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Here comes an extension of the analysis to currency futures, CL, GC, SI and ZB. It is an analysis of the impact of transaction costs and slippage on the profitability of a simple strategy with
- 60% profitable
- and a win - to - loss - ratio of 1:1
…
Can you help answer these questions from other members on NexusFi?
Hi all
I am confused with the concept of limit order and stop loss order? Last time I was reading a journal and it stated that limit order is helpful to traders who order the broker to trade behalf of them only in specific condition. Can any one discuss this in detail?
Regards
Hi all
It is said that straddles and strangles are two effective trading strategies. How effective are these strategies. Can both be applicable while stock prices are galloping upward or decreasing? I am searching for details of this strategies and how can they be developed and implemented.
Regards
Check the wiki (follow the links) for limit order and stop loss order. Also I highly recommend you start reading some basic trading books, you can find some that start with a good overview of concepts:
Straddles and strangles.... brings back bad memories... lol
I used to trade straddles and strangles often. But I realized I was rarely profitable with these strategies and started doing the more direction-biased strats like diagonals that in my opinion tend to provide much better risk to reward ratios.
but, since you ask, here are the main points about straddles and strangles:
1. they are generally directionally neutral - aka delta is close to zero. So, when you first trade the spread, you don't care which way the price moves (although it MUST move, more on the later). On most trading platforms you can see how much the price must move before your position becomes profitable. One of the reasons I stopped trading these was because generally you need at least 2-3% of price action in one direction which keeps increasing everyday.
once the price goes bullish/bearish, you need it to keep going in that direction and then you decide to become bullish/bearish (unless you stay delta neutral by adjusting, but beware commissions).
2. you need volatility/gamma to rise. one of the BIGGEST killers of a straddle/strangle is a drop in implied volatility/gamma and of course vice versa. a good time to buy straddles/strangles (s/s) is before earnings announcements. a caveat is that generally right after earnings, implied volatility drops significantly (unless there is a big price movement. in my experience the drop in implied volatility is offset by the price action and you end up with not much of a change - which is terrible news for s/s). So i used to buy maybe 2 weeks before earnings and sell a day before earnings.
3. theta is your biggest enemy. if the price does not move enough or if IV does not rise, theta will slowly kill you. it is like a cancer that spreads through s/s and kills your trading account one day at a time. this was the main reason i stopped trading s/s because i realized i am not a patient person. I cannot wait around and see my position dropping everyday and wait for the big move...
having said all that, a lot of people trade s/s successfully. if you really want to go at it, i suggest looking hard for options that have low IV compared to historical IV, stocks showing signs of a large move (although then you might as well trade a diagonal or something - something that gives you better hedging options), or try an alternate s/s-like strategy (something like a short calendar - has similar properties but provides better exit options).
Hi all
I am looking for a high leverage/low margin req. broker where i can trade US stocks (it should have all the stocks, not just 20-30). The best one i could find offers a 10:1 leverage which is really low compared to the 100:1 or ever greater that i'm used to when trading forex.
I'd be curious to know where you found one that offers 10:1 for stocks. Day trading margins for stocks are 4:1.
Also, if I can provide unsolicited advice. Based on the questions you have been asking here, trading with the highest margin available in any market, is the last thing you should do at this point.
