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Wednesday, February 29, 2012

Risk/Reward, Profit Factor and Profitability of Trading Strategies

It is amazing how many traders, specially newbie traders, emphasize how this or that system wins 80% or 90% of the time, as if that is the only thing that matters. When in fact, only the combination of the success rate plus the risk/reward ratio of the trades should be analyzed as a whole.

Saturday, February 25, 2012

Weekend Portfolio Analysis (02-25-2012)

Well, well, well, and we keep going up and up and up. Anyone would say the sky is the limit for this market. Before my usual weekend rant, I want to talk about the title of these weekend articles which I have changed to "Weekend Portfolio Analysis". The reason why I think this change is important is that it accurately describes the purpose of these articles. I was definitely not forecasting market direction for the upcoming week, so a title like "Weekend Market Analysis" was not appropriate. At the same time the other title "Weekend Thoughts" was too generic, and I was attracting the wrong readership to the site, by bringing frustrated moms who were Googling God knows what on a Sunday afternoon and were ending up at my site.

Tuesday, February 21, 2012

Why ZuluTrade is a bad idea

If you got to this post via a search engine, you know what ZuluTrade is. If you don't, ZuluTrade is a website that offers a platform for Forex signal providers to broadcast their trading signals so that these are replicated across subscribers' accounts.

Saturday, February 18, 2012

Weekend Market Analysis (02-18-2012)

This was a very active week, with the markets still moving up with no significant retracement and holding the 10EMA with confidence. Friday marked February expiration, and therefore, the trades for the month of February are now history and the track record updated accordingly.

Thursday, February 16, 2012

February SPY Position closed

Demo-Trading:

BUY TO CLOSE 13 February SPY 137 CALL @0.08
SELL TO CLOSE 13 February SPY 139 CALL @0.00
Debit: 0.08

March SPY Bear Call Spread

Demo-trading:
SELL 14 SPY March 141 Call (@0.39)
BUY 14 SPY March 143 Call (@0.16)

Tuesday, February 14, 2012

Profitting from Delta Neutral trading

How to trade delta neutral and still profit from it?
At first I didn't even know what the hell Delta meant, let alone did I question how to make a profit Delta neutral trading. Anyways, according to Investopedia:

Friday, February 10, 2012

March SPY position closed

Demo-Trading:

BUY TO CLOSE 14 March SPY 139 CALL @0.75
SELL TO CLOSE 14 March SPY 141 CALL @0.39
Debit: 0.36

Thursday, February 9, 2012

March IWM Credit Put Spread

Demo-trading:
SELL 14 IWM March 76 Put (@0.76)
BUY 14 IWM March 74 Put (@0.51)

Wednesday, February 8, 2012

MACD Divergence indicator for Metatrader

The MACD Divergence indicator displays the traditional MACD histogram indicator panel with the addition of both Regular and Hidden divergences that are also reflected on the price action screen. The indicator sends alerts via email (with attached screenshot of the chart), via mobile notification to your mobile device (Android, iPhone, iPad), and additionally pop up message and/or sound alerts in the Metatrader platform. That’s four different ways to alert the user. The periods of the MACD as well as the colors can be customized.

Sunday, February 5, 2012

Weekend market analysis (02-05-2012)

Well, well, well, the market just doesn't want to go down. This week was impressive and gravity on the charts seems lost forever. This uptrend has been developing without pullbacks, and again, it reminds me so much of the December 2010 - February 2011 rally without pullbacks. It will happen, the pullbacks will come, they have to, in order to sustain this uptrend,.....well if the pullback doesn't show up the market will end up the year up 70% or something, which is clearly insane.

Friday, February 3, 2012

March IWM Credit Call Spread

Demo-trading:
SELL 14 IWM March 88 Call (@0.44)
BUY 14 IWM March 90 Call (@0.19)

March SPY Bear Call Spread

Demo-trading:
SELL 14 SPY March 139 Call (@0.63)
BUY 14 SPY March 141 Call (@0.31)

Wednesday, February 1, 2012

Use a Credit Spread or a Debit Spread

This is an interesting occurrence that you might not know of when/if you are new to trading vertical spreads and that you can use to your advantage to gain a few extra dollars here and there.

In my paper-trading venture I had decided to only trade Out of the Money Credit spreads. That is, when I believe the markets are close to overbought I sell and Out of the Money Call option and buy a farther Out of the Money Call option to reduce the unlimited risk. Likewise, when the markets seem oversold to me, I sell an Out of the Money Put option combined with the purchase of a farther Out of the Money Put for protection.