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Tuesday, December 28, 2010

Adjusting an Iron Condor

This is a follow up on the Iron Condor opened here. POT has been going up in value for a while looking really strong.

Friday, December 17, 2010

Butterfly play on IBM

IBM just doesn't want to move.
If you take a look at its chart you will notice how IBM has been trapped in the 141 - 147 range for the last month and a half.

Iron Condor play on POT

A Canadian one this time. When takeover rumors were spread by August this year, Potash of Saskatchewan suddenly sky-rocketed from the 90's to 140's. Since then, it has been pretty much trapped in a sweet range.

Saturday, December 11, 2010

Do Forex robots really work?

Yeah, I asked myself the same question before deciding to learn MQL in order to program Expert Advisors. Do Forex robots really work?

Well, I guess the ones selling power points based systems will say they don't work. But think about it,

Monday, November 22, 2010

Closing Calendars trades (OSX)

Today at about 4pm, the calendars on OSX discussed here were closed.

This trade was put on November 16, and closed today only 6 days later. Remember how I wanted to benefit from the volatility skews, by selling options of high volatility while buying options of low volatility for protection.

Saturday, November 20, 2010

Using options volatility

Following the idea of Volatility. I am going to be experimenting with a position in the PHLX OIL SECTOR index (OSX). Which I didn't find the time to blog about when first opened.

The idea is to use calendars, trying to sell the high volatility in the front month and buy the lower volatility in the farther month for protection.

Closing Butterfly on SPY

Following up on the Butterfly play discussed here. This trade was unfortunately a loser. SPY ended the week outside our profit range so we lost $154.

As you can see in the chart,

What is options volatility?

I remember having a hard time understanding when someone spoke about volatility. I didn't want just a concept in my mind, I wanted to have a formula, something mathematical so I could feel fine with my soul.

Now, what is then volatility?

Friday, November 19, 2010

Find the right Forex broker

This is a follow up on my venture trying to find a good Forex broker. My initial post can be found here.

Out of my already filtered list:

- Alpari
- ATC Brokers
- Oanda
- MB Trading

I am reducing it even more ...

Wednesday, November 17, 2010

How to find a good Forex broker

For sure, one way not to find it is by basing your judgment only on online reviews. I have been spending hours of precious time during the last two weeks trying to find a good Forex broker.

At first I thought it would be something easy. Boy was I wrong! By now I have probably been through every website with Forex brokers reviews you have read out there. And it's really disappointing to see so much crap and scum everywhere. Most sites offer fake reviews, most sites get paid in order to raise the rating of specific Brokers with fake reviews. Furthermore there is no guarantee that the reviews are legit and not written by the brokers themselves. In the end Internet is so impersonal! So, by default I don't believe in anything. Lies everywhere....

Monday, November 15, 2010

Follow Up on Butterfly trade on SPY

This is a follow up on the Butterfly trade played on the SPY ETF. The initial trade was discussed here.

Well, the markets have gone down a little since the trade was open and along with it, as usual, most indexes and ETFs that track them. That is the case for the SPY which has gone down to 120.03 from 122.73 on November 9. Since our initial profit range had been defined from 122.54 to 127.47 we are in a losing position right now.

Take a look at the profit chart obtained from the ThinkOrSwim platform:

Sunday, November 14, 2010

Protecting investments with a Collar

The collar is another wonderful strategy that combines stocks with options to protect investments and make some profit at times as well.

Suppose you have 100 shares of company ABC. Each share is worth $10, so you have a $1000 investment. Now, you are afraid to lose money on that stock and you buy a PUT option strike price $10 for say $2.00 ($200 for the right over 100 shares).


Ok, time to discuss about leverage in Forex.

When I first started delving into the Forex world I used to wonder "How do people make money trading currencies? The movements are so negligible!"

Let's say for example that the pair EUR/USD is trading at 1.4000. That means you would spend $1.4000 dollars for every Euro you wanted to buy. You would enter this trade wanting the Euro to go up. Let's say you have $1400 US Dollars and you buy 1000 Euros with them. Now you have 1000 Euros and hope the Euro goes up against the dollar.

Traders comparison (penny stocks)

For those who lose their asses over and over trying to make easy profits with penny stocks, here is a comparison of the performance of the most popular alert services out there today.

Go to the bottom of this page in order to see the Legal Stuff

Tuesday, November 9, 2010

Butterfly play on the SPY

This is a very simple idea to speculate on the movement of the SPY.
As of this writing SPY is trading at 122.73. The idea is that the markets will keep moving strong or in any case they wont plummet anytime in the next 10 days. So, I came up with a Butterfly that looks like this:

BUY 1 SPY NOV 121 CALL @2.23 (-2.23)
SELL 2 SPY NOV 125 CALL @0.37 (+0.37 X 2 = +0.74)
BUY 1 SPY NOV 129 CALL @0.05 (-0.05)

MAXIMUM PROFIT: $2.46 ($246)

Sunday, November 7, 2010

A lazy trader vs a hard working student

I've been a little lazy with the blogging duties lately and there are two reasons for that. First I moved out to a new place which supposes a lot of physical and mental effort lol, and buying stuff for the apartment has demanded lots of hours out of my time. The other reason is that in the last two weeks I have completed reading three books. Yeap, however hard you find it to be true, I have read over 800 pages worth of trading in the last two weeks. I get passionate, which is not always a good thing, and being a lazy trader doesn't mean being a lazy student.

As for the books, the first one I read was "Massive Profits in Penny Stocks" which you can get for free by visiting It is definitely a must read for penny stocks. I am not a penny stocking guy but you know I like reading as much as possible about trading, and this book can definitely help you understand the world of penny stocks and use the strategies exposed by the author in order to be profitable. And although you may or may not be a penny stocker, this book is for free anyways ;) Don't go naked to the penny stocks war!! You are warned.

Tuesday, October 19, 2010

Iron Condor on SPX, trade closed

This market is crazy!
Dow Jones down 165 points for the day, but during the session it got to be down by over 200 points.

Today I decided to close the trade on SPX open on October 11, and get out with a 700 dollar profit in 8 days.

Saturday, October 16, 2010

Gurus vs market direction

The market has been soaring lately. The most unbelievable thing is that it has been doing so amidst not so good news and definitely not good volume. Volume is always a sign of conviction, confirmation. In the middle of all this it is a lot of fun when you see so many "Gurus" everyday looking for an explanation, or "finding" a reason why it went up today or a little lower down yesterday. They always seem to find a reason haha, same as when they explain things that already happened on a chart. It is so easy to be a good technical trader when you are explaining things that already happened!!!! I could be a teacher my self and be selling pdfs and making money without ever having traded at all!!

Friday, October 15, 2010

And the Strangle hit it off the park!

As analyzed on the previous post, yesterday Google moved strongly after earnings report. But let's take a look at it in slow motion:

Thursday, October 14.

3:30 pm, just 30 minutes before market close, it is presumable that Google has made most of its move for the day and everything else will be left for the earnings. At 3:30pm the stock was priced at $538.63.

Tuesday, October 12, 2010

The magic of the Straddle and the Strangle

Earnings are big movers! That is almost a universal truth. Earnings reports are like fuel to an engine. So today, we will move on to another type of neutral strategies: The Straddle and the Strangle.

As any neutral strategy we don't really care whether the stock moves up or down. But unlike the Iron Condor (where you don't want the price of a stock to move outside an interval), with the Straddle and Strangle you are speculating that the stock will have a huge movement in either direction.

Monday, October 11, 2010

Iron Condor open on SPX

I just love the Iron Condor.
This time I will be playing another one but using the SPX index. Indexes are better for Iron Condors than stocks because they are averages of groups of stocks, which means they move slower than a particular stock. You can trade an Iron Condor on Google or Apple, but the problem is that stocks are influenced by rumors, news, earnings etc which makes them move sharply and that's what we don't want when trading neutral positions.

The position open is:

Wednesday, October 6, 2010

Weak USD, is that good or bad for stocks?

The Us Dollar is weak these days and losing value. It is in oversold territory against major currencies already but how long can that last? Nobody knows. Ok now, how does this impact the stock market? Well I don't know. I know that for the Forex markets it means wait for the reversal!! It is gonna be a good opportunity when the downtrend comes to an end, but again, when is that gonna happen? You don't know? I don't either!! So, you will have to wait for the clear technical signals on the charts.

Tuesday, October 5, 2010

How to start paper trading?

There are certainly many ways to start paper trading for free. However, very few places will allow you to analyze complicated positions combining options the way ThinkOrSwim does. The ThinkOrSwim platform has been consistently rated among the very best of the brokerage industry for several years in a row, and it is a tool suited for options traders (although you can also trade Forex and stocks). One of the sweetest things about this software is that it is provided for free for you to practice all the time you want! That's incredible and it says a lot about the confidence this guys have on their product.

Thursday, September 30, 2010

The Diagonal Spread

Just added a basic description of the Diagonal strategy to the Options Strategies section. Check it out

Go to the bottom of this page in order to see the Legal Stuff

Wednesday, September 29, 2010

Calendar and Double Calendar

This is such a powerful strategy that many traders will only play the game using Calendars and Double Calendars. I added the initial concepts to the blog, which you can start reading here
In the future I will try to explore some trades using this valuable strategies.
Have fun!

Go to the bottom of this page in order to see the Legal Stuff

Tuesday, September 28, 2010

Get Started on Options Trading

I just added a new page to the blog in my intent to educate. If I am going to talk about options here it makes sense to explain the basics before getting into more complicated stuff such as the Iron Condor explained some days ago.

So, go to the Get Started section and learn the very basics of options trading. Hopefully that will be a good starting point for you on this subject.

Friday, September 24, 2010

I totally suck

Got Kicked out this  morning in the USD/CAD trade put on last night with a 400ish dollar loss.
I totally suck!!! Trying to learn why that happened I discovered something called time frames!!

Thursday, September 23, 2010

Delving into Forex

After my first venture in XAU, I decided to allocate some free time towards delving into the Forex market. I am totally new at it, and my first task was to look for good information, preferably free on the internet.

I stumbled on this great site that offers lots of free education, tools and resources

Tuesday, September 21, 2010

The perfect parasite

Hello fellas!!

Wouldn't it be nice if you had money coming into your pocket just like that? Without doing much for it? Everyone would love that! But the point is that if it were possible for everybody the world would be a bigger mess than what it is now. Someone has got to work! So, only those that try to get some education in finances (get educated buddy (stocks, options, Forex, real state, whatever)) and only those with more desire to win than fear of losing have a shot at it. A shot at being the perfect parasite!!

It's been a little busy the last few days, but I have kept an eye on XAU while the market has been going up and up.

Thursday, September 16, 2010

Adjusting the Iron Condor

XAU hit a high of $193.92 today, and although it went down later on, I decided to adjust the Call options of our initial Iron Condor explained here

Initially our position was

Bought 10 OCT 175 PUT       @ $2.55 (-)
Sold     10 OCT 180 PUT       @ $3.80 (+)
Sold     10 OCT 192.5 CALL @ $5.50 (+)
Bought 10 OCT 197.5 CALL @ $3.60 (-)

Tuesday, September 14, 2010

Taking care of our Iron Condor

Uuufffff, scary upside movement on XAU today. It closed at $190.70 but reached a peak of $193.21 during the day. I would have adjusted had it broken the $193.75 mark, but it didn't. If we had adjusted, now our profit picture would look different (less profit). But that's the importance of been serious with this "rules" thing. It's like the woman of your life. You don't cheat on her!!!

According to many "gurus" the market must be getting close to a correction. I don't care about that, and anyways XAU tends to go on its own way. Take its one year chart for example and compare it to that of the DOW Jones and you will see why I say that.

Sunday, September 12, 2010

Stop Overtrading!

One of the most difficult stuffs when dealing with neutral strategies is, believe it or not, to avoid over trading, avoid over adjusting your positions.

Set some ground rules from the beginning and stick to them. For example in the trade I analyzed yesterday, if our downside break even point ($176.83) is threatened I would adjust. But what is the meaning of "threatened" here? Well, that's when your personal flavor comes in. For me, I said to myself, if XAU goes down to $178.50, I will close the Puts side of the trade:

Saturday, September 11, 2010

Trading an Iron Condor position in XAU

Hello lazy traders,

I recently put on an Iron Condor position (paper trading) on XAU (Phlx Glod/Silver Sector) where I really like my odds. Usually Iron Condor players only aim for a 10% return on investment or something like that, sometimes even less. Sorry guys, but not worth my time. It just doesn't work for me.

This position was open on September 8th, and looks like this