More than one year

I changed.

1. Recent gains are due to playing swing trades correctly, most of them are from the long side.
2. Recent losses are due to option buys, most of them are from the short side(bought puts).
3. I won't buy options in the future, unless it's an extreme market.
4. I will write options, this way I keep a distance from the assigned value, and even assigned, may turn out to be a winner. The key is following:
5. It has to be OTM puts, I can't choose ATM puts, the buffer is too small, specially use 3x ETFs.
6. It has to be sized correctly, that is, 1x, 2x, 3x, 4x, turn aggressive at the end of the move, not the beginning, most of the cases, sitting on the sideline.
7. The key is not to lose money, not to be in the market all the time.
8. I invested huge amount of time in trading, and learned a lot, but now is time to do the most smart move: play small, play smart, and be a risk taker.
9. Like play poker, I know I can win certain games, but if I play big tourney every weekend, I'll lost in a few weeks, since the odds is just to small.
10. Same as in the market, I need to play only when I sense it's an overbought or oversold market, and it's near the end of a move.
11. Sometimes, take quick profit is a great idea, even I miss the rest of the move; but sometimes, it could be a huge winner, like I bought early August(around 12th) when marekt tanked, I could sell at middle of August, when marekt rallied for 3 days, I didn't. All these TNA,TYH and MWJ, went from quick 4-5% gain to 5-10% loss. Yes, I sold today for a gain, but I could have 20% gain than this 5% gain. So, don't be greedy, and when I was right for a quick profit, take it.

Win

1. First, you need to play by the rule, improve yourself to be the best. You need to study day in and day out to find useful patterns, useful setups, cut loss quickly and take profit at the optimal time. This will build a base.
2. To make real money, you have to take a calculated risk(sometimes, it's surprisingly small risk) to get great reward, that is, you play in a field, there is no rule, it's such a new field, you can almost just go there and pick whatever you want. But you have to be the first one, or second one to be there before everyone else, once there are too many people there, there will have rules and the profit will diminished quickly.
3. Similarly, finding an edge in market, it has to be less crowded play, be the very first to be there, it's better to let smart people identify the opportunity, and you go in and follow them, get out before it's too crowded, and move to the opposite side. It's when to get on the train and when to get out make the whole difference.
4. If you can break the rule while others follow the rules, you'll have great advantage, but usually the reason there is a rule, rule breaker will be punished for breaking the rule, unless it's a new field.

Weighted market moves

1. I will add positions to the opposite of the end of a trend.
2. I will add more weight to that positions, ideally, double the previously small positions.
3. Do this three days in a row, then use 2x ETFs, 3xETFs, options(put on the opposite).
4. By doing this, it will win 100% if I have unlimited resource, and double the size each time.
5. For me, I have to take an educated guess, and take profit if I have one and let the losers recovery.
6. The puts on opposite 3x ETFs is a great way to profit, and low risk I may add, since the one correct action may recover 3 times of the costs.
7. The key is starting small, even using OTM strategy, like right now for me, I am way under the water, and limit my action to add more.
8. With these trend lines, oscillators, I think can perfect this system and make great comback in the future.

Actions

Don't let macro view block my trade.
Don't be a bear, don't be a bull. Be the winning trader.
Reduce risk level so I can sleep at night.

1. Sold 140 SRS at 33.5. Bought last Thursday at 32.17.
2. Sold 90 FXP at 20.5, and 130 at 20.5, bought them last Wed at 22.7.
3. Sold IWM May 47 puts at 3.2 and 3.1, bought last Thursday at 2.86 and 2.79 respectively.
4. Market closed almost flat, SRS at 31.3 and FXP at 20.2 and even IWM went up, the puts closed at 2.8.
5. I will trade less and be more correct than before.
6. Now I still have SRS and the naked SRS puts that's underwater, and AZO shorts are underwater too. It's time to try to get these out close to even as possible.
7. Not losing is the first priority, then making some money back.
8. There is no love and no hate in the market. It's a ruthless world, when you buy, the sellers are dumping to you so she can make money;when you sell, she is buying the cheap shares to make more money. Trust none!
9. I lost my trust in the market, in the Fed, in the company, and in the government. There are too many false actions by them to get you.
10. I will take care of myself in the future.

Trading rules

Respect the price action but never defer to it.Our eyes are valuable tools when trading but if we deferred to the flickering ticks, stocks would be "better" up and "worse" down and that's a losing proposition.Discipline trumps conviction.No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always attempt to define your risk and never believe that you're smarter than the market.Opportunities are made up easier than losses.It's not necessary to play every day; it's only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability.Emotion is the enemy when trading.Emotional decisions have a way of coming back to haunt you. If you're personally attached to a position, your decision making process will be flawed. Take a deep breath before risking your hard earned coin.Zig when others Zag.Sell hope, buy despair and take the other side of emotional disconnects (in the context of controlled risk). If you can't find the sheep in the herd, chances are that you're it.Adapt your style to the market.Different investment approaches are warranted at different junctures and applying the right methodology is half the battle. Identify your time horizon and employ a risk profile that allows the market to work for you.Maximize your reward relative to your risk.If you're patient and pick your spots, edges will emerge that provide an advantageous risk/reward profile. Proactive patience is a virtue.Perception is reality in the marketplace.Identifying the prevalent psychology is a necessary process when trading. It's not "what is," it's what's perceived to be that dictates supply and demand.When unsure, trade "in between."Your risk profile should always be an extension of your thought process. If you're unsure, trade smaller until your identify your comfort zone.Don't let your bad trades turn into investments.

From KingShort

ok I just wanted to post a note on something.

imagine 10 guys in a closed room who are to trade some security X.

X is trading at $10. with 100 issues on the room. assume no risk of default). all 10 have the same amount of cash (I'll come back to this later)the 10 guys are all humans. they all think the same (trust me on that). the room is bullish and everyone believes X will go to $20 soon. so based on their belief, cash-flow calculations, TA, EW, fundamental analysis etc. or whatever you like to call it, they all want to buy. even if 1 of the 10 is a monkey if the other 9 are buying he will buy too.

so lets say each has now acquired 10 stocks of X. market price of X is trading at $10. everyone is LONG.couple of days later X moves up to $15. what do you expect to happen? one might want to take profit already. but all expect $20 so why sell? at the same time another wants to buy 10 more @ 15 because he knows this is going to $20 - but hey - who is going to buy it from him at $20? maybe there is an idiot big enough left to think it can go higher or I can convince one of the other guys? you think $20 will ever be even reached!? how would you play it?

I'm not going to complete the thinking in this scenario, don't have time but although simple it's actually what happens in reality. the point I wanted to make was this: if all 10 traders are rational the price will be at a 'fair' price that all 10 agree upon. very few would want to disagree with 'the group'. this fair price will be fair, efficent, and accurate. there wouldn't be any speculation, trading - it would be frozen. so how is anyone to make money? so it fails.

to be able to make money it is REQUIRED that the market operate irrationally. if the market operates rational i.e. trade where everyone thinks it should trade - there would be no market, and no one will make money! this is why when you have 90% of the people who agree the market is under valued or over valued (probably rightly so) are wrong and lose money. earlier we assumed all 10 had the same amount of cash. now assume 1 has more cash than the rest. how can he use it to his benefit? in capital markets we call these "the biggest house in the jungle who SETs prices".

this market we're trading at the moment is a great example. round the corner it will take a magnificent turn just at the moment when most have gone insane, closed positions at a loss and jumped off the roofs. it has NOTHING to do with toxic assets buy-back, up-tick rule, g20 or whatever. the whole of credit crunch was the room full of 10 guys above on a grand scale. unfortunately the little guy sitting in his bedroom trading wanting to buy a ferrari totally forgets the significant players and political war-fare interest the market attracts. did you seriously think if you can turn numbers in a 'free market' from your kitchen then other larger parties (such as governments) have no interest in this? this is also another reason why it doesn't make sense to share your position with the public and if you have GREAT friends then you sure can make alot of money in the market.

when we were around 690 everywhere I looked the talk was about SPX @ 400 or 500? 550 or 560? or maybe bottom at 300? even war!?now when I take a look around the majority discussion is about SPX @ 950 or 960? maybe 1100 or 1200?If you've lost your life saving holding to your short from 700 then file for bankruptcy. but if you made a good entry from thursday and feel VERY UNCOMFORTABLE about it then you should know that you've made the right trade. it's a trade worth fighting for and believe in.

Have a good weekend..

Future plan

I exited almost all positions, will do my best in the future.

1. AZO, still have 2 shorts at 145.5. Now it's 158.2. Covered one at 157.8 today(this one shorted at 160.6).
2. POT, MOS, MEE, WFR plus covered calls, I will let the calls take care of them. If called away, I do great on these.

ET.

1. Will do only a few things there, short stocks like AZO.
2. Sell OTM puts on stocks like POT, MOS, with high premium.
3. Buy stocks like POT,MOS, DBA,GDX if market crashes. long term play only.

IB:

1. This will be my trading account.
2. Wait extreme conditions and bet on 2x or 3x on options. Need to wait 3 days before I take an action.
3. Paper trade, then paper trade, both need to be wrong before I take a 3rd shot. This way, I will likely catch the Sept low, Oct.low, Nov. low and now the March low.
   
4. Only on these very high possibility shot. Others are not worth it. Reduce my trade and focus on work.
5. Long term, it's the inflation trade, then another big crash.
   

Plan

Only add IYF and IYR puts (around 0.5-1) when market rallies.

1. 2K each.
2. xTrends can be wrong, like in Dec. But it's likely this time he is right.
3. Don't be too greedy, using ATM or near ITM puts.
4. Avoid day trader pattern.
5. Another one, I said many times before, it's AZO. So far it's good. Maybe April's put, around 2, 2K.
6. SRS puts are OK too, but see if it allows me.
7. FD, keep it for another rally.
8. The Oct. 1987 pattern may not play out. But this week's pattern is similar, tomorrow need to close down. If close up, all bets are off. So it's wise for me to add near the close; or if there is a decent rally like today, I can add.

Two charts

plan is nothing, can I at least wait?

yesterday's plan turned out to be golden, I should sit.

1. After seeing Sol and then Erik, and then Atilla all went long today. I started to add. Against my plan yesterday. I thought these arguments are great.
2. I added QQQQ calls at 0.99, 0.94, 0.9. Very bad entry in ET. FD is better, including two at 0.87 and one at 0.8. If I kept the limited order, I could entered at 0.8 and 0.78 respectively for FD and ET, both are far better than the current holdings.
3. If I waited and sat out the middle of day rush, and then see the market in free fall, I might enter at the close, with is 0.83. Far better than the average I am in.
4. Tomorrow's plan is following, if gap down, add 4K and 0.5 K respectively after 10-20 minutes. If not, keep it and hope and strong rally and then sell into the rally. Even there is a run away rally, I'll sell some into it.
5. Follow Erik and Sol closely.
6. On the other hand, don't take profit and rush back to short, these people who playing god will be burned.
7. Now I am more in the camp that this selloff, keep adding on the way down, and it will have a atleast 10% rally back above 800. Now it's much like Oct. and Nov. sell offs.
8. The key is to have enough cash to play it.
9. I regret my decision to enter QLD and TNA in ST.
10. ET and FD are OK. Will enter some in IB as well, since it's near the point. Unless Atilla calls for 4 sigma move again, which I think is unlikely.
11. Tomorrow's bank plan will be key. All others news are not important.
12. Think TK and Mole are weak beings and even Atilla and Erik were early sometimes, like today.

All in cash

1. Sold SRS a day too early, but in great profit, no complain there.
2. Sold qqqq puts for a profit. Timing were not great. Move on.
3. Next week, hope for a strong bounce and rally to add shorts back, I will wait until Tuesday, better one day after xTrends since they were early recently. And follow Erik. I think he may go long on FAS/XLF etc.
4. I think it's risky to play both side, so I'll sit out long, and wait time to enter shorts.
5. From now on, no posts in xTrends in work. Just follow them.
6. Short targets:
7. AZO, it's a overvalued story, and it has debts. Wait three days, since Tuesday morning or Monday if it passes 150, add 1 unit.
8. GDX, if dollar crashes and gold up, GDX may pop again, wait a few days, after Tuesday, maybe later in the week, when gold breaks out again.
9. SRS. This is THE story of the year, it's safer than SKF since just like tonight, the C news can gap up market, and XLF can go up 10% and FAZ down 30% in one day. May go to extreme. If Erik likes XLF, I think I will enter a FAZ puts in the 20s like $500 total. May not worth it though. I can envision a 75% drop in FAZ in one day! Also, enter SRS slowly, I think I'll choose the July puts again, use 45 ot 50, just to be safe, when it's in the 50s for sure. Won't enter tomorrow, I'll give the market a few days to rally, first is at 800, then 850. It could go to 40s in three days or this week, that will be all I need to jump in with both hand.

From another trader Erik

1.always press your winners..., especially when a longer term weekly trend is just starting...

2.yes,thankyou.. lets ride this downward momentum while it is here.. makes up for the slower times when the market is consolidating..

Today 05:18 PMin
3.market will go lower tomorrow, will post XLF intra-day chart in the a.m. as to key levels and a trendline that i will follow tomorrow...

Today 05:11 PMin
4.i always buy ATM options rarely OTM, when they move ITM i will take profits and reposition ATM again. example last week on one position i put on was SPY 83 feb puts.doubled this morning, sold entire postion this morning and took 1/2 the money and bought back-in on the SPY feb 80 puts ATM and bought with the other half of the money SPY mar 80 puts ATM. i will coninue this strategy thru the end of next week as i am trading the downward weekly trend that the XLF confirmed last week that should continue for the next 2 weeks min.

Great entry/exits

1. Recently AMZN, a limit order to short, at 63.5. It gapped up 20% to closed at 59.9, then waited three days and shorted at 63.5. Closed at 61.9, I think.
2. AZO, new high, and market was overbought. Shorted at 144 (day high 146). Closed today at 137.88. Could close at 135.
3. Missed POT shorts at 96 and MOS at 48. POT just two days later, low at 82 and MOS , low at 42.
4. Missed SRS. Sold at 65, bought back at 62.5. It went all the way back to 51! I sold one SRS July 50 puts at 15.2 when it's 53. Like I said, if I waited one more day, I can get in at 56, another day, I can get in at 51.
5. That's why today I didn't chase. Yes I may miss it. Unless Atilla calls for a terminal move, I'll wait and have enough qqqq puts.
6. Think about this, Yesterday, can sell SRS at 66 (if I bought at 53 on Monday), and bought back at 59.9 at the close yesterday. Then today, I can sell at 70.
7. These are the kind of trades I need to learn.
8. Beanies said one thing right, don't use front month options, it will kill you sooner or later. And If I have front month options and have 30% profits, what am I waiting for? Even the March puts, I should exit. Greed, then fear, that's what killed mole's trades, even with so many great calls.
9. KC seems like is the one who claimed he did this all the time. Learned something everyday.
10. Just the last few minutes, if I went calls, I could make a killing, like 20-30%. That's the trade I experienced in 07, which killed me. But I found out in OEX day again and again.
11. Let's use 90% solid. 2-3% next month options, and then 1% front month options.
12. That's the trade I need and I think I can most of the time waiting.

1. LT.Bear market.
2. IT.Bear market.
3. ST. Using charts(oversold, etc).
4. Taking profits from shorts at critical supports are important, like today.
5. Also my selling OTM puts continue to be a great strategy!

A wild day and the lessons

1. Market started 1% lower at open and continued to fall. SRS jumped 5 to 65, and after a while at 8:30AM, my QQQQ 30 puts was at 0.9 (bought at 0.7) and SRS over 66; AZO at 136 and AMZN at 62.8.
2. Someone in xTrends were covering shorts and I was laughing at them.
3. Then it turned. At 11AM, SRS was dropping to 64, then 63.6, I closed AZO at 137.88 (Low was 135.9) and AMZN as 64.1! Fuck!
4. Then it turned again, I canceled SRS order at 66.8. And SRS hitting over 70 at 1PM and QQQQ puts again recovered from 0.58 to 0.97! I was laughing again, promising to close them one more day tomorrow monring or if it dived 5% on the day (at the time, Dow was down 3% and Nasdaq 2.3%).
5. Then it turned again. I sold SRS at 67.1 and closed AMZN at 63 (Shorted at 63.76, Low for AMZN was 61.9). Then some news coming out the the rally continued. Dow closed down 7 after down as much as 245 and Nasdaq up 0.7%! WTF. AZO closed at 139.9 and AMZN at 64.7. ALso sold FXP at 38.2 and it closed at 37.3. SRS closed at 61.4!!!!!!
6. If I sold my puts, I will be 2.5K richer! Now Feb. put is down 30%, was up 30% just 60 minutes ago. March puts are down 30%!
7. I did my best to escape.
8. I found two things:
9. Solid entries.
10. Great exits.

Don't push

1. Shorted AMZN.
2. Bought QQQQ MArch puts.
3. A little bit extended, be careful.
4. Need to start to exit tomorrow. One at a time.

A few things learned.

1. For 2x, 3x ETFs, like SKF, SRS, FAZ,TNA,TZA,FAS. Buy on extremely oversold; better sell OTM puts when you want them.
2. For options, just use SPY or QQQQ, next month on extreme case or catch a trend.
3. Selling and buying on extreme case in the trend is great, like th AMZN and AZO shorts so far.
4. Don't chase.
5. Have a balanced portfolio.

Thanks god for sitting tight

1. SPY down 5% and qqqq down 4%.
2. SRS up 17%, my SRS is even now.
3. Think in the future, I should use next month SPY options to trade.
4. For SRS, selling puts on a extreme down day is great.
5. And FXP is good buy today.
6. If the market tanks, then I should use QQQQ market puts, it's better than Feb puts. Too risky, a bounce here and there I am finished.
7. Now focus on QQQQ puts. Forget about MOS and POT puts, can sell short of these two.
8. For SRS, think if it's up to 70s, may sell the 70 Feb calls. Need to close these July puts, when it's halved, like 6.

90 to 1 and 360 to 1 and 4500 to 2

I have been playing poker for 15 months, and I have done some amazing things.

1. Finished 1 out of 90 today.
2. Finished 1 out of 360 once.
3. Finished 2 out of 4500 once.
4. And I have finished 1 out of 45 at least 30 times.
5. I know how to play positions. I know how to take a all in bet.
6. And I found similar things in stock trading.
7. There are no need to go all in on shorts now.
8. I folded JJ today, with K9 and 33 went all in. I could win that hand.
9. And I was in last place since 30, and I finished no.1 Several times I went all in and survived. You have to be lucky.
10. And I made great decisions.
11. Now back to trade, yesterday's plan was good. I should not enter qqqq puts.
12. Short AZO and sell SRS put are OK.
13. If this morning I sold SRS at 62, at opening, that will be great!
14. And if I bought UCO at 9.1 today and I can sell at 10.3.
15. If I check all the great traders, they don't put themselves in all in situation.
16. There are no moral victory in life. AA can run into a straight or flush.
17. So I made bad decisions today, I should not try qqqq puts, yesterday's HBC and qqqq puts were wrong too.
18. After I escaped SRS and AMZN at great profit yesterday morning, I should wait another day, which is today. Then, I may enter SRS and SRS puts at the end of the day, then I will be like 2K above now.
19. So in trade, like the AMZN short (waited 3 days after earnings) and AZO, waited 3 days after people mentioned.
20. And like the SRS OTM puts, you give yourself lot of room. But I was too aggressive.
21. So let's be careful, hope to trade another day.
22. Now I cross my finger and I will be 1 out of 1 million.
23. My talent is there, I just need to do what I did great in a poker tourney. Be aggressive when others are not. And know how others behave.
24. I need to know market better.

Tomorrow

I have a feeling that we'll get a huge rally on Monday, and I am heavily short.

1. Tomorrow, I'll use any chance to exit SRS, all of them. And the puts, all of them. It may cost me 1K doing that, assume it's an up day.
2. And I'll buy 20 qqqq calls. Reason, I have 3 QID, 10 qqqq puts.
3. Then, when the plan is announced, if the market dives, sell all the puts. If the market rallies, sell all the calls.
4. Long term I am bearish, but I think I can buy SRS back at 50s if not 40s if we have a 10% rally on Monday. And I can sell the expensive puts again.
5. I may miss the opportunity.
6. That market go straight to hell, which is unlikely, the PPT will rally and support the market, then it may tank. So I should have opportunity to buy SRS at 55, 50, even 45.
7. SRS will go to 150 to 200 before it's all said and done.
8. Now I don't want to have my head handed to me.

New way

1. First, identify the main trend.
2. Second, identify the short term overbought and oversold conditions. Let's say it's in the middle.
3. Third, use XT,SOH,1Option, EW to gather directions.
4. When a new trend starts, join early, use 2x ETFs or options. Once it moves to oversold/overbought conditions, reduce the exposure and take profit.
5. If the trends reverse, then exit quickly.
6. When the market hits an extreme end, time to use 2xETFs or options for a counter rally. Start with 1/8. When it go against you, add another 1/4 after, say another 5-10%. Then another 1/2 after 5-10%.
7. When market goes with you, if you start early, double the size 1/8. Take the ride and then exit.
8. This always works and works better in volatile market like right now.
9. I can use SRS only and make a killing.
10. Have to have a feel on it. When extreme comes, be brave.
11. SRS was in 49s once, in Jan.5th, it bounced to 50? That's the time to be aggressive, even I had 2 positions already. And I exited at 74!
12. Then it went from 70 back to 48 just 3 days ago, I went in early by selling two SRS puts at 55; and next day enter one at 52. It's a solid play. But the correct one should be: At 48, enter 1 position. At 52, enter another one, plus selling two puts. This way, I will do far better. At 59, even with Atilla's call for all in, I should do it slowly.
13. Now, the QID, is bad. I will hold for the ultimate 600 call sometime in 2009.
14. Rest, I will stop trading. I will enter under two cases:
15. 1. The fast dropping starts, catch the momentum, to the down side.
16. 2. At the bottom, like below 700, add 1/8, 2x. If continue to drop, add 1/4, options(2months); below 600, all in, options (2 months, using 2 x ETFs).
17. Can use the inverse ETFs puts, like SKF and SRS, on the way up.
18. Always keep at least 15K in ET. So now I have 20K left, already used 5.7K.
19. For parents, when it's below 700, time to enter the POT/AAPL/GOOG puts. Be aggressive, that is, only 20-30% down. Don't need 50% down. Jan 2010.
20. I think for my POT, I chose 25 and 15 on MOS. If I choose 35 and 20, I can close them when POT in 80s and MOS in 40. Will be better profit if you're aggressive selling the puts on the extreme cases.
21. Rest of the money, should be used to purchase the 2x ETFs calls or -2xETF puts. These can make a fortune. The problem is, you still have enough cash and you still have a balanced portfolio.