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The Learning Journal of RedK Trading Options...
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The Learning Journal of RedK Trading Options...

  #11 (permalink)
Knowledge Seeker
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weekend homework: study updated

A quick update of my custom ToS KR_DMI study to V4B - details here..
https://futures.io/download/vip_elite_circle/1229-download.html?view

i'm not a ToS script guru, just trying to make the indicators simpler, effective and easier to view/use. reflecting how i like to interpret the price & volume action on the chart. feedback welcome.

I just wish i can see it this way on the iPad Trader

RedK

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  #12 (permalink)
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Closed the QCOM covered call for $1.55 .. around $200 profit. could have left it to run, but i'm worried QCOM is on a reverse move upward, and AAPL earnings on Tuesday may have some impact on QCOM.

INTC puts still going. funny it hit may target with a gap down on open, but i didn't exit. i didn't have my STOP in place. have to be more strict with my rules. what's the point of having rules if I don't follow them. So as a fix, i re-reviewed my chart and placed an OCO for a tight Stop Loss and Exit Gain, my analysis shows it still in the right direction, so can stay for couple more days. action around closing time sort of supported this thought. will monitor closely now that i have the stops in place.

sharing another simple study, K_betterVolume_V1 on this link. if you're like me, expect to see volume bar color reflecting the current period price move (and not compared to prior period like the way the default works in ToS), then you may like it. it's just a simple customization of the default VolumeAvg study. i added a 2nd moving average to it as well.
https://futures.io/download/vip_elite_circle/1231-download.html?view

excited about AAPL earnings tomorrow. funny to watch how the market reacts to a company delivering 60%+ revenue increase .. but that's another story.

RedK

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  #13 (permalink)
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INTC & AAPL


Closed INTC Puts @ $1.32 yesterday for $780 profit - INTC reversed up today as expected - happy i exited at the right time.

AAPL Earnings plays:
  • yesterday Sold 1 AAPL weekly 575 put for $6.4 (IV play)
  • reaction to AAPL earnings wasn't great, put is trading around $4 and is 2 days to expiry, so will leave it as i see buyers coming in and expect AAPL would pick up slightly tomorrow
  • today BOT 1 Deep ITM AAPL Aug 550 Call at the dip ($29.30). got in the green during the day, but closed slightly red. target to exit when AAPL in the $580-$590 range, or within next week, whichever is sooner.

wondering if anyone in the forum is trading same style as i am (basic options, multi-day swing .. at least that's what i think i'm doing ).. feels so lonely when i mostly see futures or forex fellow traders all around...

will post results.
Green line all traders,
RedK

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  #14 (permalink)
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closing AAPL

just closed the AAPL position. thoughts behind it:
  • i don't like the action post-earnings. didn't get new highs today, so my expectations now is that AAPL will drift lower for a week or so before getting some strength. (will keep watching, it's in a great territory for a simple long Call play)
  • yes, it was double daily volume yeaterday after the earnings, but it didn't help carry the stock up, and today's volume showing lack of interest. so i got spooked out.
  • My cash-covered Put trade was a volatility play, i got most of the profit once volatlity dropped & don't want to wait expiry tomorrow, no point holding it longer if i get 60% profit with the big risk (if the stock drops, i don't want to tie the cash)..
then today i was like trying to force the indicators to show me what i'd like to see (that it will move up NOW), finally gave up and decided to go with the gut feel and play safe.

Buy to close 1 AAPL weekly Put 575 @ $1.99 profit $441
sell to close 1 AAPL Aug Call 550 @ $28.35 loss $100
net of 2 AAPL trades, $331 profit ... not so excited but happy - wasn't a bad week.

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tomorrow a new day, next week a new week
green lines all traders,


RedK

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  #15 (permalink)
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extremely unhappy

bad week for me..
after closing AAPL position at small gain (300 bucks), the position rallies and i saw a lost opportunity of around $1,200

then i update my chart setup .. adding updated indicators i just finished working on. then take trades without waiting for the signal. grrrrr! i'm just too eager to pull the trigger, then the fear of losing. 2 losing trades in a raw. and i played the weeklies *in both* (i set a rule before not to play the weeklies until i'm totally confident).. so mad with myself.

not sure what's wrong.. not focused, too eager to gain, too worried to miss or lose. not the right mind-set .. i was better before, even now that i have a better set-up that helps me see the action clearly .. am I confusing myself looking at too many timeframes (15min, 1 hour, 2-hour, daily..)?

is it back to the sim for me? i hate losing real money that i just made.
why don't i follow my own indicators? you look back and say, how the heck did i take that trade, it's as obvious as the sun that this is the wrong direction. it's just so clear in retrospect.

need to build confidence. will not open new trades until all signals align properly and on a daily + 1 hour aligned. will spend time in the sim and OnDemand to learn my own indies.

hopefully next post will be a positive one. hope my mode isn't contagious.
green lines all fellow (good) traders,
RedK

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  #16 (permalink)
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i'm really starting to think i'm in the worng timeframe...

so couple of bad trades last week, taking me back a lot on my quarterly target. i know the issue. i was trying a new idea, new setup, then to add salt to injury, i used weekly options against my own rules.. then all week this week, not having enough confidence to pull the trigger on new trades, and waiting for what should be an ideal confirmation...

it got me thinking if i'm in the wrong timeframe altogether.. i want to ride multi-day trends, and i don't want to / can't afford to watch the screen all trading sessions with fingers on the trigger, every hour every day, and i want to make few and profitable trades.. this is not supposed to be labor work (with all due respect to fellow day traders.. pls don't get upset or flame me, it's just not me).. this is supposed to be "brainy" stuff.. i also saw reviweing my past trades, that i made some really good trade entries, then chickened out only to watch them go in the direction i expected, and i miss big on profits.. what's wrong here? some adjustment must be due to the way i trade. i need to learn from what's not going well, and get myslef to a better level that suits the way i want to trade. isn't this what this journey is all about?

i zoom out my timeframes.. i know i should be looking at a shorter one, and a longer one, so my short-term trend trades are in the direction of the longer trend.. but i was looking at 15min vs 4 hours.. thought is, the 4 hours will reflect the daily trend as well.. so i should be safe taking trades along the daily trend but see a slightly "zoomed-in" version of it. the 15min kept me anxious all the time, with many ups & downs, wondering, is this time to make a move?

then i expand into a day vs a week view.. and things there look much simpler, with less room to go wrong.. see the charts i attach for 2 of the symbols i follow.. the crosshairs show where the needed trend starts on both timeframes. Man,it looks much easier to capture these trends and my indicators just screamed the upcoming moves.. i will need to use options with further expiration (which is fine) or just go and buy the stock (buy & hold)

Am I on the right track here? me thinking aloud, hoping to hear advice from someone who "has been there before me" .. so this is RedK on a change in the same journey, just a shift in strategy and my new trades will align to this new timeframe.. we'll see how it goes from there

Green Lines to all,
RedK

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  #17 (permalink)
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Improved Setup = better visibility .. going well

improving my setup by setting to a wider timeframe. i'm finding out that i will always need to look at a good timeframe pair to get meaningful visibility on price action..
day vs week works well for longer trades (few days in position)
hour vs day also can work well for multi-day positions
15min vs hour .. hmm! ok, but will show possible intraday moves, which i want to avoid for now
15min vs day .. not good.. the 2 timeframes are not suitable together and will be confusing. same for hour vs week.. avoid.

so after modifying timeframe/aggregation and set up my charts to look at the chosen timeframe pair, i feel i can better identify good moves to trade.

took an option trade in NFLX. Entry/exit as marked on the chart. there was a better entry but i was too eager to try the improved setup, and also set an exit too tight not wanting to give back profit. but i loved it. confident position, price moved as expected. in fact, after i got out, i was expecting the move to ease down, as shown by my VMI indicator on the right (this VMI always moves ahead of price, it's based on recent Volume pressure.. a leading indictaor? maybe .. but it's doing well so far)
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5 NFLX Sep 57.5 call bought @ 5.4 on Fri, sold @ 6.9 --> $750 profit. the move continued after i was stopped out, but today is easing down. i see the trend on longer timeframe slowing/breaking and expect it may gain strength after that again. so i'm waiting. happy the improved setup works well, and will try to commit to it from now on.

just posted my custom Stochastic Momentum Index (KR_SMI_v2). i found that i need a momentum indicator with the trend studies, to better "see" the end of a move. so that's what i use. feel free to try and share feedback.
https://futures.io/download/vip_elite_circle/1251-download.html?view

so now, all indicators i use in my setup (except for the NetRSI/VMI.. it's just a crazy idea i'm playing with, so will leave aside for now)are posted here and in a future post i will also share the method in a simplified way, for the benefit of others who may find it useful.

cheers,
RedK

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  #18 (permalink)
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INTC by the book

Took a long Put trade on INTC .. followed my signals, checked the bigger timeframe chart.. even waited for retracement (upward) yesterday before hitting the trigger on buying them.. INTC gapped down on the open today, and i happily closed the trade for a good 50% profit ... i wish they all go like this.

i wanted to hold longer, but my chart says i should question the continuation of the move. there's a support level near by. Also market made a big move down today overall, that doesn't happen everyday. if a quick move makes me so happy in a shorter time than i planned, i will take profit and exit.. and keep watching if it resumes later...

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2nd trade was selling covered call on my QCOM stocks.. but QCOM kept trading in a range, so i closed it almost at 0 profit. trying to learn not to be in a position that doesn't make money, and for QCOM to hold it's ground with such a down market, that's strength. so close now and check back later when there's a direction.


the thing that looks like a lego/ladder on the left-hand chart is a Price Levels indicator that i put together quickly, to be able to follow the move of price "in levels" .. or increments of a certain $ value or percentage. be warned, it's nice, simple but also very addictive ... you can see breakouts much easier this way, and i can play with the "level unit" to change it in different ways (% or dollar) .. if you like something similar to Darvas Box, or Range Charts, you you may like that one (note: i didn't like the Darvas Box study in ToS - IMHO, it doesn't reflect the correct Floor/Ceiling of price ranges).
https://futures.io/download/vip_elite_circle/1253-download.html?view

next few days, i'm watching NVDA, STX and GM for possible uni-directional moves (all down). looks like it's gonnabe a "short-summer"

Green line fellow traders,
RedK

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  #19 (permalink)
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better weapons..

after reading more about 9/30 method i got inspired. i want to do the same, simple setup, clear to identify, consistent entry/exit-loss location, and you ride it for few hours, a day or 2, or as much as it gives you.. with options as a proxy to the underlying, the profit potential is there.

so spenttime in those past 2 weeks improving my indicators to adjust to the same concept, but ont copying it exactly. the 30WMA is almost the same as 20EMA. so i'll stick to my trender settings of 10/20/40 or 5/10/20EMAs. but need something to show me short-term moves for entries and exits (if things don't go as planned) while i still look at Trender to stay with the longer-term trend.

first, added a simple volume ratio weight to the ADX/DMI .. it shows me where the volume behind the current move is going, and i use the same calc of the +Di/-Di but apply on the ratio of volume compared to volume average of same DMI length.. sound promsing and acts as a leading indicator.
then i wasn's happy with my SMI. my mind can't relate the SMI move to my Trender or DMI. i ended up doing 2 things
1. created "Sloper", an indicator that calculates the change in slope angle of an EMA and provides a signal up or down on reverses of direction. thought i would use it to complement Trender to id short-term moves
2. added a Fast_Momentum line to my Trender,, and wow, amazing.. the calculation was simple, take the fast EMA and calculate where it's position within it's own Hi/Lo channel. drawn on a chart, this is a great indicator to where the price is between it's Hi/Lo range.. and we have momentum..short-term.. exactly what i need. i even tested it in 2 live trades on the spot and got them both right (ok, doesn't mean much.. i will stress-test it more

the funny thing, the addition of this Fast_momentum line to Trader given exactly same signal as the Sloper, at exacly the same candles.. (setting to same EMA length). also i compared it (visually on few charts) to PPS (John Person's Proprietary System which is built-in in TOS), and results very good.

the 2 trades were like 2 hour long, but since i was always bad in intraday ,i thought that's a big change.... gives me a lot of confidence.. i feel i have bigger weapons now and better prepared to "engage" .. we'll see what happens next, i need to make up for this quarter target and missed so much experimenting.. focus.. focus..

if anyone is curious about my improved Trender, you can find it here in the Elite section. feel free to share feedback or a note.. or if you think i'm going completely off track with this
https://futures.io/download/vip_elite_circle/1261-download.html?view

enjoy your long weekend, and happy trading,
RedK

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  #20 (permalink)
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the better weapons in action


i keep working on improving & simplifying my setups ..

the improved version of K_Trender allowed me to remove the SMI, as i now have the Fast_Mom built into it.

After some research, i could find out that the concept of K_Trender can be technically positioned as 3 stochastics averaged together, with a twist: each stoch is scored against the next EMA - I use 3 EMAs, then the price itself is measured against the fastest. so Fast EMA relative to Medium channel, and Medium EMA relative to slow channel... this is to mathematically map the original chart setup i started from and have all scored within a +100/-100 range. Fast_Mom, the late addition, is a regular stochastic of the fastest EMA of all 3, against it's own Hi/Lo (Donchian Channel). so in reality, the 2 lines are not directly related, although they look at the price action. but it's more like having 2 indicators plotted on top of each other. but, well, it works.

i spent few days comparing this technique to other possible "trend/momentum" calculations i can use (single line, within a BB or Keltner channels..etc). it seems the concept of the 3 averages delivers smoothness, while allowing the Trender line to also respond to fast price moves (33% of its weight is from fast price).. so it's more sensetive that just using a single-EMA stochastic and produces better signals this way. at the end of the day, if the short term move is stronger, it wins (with equal share within a 100%, Trender moves up), otherwise, the long term (also 33% percent share of total) prevails. i think this is simple concept but effective. then when all 3 EMAs cross, the total is 0 - producing a crossing of the zero line and Trender jumps to the other side. the addition of Fast_Mom opened a whole new dimension of comparing relative speeds (the fast one to the combined effect)- not sure if i could explain.. it's really "easier plotted than told" ..

i love that i understand the way my own indicator behaves.. and that there's no magic/external ratios but only interpretaion of price and the short/mid/long EMA moves.

i made 3 trades so far using signals from my new K_Trender. 2 Intraday small winners (as test), and one is currently an open position (Covered Call on QCOM to benefit from the down move). marked the entry point on the left-side chart and the K_Trender signal.

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(meet my new setup .. only DMI & K_Trender - but running out of colors )

the 10min chart shows continuing to slightly "increasing weakness". the hourly (right-side) agrees. so QCOM looks like will continue tomorrow to side-ways or slightly lower (given the prevailing trend is to downside). on the daily (which i don't show here) Trender shows the beginning of a new wave of down trend. i have my eyes on some October ITM Puts to secure my stock position.

thanks for the positive feedback on K_Trender latest update. if there's interest, pls let me know and i'll start a separate thread to capture observations on how to use it, the signals you may expect, and how to improve for different styles for everyone's benefit. Also we can discuss the Trender_TopChart. it's the study you see on the right-side price chart. it plots the 3 EMAs used in K_Trender and provides option of a price channel to visualize the trend (BB, Keltner, Donchian..etc)... a nice gizmo to play with

Also apologies if the "position recommendation" ChartLabel on K_Trenders_v5 still refers to the main trend line. in a future update, i will add the impact of Fast_Mom as it adds some more insight. just need some time as it's not as straight forward.

Green lines all traders,
RedK


Last edited by RedK; September 5th, 2012 at 05:55 PM.
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