Edge set and forget indices trading

This is a discussion on Edge set and forget indices trading within the Indices forums, part of the Markets category; Originally Posted by tomorton Alright, very very long-term, all stock indices tend to rise, if for no other reason that ...

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Old May 14, 2017, 10:33am   #16
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Alright, very very long-term, all stock indices tend to rise, if for no other reason that they are continually upgraded by deletion of the weakest stocks and addition of the next strongest. But this alone is no reason to always be buying all indices at all times.

Inevitably, this philosophy means investing increasing capital in long positions which are more likely to fall in price than rise. And the basis for this is not related to economics or TA or FA, its simply derived from how much money you are currently down. Removal of the elements of skills and knowledge from affecting the outcome of the investment reduces it to voluntary gambling.

This is surely the opposite of prudent money and risk management?
On a short term basis indices are well supported , they respect supports and long trades tend to do better .After most retraces , intraday and short term , indices tend to rebound.

The odds are more in your favour , after a string of losses , the market is long biased , fed is supporting it with puts i.e fed put.

If initial 4 trades are risk of 4% in total , then the next 4 are 8% , the total risk is only 12%, if next 4 trades lose the risk increases to 28%.Investing in stockmarkets can give you similiar risks.

How often do you get 12 consecutive losses , buying at supports on indices?If this 28% risk gives you a loss recovery method , and eventually zero losses , then it is worth it.You can always do option put spreads to reduce the 28% risk to maybe 15%.

If this trading gives you a 100 ticks a week profit and an income of £1,000 , then £50,000 year income on £100,000 capital ,with a risk of £28.000 is not bad.There is no profit without risk , but depends on individual beliefs.

You can always change the system into a long and short biased system , to reduce risk to half.
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Old May 14, 2017, 10:48am   #17
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foroom lluzers started this thread Next stage is to develop a fixed mechanical system for weekly options.

Target profit should be 100 ticks a week net

Option costs 70 ticks

Total profit 170 gross

Is it doable , how do Idesign this system ?


Initial option cost is 40 or 50 , so first profit target is 80 ,+

Second entry is +60 target option cost 40

Hope one of the above 2 trades has 2 sets of profits i.e

40,20,20

or

40,40,20
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Old May 14, 2017, 1:09pm   #18
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Buying low in a downtrend is putting hope above logic. Buying lower and lower and lower in a downtrend is just arrogance.

I suspect you are attracted to strange strategies by obstinate refusal to accept the nature of the market's behaviour. If you see the market as random and irrational, then I guess you would conclude any random and irrational strategy will be as good as any other.
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Old May 14, 2017, 1:25pm   #19
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Buying low in a downtrend is putting hope above logic. Buying lower and lower and lower in a downtrend is just arrogance.

I suspect you are attracted to strange strategies by obstinate refusal to accept the nature of the market's behaviour. If you see the market as random and irrational, then I guess you would conclude any random and irrational strategy will be as good as any other.
Market trends 20 % of the time , it down trends probably 8 % of the time ,12 % of the time it uptrends .If market breaks below average monthly lows breaks big supports ,then you stop buying , but you also always get pullbacks to offload.

Buying support and selling resistance ,several times a week is irrational?
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Old May 14, 2017, 3:38pm   #20
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Market trends 20 % of the time , it down trends probably 8 % of the time ,12 % of the time it uptrends .If market breaks below average monthly lows breaks big supports ,then you stop buying , but you also always get pullbacks to offload.

Buying support and selling resistance ,several times a week is irrational?

How can you rationalise holding two contradictory beliefs - that markets uptrend 12% of the time but also "Take a look at monthly and weekly charts on indices , they are always up , after every fall they recover."?
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Old May 15, 2017, 8:45am   #21
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How can you rationalise holding two contradictory beliefs - that markets uptrend 12% of the time but also "Take a look at monthly and weekly charts on indices , they are always up , after every fall they recover."?
What is contradictory ?A picture confirms my thousand words.
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Old May 15, 2017, 8:50am   #22
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What is contradictory ?A picture confirms my thousand words.

Is it really only a thousand?
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Old May 15, 2017, 9:07am   #23
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Is it really only a thousand?
I meant rather than give you a thousand words , see the picture.
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Old May 15, 2017, 11:15am   #24
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foroom lluzers started this thread Using weekly strategy on set and forget , I am looking to buy the first position strictly at 1.2700

next supports are 1.2600 , 1.2500 and 1.2400 , I am looking to buy at these levels based on my subjective anylysis , if price goes there.

Ideally 1.2450 is next support.
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Old May 15, 2017, 11:24am   #25
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I meant rather than give you a thousand words , see the picture.

Sorry, just couldn't resist it.
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Old May 15, 2017, 11:28am   #26
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foroom lluzers started this thread These are this weeks option prices ,looking at long at 1.2700 with 1.2650 put long.

These option prices become cheaper during the week .weekly options.
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Old May 15, 2017, 11:39am   #27
 
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These are this weeks option prices ,looking at long at 1.2700 with 1.2650 put long.

These option prices become cheaper during the week .weekly options.
I don't known much about options. Is max risk calculated thus:

12700 - 12650 = 50

premium on the Long Put (12650) = 34.5

Max Risk = 84.5 points?
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Old May 15, 2017, 11:42am   #28
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I don't known much about options. Is max risk calculated thus:

12700 - 12650 = 50

premium on the Long Put (12650) = 34.5

Max Risk = 84.5 points?
price will be 50 for 12650 put today (when price reaches 1.2700) , it will be cheaper as days pass

100 points risk

By wednesday you may be able to buy put for 25.
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Old May 15, 2017, 11:57am   #29
 
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To what extent is 12650 a technical level? A function of the option premium? and a function of your R:R strategy?
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Old May 15, 2017, 12:06pm   #30
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To what extent is 12650 a technical level? A function of the option premium? and a function of your R:R strategy?
If it drops , it touched 1.2650 last time , double bottom there.
If I have stop loss at 1.2650 , then if touches I lose without an option.

Option just gives me the holding time for a week.Trade may go to 1.2600 and rebound to 12800
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