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Oh Johnny...
Along comes Johnny, and he's like... having a ton of money sure would be swell. I think I'd like a lambo tomorrow. Let me google how to do that. Johnny hears about day trading. Should be easy right? Nobody's ever lost money doing that.
And even though one literally has a professor, tutor, teacher, or at least a book for everything else in life... Johnny doesn't need any of that teaching crap because he Googled how to make that lambo happen. Besides, they cost money, and he's emotional about money and way too cheap for that. I mean he'll argue online with other n00bs, but that's besides the point... lambo baby!
He's told he'll need to do technical analysis for day treading since fundamentals are more important for investing. Sounds legit, then swears by Fibonacci despite having zero clue about the math behind it. Standard deviation in Bollinger Bands? Bring it on. What's statistics again? Tries a ton of fancy indicators, despite not really understanding what is meant by lagging. Loses money.
Does more "research" and find experts claiming to get back to the basics and keep it simple. Bruh, RSI is where it's at. That and price action with some trend trading and you're good to go.
Johnny loads up his account with more money and its go time. At first, Johnny uses his RSI like a good little trader, even though he couldn't tell you what the fudge a sine wave is. He's gonna use it to help spot reversals. Sets it to 30 70 and starts making trades based on it. Loses money.
Now Jonny lies about it so he can seem cool and not-foolish. So, he continues to watch more "experts" online rather than hire a tutor. After digging, some "expert" videos say, "naw dude you need to set that 20 80 to weed out false signals". Johnny can taste that lambo. Except now he loses more money. Real money. Paper trading is for clowns.
Then Johnny searches more things online, while still not paying for his education. Doesn't bother to learn market theory. RSI baby!!! He finds out only plebs use RSI for a reversal though. Nooooooo. The "elite" use RSI to gauge momentum. So, he does some more trades, going with the overbought and oversold rather than against, still loses money.
Says day trading is scam. Still not gonna back test anything and definitely not hire a tutor. I mean, spending money to improve yourself? Wahhh? Quits, upset. Bye bye lambo.  Gotta go get a job again.
Jethro in the hizzy...
Then along comes Jethro and he's like. I'm gonna test crap rather than blindly trust people online. Jethro knows most people lose money, so clearly most people don't know what they're doing. Otherwise they'd make money. Jethro takes actual, historic market minute data for a year or three and runs simulations. Jethro finds out, the experts were wrong when going counter to the reversal using the RSI (over time), for the minute data at least. Does another test for different years and finds out they're right. Concludes nobody knows what the fudge is going on.
Huh?
Point of the story is, all the "experts" you see online don't even back test the crap they regurgitate and most have no idea of what they're talking about. There's a thing called confirmation bias that people develop, just because something may have worked for them once or twice in a very specific scenario. Also, people lie a lot and need clicks and views.
And let's not even talk about the data a retail trader doesn't get (it's not cheap) or the fact there is active manipulation going on in most markets.
And yet, people still believe "experts" online without seeing a P&L, because they did an almighty Google search... for free.
Edit: Trading is great btw, but most people do lose money and play a fool's game with it. Don't be like Johnny.
Jeremy Falcon
modified 27-Mar-24 13:21pm.
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Wow, did you or someone close get burned by a shyster? 
Even backtesting is dubious. It might be worth looking at if it goes back decades, maybe even 50 years. Even then, it's unclear why a pattern that occurred in the past should repeat. There are simply too many variables. Most of it is little different than numerology.
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Greg Utas wrote: Wow, did you or someone close get burned by a shyster?
Yeah. Everyone does though. I've even paid good money to be lied to by "reputable" organizations... cough cough OTA. Even lost money due to my own stupidity over the years. It's called tuition. Everyone goes through it, if they're being honest.
Greg Utas wrote: Even backtesting is dubious. It might be worth looking at if it goes back decades, maybe even 50 years. Even then, it's unclear why a pattern that occurred in the past should repeat. There are simply too many variables. Most of it is little different than numerology.
Well, back testing is great, but you're right. However, best to figure out the common denominator here... which is patterns. Forget trying to make hieroglyphics out of a chart. It's subjective anyway. Learn market theory (it's a real thing) and risk management, then back test that.
* Note, OTA has some advanced things with decent-ish information. Their beginner/intro/sales pitch stuff, to get to you to buy into the more expensive stuff, is a sham though.
Jeremy Falcon
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The best advice I ever heard--too late--was, "Don't confuse a bull market with brains." I managed to retire rather young because of some contrarian investments and thought I'd figured it all out. I almost ended up going back to work.
Puts for insurance are insanely cheap right now (VIX < 15). Spitznagel's The Dao of Capital is a good read for risk management, but you have to fill in a few details. He runs a hedge fund to protect against tail risk, so he doesn't quite give it all away.
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Greg Utas wrote: Don't confuse a bull market with brains.
Preach, brother. 
Greg Utas wrote: Puts for insurance are insanely cheap right now (VIX < 15).
One of these days, I'd be curious to play around with options, but it just be tinkering. Figured it's better to specialize in an area that works for you rather than spread myself too thin and become susceptible to the nonsense because I'm no longer an expert in any one thing.
I'm into Forex btw, which is like equities, but for a country... the country's equity... currency. Some people hate Forex, and I get it... because it's the wild west with way more scams than stocks IMO. And, because its distributed and has no "real" good volume information, but I love it because it's extremely, extremely liquid (slippage is rare) and shorting isn't a big deal like in the stock market. Like, no such thing as a broker refusing to lend out low cap shares for a short... it's all money exchange. But, that's my bias.
Still love hearing about options traders that do well. It's interesting.
Greg Utas wrote: Spitznagel's The Dao of Capital is a good read for risk management, but you have to fill in a few details.
I'll have to check it out one day. I've read so many books on the subject, I have no idea where I learned my risk management strategy from. But, it's close to a percent equity model, except I use a realized balance rather than equity to determine risk. And handling the downside, don't have a name for that.
Greg Utas wrote: He runs a hedge fund to protect against tail risk, so he doesn't quite give it all away.
Noice
Jeremy Falcon
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Jeremy Falcon wrote: One of these days, I'd be curious to play around with options, but it just be tinkering.
If you do, I would recommend you to look for the wheel.
The short meaning is: You sell the options to the people betting.
It is way slower, but if you do it correctly, it is pretty constant.
In the US way easier to use than in EU. Here the available options are mostly crappy and the local brokers suck or are way expensive. The only one useful for it is IBRK.
I went for stocks a couple of years ago, and my current balance sadly is dark red (around -15k, dunno for sure). But... and this is the only thing I really hope all Johnnies get told and kind of hear it.
- You are a little fish trying to get through a sea of big sharks. The market is a fvcking casino. Most of the time, there is no real logic behind it and you can only bet. There is no secure bet AT ALL. Only use money you don't need for living. Start with little and increase only in small steps, leave emotions outside, think fast, decide slow and act inmediatelly.
I am sitting now in many of my stocks, but:
- I never go for big risk. I imposed myself the limit of 3k cash in a single company, only broke that rule one time with 3,35k because I had a typo when calculating the number of stocks to buy.
- I knew that some of them could go south when I bought them. As they are startups, but I believe in their product and I think there still isn't everything lost. If it kicks, I will be there from penny stocks. If not, well... I knew it was a bet and I can afford losing that amount.
- I am pretty sure, than at least the half will be back in green sooner or later, because they are big companies. My problem was I bought in the bull market in the second half of 2021 and couldn't react in the market correction of the beginning of 2022 because I was offline for some weeks due to illness. As many say, time in the market usually beats timing the market. As I do not need the money invested in them, I'll just wait patiently to recover its value (plus inflation) and sell them when reaching black or light green.
- I got fvcked with a couple of companies explosions (i.e. Wirecard). As I said before, there is no 100% security.
- When I buy a set of stocks and they get a big bull push, I try to not be greedy and usually sell some of them to recover the investment. This way what happens later doesn't affects me anymore. I.e. I bought in the Meme Gamestop, sold a couple of stocks when one of the pikes and recovered my money. When I sold they were below my entry point, but they were "free stocks" as I had already recovered my original investment.
Some people said me... I should sell everything and recover at least those couple of hundreds that are still there. But I say, I really believe some of them will recover and, on the other side, those red numbers are the best teacher I will ever have in this topic and a really important reminder of what I wrote above these lines.
And in the overall: I started in 2018 I am in green in the big total, not much (less than 2k), but still green.
M.D.V. 
If something has a solution... Why do we have to worry about?. If it has no solution... For what reason do we have to worry about?
Help me to understand what I'm saying, and I'll explain it better to you
Rating helpful answers is nice, but saying thanks can be even nicer.
modified 28-Mar-24 7:51am.
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Nelek wrote: If you do, I would recommend you to look for the wheel. The short meaning is: You sell the options to the people betting.
You're a smart man. A lot of the manipulators/big bois manipulating the markets do exactly that. Say for instance, intentionally trigger a price spike to clear out people's stops so they can control the price with reduced liquidity. Say, if I want to go short with a big position, I'll put in a buy first to clear out some stops and then go short. If I'm big enough to control the market, I get my money back from the buy and then reduced liquidly makes price more volatile and so I get a much better chance of dropping the price further for my original intent to sell.
It takes a lot of horsepower to pull that off, but it happens... a lot. But, if you're ever been stopped out at a SR level, and the price went in your favor anyway, well you've seen this first hand. Which is why, IMO it's much better to know what the fudge is going on with the market than gizmos and doodads that just distract.
Nelek wrote: I went for stocks a couple of years ago, and my current balance sadly is dark red (around -15k, dunno for sure). But... and this is the only thing I really hope all Johnnies get told and kind of hear it.
Thanks for being honest with the numbers. If it makes you feel better, I lost $60K USD in crypto... despite knowing better.  Losing money is a rite of passage though. For Forex, not counting courses, tutors, books, etc. I've lost about $10k before finally getting to the point I could at least break even. Took years to get to that point. And then I stayed at the break even point for a while. Eventually, I moved passed that and was clocking in 5%-10% ROI a week. I hesitate to say that because it sounds scammy, but it was true. Got bored and depressed with the whole thing and stopped. Talk about self-sabotaging. Years later, I want to get back into it, but find a better class of peeps to hang out with to talk about it. Just to give you context on my background.
Nelek wrote: You are a little fish trying to get through a sea of big sharks. The market is a fvcking casino. Most of the time, there is no real logic behind it and you can only bet. There is no secure bet AT ALL. Only use money you don't need for living. Start with little and increase only in small steps, leave emotions outside, think fast, decide slow and act inmediatelly.
Amen brother. And anyone who can tell you they can predict the market with their doodads on a chart is just lying man. The principles to winning at trading is much like the principles for winning at blackjack... market theory (so you know what is going on) and risk management will take you much further. The sad thing is, most people have no clue what's meant by risk management.
Nelek wrote: I never go for big risk. I imposed myself the limit of 3k cash in a single company, only broke that rule one time with 3,35k because I had a typo when calculating the number of stocks to buy.
That's the best way to avoid being over-emotional about it. It's a game of numbers, not one single trade. Btw, start thinking in percentages. It's a psychological trick that will help you scale out. If I say 3k and then start doing 30K a trade then it sounds daunting. But if both those numbers are 1% of your account, it's the same number.
Nelek wrote: I knew it was a bet and I can afford losing that amount.
Nelek wrote: When I buy a set of stocks and they get a big bull push, I try to not be greedy and usually sell some of them to recover the investment.
Greed has burnt me so many times man. You should know when you're getting out before going into the trade. Stick to it no matter what. Sure you can add on to a winning trade or exit early, etc. But staying in the market longer than you planned to by a large factor will burn you in the end... because price will turn. Specifically referring to trading here... not investing... which is something completely different.
Nelek wrote: Some people said me... I should sell everything and recover at least those couple of hundreds that are still there. But I say, I really believe some of them will recover and, on the other side, those red numbers are the best teacher I will ever have in this topic and a really important reminder of what I wrote above these lines.
Everyone has advice in this area. And they're usually full of crap. Before you take their advice, ask them to show you their P&L for the past year. They won't.
Nelek wrote: And in the overall: I started in 2018 I am in green in the big total, not much (less than 2k), but still green.
Nice job man. To me, the pros get back to the basics. Stuff like level 2 data isn't reliable as it used to be (depth of market, etc.) with all the active and automated manipulation going on, but at the end of the day... remember price is going to do one of two things... go up or down. You got a 50/50 shot. Roll the dice. Forget the clowns. Manage that risk and back test.
Jeremy Falcon
modified 28-Mar-24 11:24am.
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Jeremy Falcon wrote: You're a smart man. A lot of the manipulators/big bois manipulating the markets do exactly that. Say for instance, intentionally trigger a price spike to clear out people's stops so they can control the price with reduced liquidity. Say, if I want to go short with a big position, I'll put in a buy first to clear out some stops and then go short. If I'm big enough to control the market, I get my money back from the buy and then reduced liquidly makes price more volatile and so I get a much better chance of dropping the price further for my original intent to sell.
Not exactly that...
The wheel is:
0) Yo need an account with Cash. (You might go margin, but I wouldn't)
1) You select a company you wouldn't mind owning stocks of. And you can for sure pay at least 100 stocks of it.
2) You sell Cash Secured Puts (CSP), if you don't get assigned, you earn the premium. If you get assigned, you buy the stock at the price you set.
3) Then you start selling Covered Calls (CC) with your stocks as collateral. You don't get assigned, you earn the premium. You get assigned, you sell your stocks at the price you set.
4) You start selling CSP until you get assigned
5) You start selling CC until you get assigned
6) rinse and repeat
It doesn't need big horse power. And if you already know about the market and some companies, it doesn't take too much time.
It needs organization, it needs to be constant, it needs a first cash inversion, it needs to work with rules and to stack with them.
Conservative people usually set automatic orders at 30% of the premium left and re-buy the option, so they just keep 70% of the premium, that's usually not much, but being constant... it adds.
M.D.V. 
If something has a solution... Why do we have to worry about?. If it has no solution... For what reason do we have to worry about?
Help me to understand what I'm saying, and I'll explain it better to you
Rating helpful answers is nice, but saying thanks can be even nicer.
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Nelek wrote: rinse and repeat
I may have to be more familiar with options for me to fully follow this then. Me think me sure. Me not sure I'm sure. I'm reading it as going counter, but I could be smoking crack on that...
Nelek wrote: It doesn't need big horse power
The horse power was for the example I was giving, fyi. Essentially, in that example I was talking about how people going counter trend to their own trades to manipulate price action. That does take horse power. Dunno about options though, referring to actual price of an instrument and not necessarily a derivative.
Nelek wrote: It needs organization, it needs to be constant, it needs a first cash inversion, it needs to work with rules and to stack with them.
Preach.
Nelek wrote: Conservative people usually set automatic orders at 30% of the premium left and re-buy the option, so they just keep 70% of the premium, that's usually not much, but being constant... it adds.
If you can systemize something, small incremental wins will do better than ton of losses... every time. Presumably, you can still scale that up with more capital. So, if it works, it works. Make it yours and scale it.
For me, as much as I'd like to tinker with options in theory, just can't lose focus on what I'm doing currently. The peeps that lose in this game, don't master something and are all over the place. So like if your desire is to be an options guru, I'm happy for ya man. For me, I like the idea of options, but it's not my wheelhouse (har har har). And, truth be told, if I did get into another market, it would most likely be Forex futures. Options will have to be one of them things that sound cool for now, but not pressing.
Not sure if you caught what I mentioned earlier btw, but given the returns I know I can get in Forex spot, gonna be a hard, hard sell to get me to stop everything I'm doing. But again, anything you master is like that. I'm sure people do just as well with options or whatever, just gotta specialize in something and learn it better than anyone else.
If you do the math, 5% ROI a week consistently is almost impossible to achieve and took me years to get there. Run the numbers on that ROI using the future value formula FutureValue = PresentValue * (1 + InterestRateInDecimal) ^ NumberOfPeriods and you'll see what I mean. Remember, anyone can get lucky once or twice, the idea is having something that's consistent and repeatable.
Jeremy Falcon
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Greetings Kind Regards
My 2nd major project upon start of my modest career was an options trading simulator for none other than Tony Saliba .
- Cheerios
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Oh, and don't get me started on the crypto scams... which I still feel for... despite being educated and knowing we were in a bubble. Sometimes people can be so convinced in their delusions they sound trustworthy... despite being 100% delusional on 100% speculation (which is a fancy word for guessing)... that even an educated person can go against their better judgement.
Nothing against crypto btw, but by the nature of a bubble, you better know when to get out.
Jeremy Falcon
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When I retired I thought I would "fiddle" around with the equities market, stuck the bulk of the funds into the wife's name and went for low risk, long term stocks. Then attempted to pick and choose some high risk, volatile stocks taking the advice of a bunch of online "experts".
3 months later having dropped a large percentage of the capital I moved the lot into the wife's choices. We don't make a lot but we don't lose much either.
Never underestimate the power of human stupidity -
RAH
I'm old. I know stuff - JSOP
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Mycroft Holmes wrote: We don't make a lot but we don't lose much either.
Believe it or not, breaking even is a lot better than what most people do. Don't ask what I lost on crypto...
I will say this though, anyone who claims they can predict the market is lying. I mean, you can make money day trading, but it's a hard learned process the "experts" lie about.
Jeremy Falcon
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Jeremy Falcon wrote: there is active manipulation going on in most markets.
And yet, people still believe "experts" online...
You mean the 'active manipulators.'
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I love me some RSI! It isn't biased, it just reports how strong the trend is at the moment. I always trade with the trend, when I trade. Now, that said, if today is not an up day for the market or the security that interests me, I won't buy even if the trend is up. I never go long on a down day, no matter the trend. But if the market and the security are down, and the RSI remains above about 70, I'm going short. Actually, I never use shorts; I buy Puts. The leverage really helps. I find that, in a volatile market with a moron leading the Nation, a Buy and Hold strategy is incredibly stupid, so I've been swing trading and playing options. I'm told that 80% of securities follow market trends in pricing, no matter their fundamentals, so it really makes no sense to try to fight the market, unless you have insider information.
By the way, Jeremy, I use a product called VectorVest for investing knowledge and training. They have been very good to me. They have a YouTube channel, and they will be hosting a weekly live event tomorrow called "Trending Thursday" there. Plan to be there, and I think you might be impressed by the amount of knowledge they have to impart. I highly recommend their service...
Will Rogers never met me.
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Roger Wright wrote: I love me some RSI! It isn't biased
I love ya buddy, but gonna have to disagree there man. I don't think the RSI has a negative or positive bias btw. But, I do not think any indicator is the holy grail of anything. This is coming from over a decade of trading and going through many books, a personal hired tutor, self-study, years of back testing, years of watching the charts in real time. I've broken down the math. Written my own RSI in JavaScript. I fully understand it's a lagging indicator. Went through the novice teachings. Went through the advanced teachings. I could go on. I'm to the point now I can back test over a decade's worth of trades in seconds, using things like an RSI.
Did you ever read the book by the dude that invented RSI? I did. I've hosted meetup groups training other people. And so on and so on. I could go on, but it's been my experience that online... everyone tends to assume someone is a n00b or clueless when they post something. That's not me dude. I'm posting so people don't end up like Johnny and just lie about it to save face.
Roger Wright wrote: and the RSI remains above about 70
If you believe in that, you shouldn't, but if you're still at that level, don't forget to get confirmation in a higher timeframe. Not that it means squat, but if it gives you warm fuzzies.
Roger Wright wrote: , in a volatile market with a moron leading the Nation,
This is why I like you, man.
Roger Wright wrote: I'm told that 80% of securities follow market trends in pricing, no matter their fundamentals, so it really makes no sense to try to fight the market, unless you have insider information.
Going with the RSI isn't necessarily going against the market. It's an oscillator, not psychic pixie dust. Which means, it could stay in overbought for along time while the market continues to go up. My point was pointing out the folly in assuming it can predict anything. But, totally agree you shouldn't fight the market.
Roger Wright wrote: By the way, Jeremy, I use a product called VectorVest for investing knowledge and training. They have been very good to me. They have a YouTube channel, and they will be hosting a weekly live event tomorrow called "Trending Thursday" there. Plan to be there, and I think you might be impressed by the amount of knowledge they have to impart. I highly recommend their service...
Thanks buddy, but I wouldn't be going unless I was training and they paid me. And, I already did the training others thing. Anyone that talks RSI over market theory, for instance, are not the people I'd trust. Their P&Ls I seriously doubt will be ever shown, without being doctored, etc.
Btw, the reason I stopped the meetup stuff is because I got tired of the BS. People were so egotistical about it all (not saying you) and lying about everything. Dunno what it is about money, but thar be a lot of ignorant folks with egos being fake and pretending in that circle. And they'll never show you their honest P&Ls.
Jeremy Falcon
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LOL!!! RSI is great, and I do use it, but it's not my GOTO. I like various combinations of moving averages, as well as a thing called the TTM Squeeze. But my real favorite is Options trading. I've been trading stocks since years before I passed the NASD Series 7 exam in 1987, but never touched options until about 5 years ago. What fun! 
Will Rogers never met me.
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Roger Wright wrote: but never touched options until about 5 years ago. What fun!
One of these days I'd want to play around with options too. I'm a Forex guy. Despite the bad press it gets because it's the wild west with so many scams, I love it. So, just focused on that.
Jeremy Falcon
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Roger Wright wrote: But my real favorite is Options trading
I don't know enough about options to get into it yet, but I'm reading up on it. I need to get more comfortable with it before I jump in.
-Sean
----
Fire Nuts
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Enjoy! A couple of things to know - as long as you're buying, not selling, you are at no risk other than losing the premium you paid. When you sell, it's much riskier. Also, check the Volatility rating of the underlying stock before you select an option. If the Implied Volatility (IV) is higher than the Historical Volatility (HV) it's a sign that the options are overpriced. Only buy Calls in a rising market, on an up day for the underlying stock, and when IV<HV. The opposite is true for Puts, but you still want IV<HV. Another rule: Know your exits. As soon as I have an order filled, I set what's called an OCO order to sell. This consists of two orders, one a Limit order set for a 50% profit point, the other is a Stop order set at a 50% loss. Which ever one hits first, the other one is automatically cancelled. And a critical thing to look for before you buy is the Open Interest; if there are less than 100 open contracts, you may not find a buyer when it's time to get out.
Check out a website hosted by Brain Overby called, optionsplaybook.com. I've actually got his book, but the site is the exact same material, and it's free. There he details all of the types of options plays, how to set them up, and when to use each. Have fun!
Will Rogers never met me.
-- modified 28-Mar-24 18:08pm.
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Or just do the wheel... you sell options but with less risk than other strategies (if you do it properly). I explained above what is to Jeremy.
M.D.V.
If something has a solution... Why do we have to worry about?. If it has no solution... For what reason do we have to worry about?
Help me to understand what I'm saying, and I'll explain it better to you
Rating helpful answers is nice, but saying thanks can be even nicer.
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I know a number of people who use this method, and it seems to be reliable. I know I've taken a number of advanced classes from this VectorVest outfit, and I've enjoyed them all. But of all the techniques I've learned, trading options remains the most profitable. I still recall that, while taking the first options class I enrolled in, we were told the second week not to start anything until we're almost done with class! Too late, I read ahead and was already in. Before the class was over my profits had already paid for the course. I can't say that my Engineering degree has done the same...
Will Rogers never met me.
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There's tons of TikTok videos that will set you straight, easy peasy.
cheers
Chris Maunder
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