update.

Half the GOOG iron condor closed. I've split all my exits now (well, most of them; it turns out it didn't make sense to split some of them) so that I can close one or the other spread on a stock swing without worrying about closing them all at once.
I have no idea why I didn't think of that (or remember it? whatever). A good friend of mine had to point it out to me.

So my first TWTR spread closed over a 2 day period as well. One side closed on the 4th and the other on the 6th. For a total profit of $29.04, including all commission costs. Took 10 days to close it. So I risked $115 to make $29 in 10 days. Not too shabby? I've responded by opening a MAR iron condor in the same. IV rank &etc are good for March too.

I have an iron condor on SINA that's half closed too. I need to look at that one again because...

I've learned that re-opening these closed sides makes good sense. My GOOG call spread (that I mentioned above) closed for a tidy 25% profit on risk (it's an untidy calculation, I can discuss it in detail later). That left the put spread still hanging out (untested, if you're curious) and tying up capital. Since I happen to like efficiency, and I caught the idea on Tastytrade at an opportune moment, I hacked up my spreadsheet to run some numbers. And of course it works wonderfully to sell another call spread across from the puts. I've re-opened the call position for less credit than initially (time decay) and at closer in prices (the stock has fallen and I'm now 80% OTM instead of 66% at 1 strike lower!) collecting a nice $80. So now even if The GOOG tests those puts I have more room to maneuver without losing money. To use harder numbers, my initial buying power effect was $190 but with the additional $80 that's effectively $110. Plus it's got the same expiration so one way or another the $80 will settle 15 days. I'm a happy trader.

Coming back to SINA... My puts there are tested. And while I have plenty of time to wait it makes me uncomfortable. However there's a nice call spread at 78% OTM that'll give me $0.42 to mitigate losses with.
You know, the more I do this the better I like it.

TL;DR: Stand back. I'm learning, and I need my elbow room.

Edit: The GOOG puts closed now. >.> I'm just going to let it die, I don't feel like playing that kind of game for too long. The SINA call spread order is in. If it doesn't fill today I'll try again tomorrow.

Random dissociated thoughts on theology

Literalism is the Pharisee's Crime. Or perhaps just their first mistake. Confusing the forms of religion with the soul of it.

Some people feel there are mistakes that can't be redeemed. Various addictions, 'selling your soul,' &etc. I ask in response "Is there some act sin that God cannot cleanse?" Keeping in mind (insert verse reference to thought crimes), are you any better? Is there a repentant sinner that God cannot save even from the very hand of Satan? Can evil spit in God's eye with impunity even in the most extreme of cases? Is God really powerless to save His people when they accept Him?
I have to answer myself in the negative.

Lest we descend into worry over our progeny or our fellows we must remember that God doesn't lead us into temptation that we cannot resist.

The more I go to church...

The more I attend church the less I seem to be willing to accept the idiocy.
Is this what the phrase 'losing religion' means? It's not the inverse of 'gaining' it so far as I can tell. It's a consistent, progressive chafing at the inherent flaws that others ignore. Gaining, if that's what really occurred to me some 5 or 6 years ago, felt different. Not a steady numbness or increasing indifference to flaws. Though to be fair life wasn't exactly nice at the time and perhaps it's more that I was retreating from life in general and thus not paying attention to what I was doing.
Hm.

Anyway. Since I never manage to remember thing like this later...
How is it that God is supposed to be as expressed (unchanging, love, perfect, never mistaken, etc) yet in the famous passages where Moses receives the commandments and Aaron builds a golden cow (EXO 32) God as much as says "Oh forget it. I'm just going to kill all those people and make you, Moses, a 'great nation.'" Wait, this is our benevolent god? Serious echoes of Noah here (which He said He'd never do again... that's a different argument).

Then over a couple of verses later Moses convinces Him to change His mind? Wait, I though God's opinions were immutable? How does He go from destroying these sinful people (oh yes, those that love their children are willing to slay them at the slightest insult?) to, well, we're not told hoe He felt after Moses reminded Him of His oaths... wait. Why did God, of all beings, need to be reminded of His oaths to Abraham? Hm again.

Verizon sucks

I don't know what unfortunate gentleman Verizon thinks is my mother but I've been bothering him constantly today because Verizon is incapable of running a cell network.

Here's hoping the idiots can at least transmit text messages.

Trading, day 2

Some hiccups getting started, and I'll journal all that when I feel like taking the time, but finally on the 23rd I've opened my first real money positions.

I put in an order to sell a GOOG IC last night, which cleared quite quickly this morning, and an hour or two after open I added a position in SINA. My balance is up 20% which is of course quite misleading but still. I'm satisfied for now. Trading through ETrade, not my first choice, is damned clunky when my research and tracking are done in different places. At the moment I'm doing research using a combination of Dough.com and Thinkorswim and tracking my trades using a Google spreadsheet. It's fugly. I sorely miss being able to look at my activity as a history or transaction log like you can get on TOS. It took me way to long to even find the cash balance on ETrade's site. Damn thing. I'll make it work only as long as I have to.

Anyway, these two were filled today, both to open. :)

.GOOG140222C1200	-1
.GOOG140222C1205	1
.GOOG140222P1120	-1
.GOOG140222P1115	1

filled at $3.10

.SINA140222C80	-1
.SINA140222C82.5	1
.SINA140222P67.5	-1
.SINA140222P65	1

filled at $1.25.

Yeah, that's probably hard to read. Frankly, I don't care. I just copy and paste from my spreadsheet and can't be bothered to pretty it up.

Something I want to do: Find a means of charting the projected market value of an option spread using theta and charm of theta over time to allow me to predict how many days it will take to reach various profit points. Using that I can (in theory) guesstimate what plays will offer me the best return on a per day basis. Hm. Though I may need to upgrade my PC (and my understanding of calculus) to implement it unless there's something that does that already. Anyway, that's a bit of a future consideration. I just want it recorded for now.

The Trading Plan

I recently heard SLM's  trader psychology segment from Jan 9, 2013 and was a bit kicked in the tail. I'm failing part of the plan that my wife and I agreed upon. Though it's only part it's a psychological crack that I can't leave un-mended. So to bring myself back in line: Here we go.

(doc link to the most current version, also it's over in the pages list)

Preface

I've had this sitting in Evernote for ages. Well. Alright, since 8/17/13. That's ages in some (a lot of) contexts. Because I've been sitting on it, being lazy, I've broken Guidance #5 from the get go. Drat it all.

Worse, I realize looking at it again that the plan has changed. Which is fine, but I'm not going to post the original version now, that'd feel silly, and so the progression is lost. Ah well. Also some of this is a bit forced because I'm trying to maintain the generic flavor of the plan when I've already pretty well gelled strategy and methods for the time being. Everything is subject to change though so I want the plan to be able to encompass those changes in strategy. It's simply hard for me to pull back from the specifics I've already decided on yet necessary to do so.

The Trading Plan

1. Assertions
1. I intend to begin trading stock options. If sufficient income streams can be built to finance my personal budget while continuing to grow account balance(s) I will cease to have a 'day job.'
2. I will be performing strategic trading based on carefully considered metrics without relying on any accuracy of forecasting individual positions.
3. Which segments and what sorts of metrics or analysis are something I must continually research, test, and refine; as a trader this must be the skill which defines my trading and will be the algorithm that will be built into future growth.
2. Guidance
1. I will actively discuss results and progress with my wife. As my children are ready I will introduce them to these topics.
2. I will perform stock-picking only as paper trading. CAVEAT: I may need to bootstrap with discretionary trading but will resist the inherent belief that I can pick a winner.
3. I may take a bath in the event of a housing-collapse-style event. I accept this possibility and will not rely on trading incomes to survive until such time as I have sufficient reserves to re-start  from scratch (this assertion will require continual, ongoing analysis of budget requirements, market conditions, and account disposition).
4. I must accept a certain amount of losses; I must identify how much loss can be allowed on any given strategy. I must perform Risk/Reward analysis at the strategy level rather than the individual trade, though the two will most likely closely reflect each other. This analysis will probably require a regular weekly review, and therefore comprehensive tracking will need to be set up.
5. I WILL communicate publicly (probably via blog) as much of my strategies and results as I can as time and energy allow.
6. I will not utilize a portable trading platform. Trades and direct research will be conducted from a tethered location. Though a multi-purpose laptop may be used, it will only be used for these activities at a single location. Educational pursuits are excepted (grey areas like blog reading must be monitored). A mobile device may be used to check account status for the purpose of personal budget planning. In short, I leave the trading behind at the desk and offer undivided attention, or at least not divided by the markets, to whatever my present situation may be.
7. I will rely on statistical advantages multiplied over number of occurrences to achieve success. I will not ride black swans but will take the first exit which offers reasonable profit on each and every trade.
3. Progression
1. I will test multiple free or demo tools and select an initial, preferably low overhead, tool for beginning trading on the assumption that success will open the financial doors to more powerful tools in the future
1. MILESTONE: Initial tool selected by 2013-10-31 - complete (ThinkOrSwim {TOS})
2. ADDITIONAL: Tool licensed or subscribed by 2013-11-30 - complete, the thing is free (with an unfunded account @ TDAmeritrade)
2. I will educate and paper trade until 2014-01 to familiarize myself with 1 or 2 possible strategies and allow maximal time to deal with tax complexities
1. MILESTONE: First money trade position opened by 2014-01-31
1. Threatened: Account funding took longer than expected and then the brokerage stonewalled on trading spreads. Working on preparing another account elsewhere
3. Identify mechanically repeatable strategy metrics
1. MILESTONE: At least one safe mechanical trade strategy by June 2014
4. Begin cobbling ad hoc automation technologies
1. MILESTONE: An ugly, bootstrapped system able to generate trade orders by Dec 2014.
2. ADDITIONAL: A way to get the generated trade orders executed by same deadline
4. Goals
1. Daily
1. Perform at least 2 paper trades a day using any strategy or mix of strategies. This goal is intended to be perpetual. Paper trades will be logged in whatever tracking device in use at the moment (currently a Google spreadsheet)
1. This has slipped a lot but I feel has been sufficient, especially over December 2013, to proceed
2. Annually
1. Year 1 (2014/01/01 - 2014/12/31)
1. Annual average account growth of 20%. This means that ROR must average to 20% to maintain growth.
1. This may be way too aggressive based on December returns. However markets vary and this may be feasible in the future. Requires monitoring
3. Quarterly
1. Review of account performance against an idealized growth chart tied to the annual goal
1. This should probably be monthly, as the account balance becomes tied to living expenses this will become part of the family budgeting routine
4. Weekly
1. Weekly review of positions and aggressive profit-taking. Positions should turn over quickly to maintain income flow. Highly profitable positions may be held longer to increase average ROR if possible.
1. This is only marginally necessary. I’ll be putting in closing limit orders at my desired exit point the day after each position opens. Position review is necessary but the aggressive profit taking will be built into the trades.
2. I deliberately left that stupid sentence in there struck-out as a reminder of my own hubris. Positions will close at defined profit points as determined at the time the position is opened. If I feel a play could have been more profitable I am free to try to re-open the position in any way deemed profitable.