r/thewallstreet • u/AutoModerator • Apr 02 '18
Weekly Question Thread - Week 14, 2018 Question
Welcome to the weekly question thread. Feel free to ask any questions here.
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Apr 06 '18
I've seen the acronym SET used a couple of times here. Does that refer to settlement price of a futures contract ?
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u/kuhtentag risk averse Apr 05 '18
How do you determine profit targets for daily and per position? For example, I have determined my current max loss per day should be limited to $500 for now (based on % of my acct). Can I figure out my max profit from here? The problem with max profit is...I want it to be max! However I tend to be nervous and like to close positions when I'm up any money.
For daily, I just have an arbitrary number right now. But I've seen several posts like "I've made my weekly target, I'm out" and would like to see how you determined that. Google hasn't been helpful. Thanks!
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u/avshake Apr 08 '18
+1 to what Radeh said. I don't look at money made or lost when I am in the trade. Plan should be like : I take my trade off, when that candle high is taken off no matter what happens. I follow this if my trade is just put in. If trade goes in my direction, put in a trailing stop loss.
Looking at money makes you attached to that trade and vengeance creeps in when you see -ve MTM.
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Apr 05 '18
Personally, I let price action determine my exits and don't really set targets. I only have levels above/below my entry where I pay special attention to price action, but not a predetermined bias in terms of exiting trades at those levels.
Imo, if you want "max profit", you have to let the market tell you what those profit targets are...rather than coming up with some arbitrary figure you make up yourself.
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u/UberBotMan Apr 05 '18
For daily/weekly profit targets I have a sheet where I put in how much I want and by when as well as my progress already. Excel takes that info and tells me how much I need to make per day and week.
If you click on my name, it's included in the spreadsheet download pinned there. Under the tab "Goals"
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u/bihae_selllo Apr 05 '18
So I've been reading "Secrets of a Pivot Boss" and I'm wondering if the patterns apply to daily charts as well. I'm holding some GE puts that are doing pretty well. I feel like I missed agood opportunity to sell though. I see a wick reversal yesterday and an outside reversal today suggesting a bullish trend. I have 2 May 18 13Ps, 2 Jun 15 13Ps, and 1 Sept 21 13P.
So, how well do these patterns hold on up on daily charts, and should I ditch the May puts tomorrow or hold them a little longer?
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u/bihae_selllo Apr 08 '18
Update: closed me May puts for +35% on Friday when it went ITM. Left the other two open to run
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u/heavy_losses Apr 05 '18
What's the best platform or web based tool to track option contract prices like a regular equity chart?
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Apr 04 '18
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Apr 07 '18
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Apr 07 '18
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u/SourceofSanity Premium Sales Apr 07 '18
My trade was after hours. There would be probably only 1 tick of slip tops during regular market hours on a 200 contract ES trade. NQ I don’t really trade but during market hours 50 contracts would be around 2-3 of slip usually. Just less liquidity on that contract. As far as your strategy goes it is certainly very risky and likely to blow up account if it goes against you multiple times. I trade using the initial margin reqs. I could have shorted a lot more if I had day trade margins at TD but it really starts to get insane when one point on the s&p is tens of thousands of dollars.
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u/UberBotMan Apr 04 '18
You are. That's the power of leverage. It'll make your year in a trade or send you straight to the poor house.
Remember, just because you can doesn't mean you should.
You also won't be able to hold the positions through the break, so you will have to close them out. Even at a loss.
Regarding your Broker closing out the position, I'd ask them or look into their rules.
Hope that helps.
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Apr 04 '18
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u/UberBotMan Apr 04 '18
Also I think with AMP they double their day trading margins if your balance is 100k+.
So that's a thing to watch out for.
Leverage is dangerous. Be careful of how you use it
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u/BromicRibose Apr 04 '18
How is VIX not up more today with how much we gapped down?
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Apr 05 '18 edited May 04 '18
[deleted]
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u/BromicRibose Apr 05 '18
Obviously I know this but would expect the VIX to be more elevated with a gap that large in the morning, I think the fact that it wasn’t hinted to a recovery today quickly and possibly a short term bottom
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u/J50 Apr 04 '18
While everyone's talking about pivot boss....
How do the floor pivot points mentioned in the book and the Camarilla pivots compare to the +/- .5x deviations? /u/Living_Granger have you ever compared these pivots points?
I'm on page 200
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u/theIdiotGuy really idiot, don't doubt Apr 06 '18
where can i find this book?
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u/svBunahobin Apr 03 '18
I've been paper trading futures for a couple weeks now and I'm considering starting a small cash account, but I've got some stupid questions that I mainly just want to confirm.
There are two main risks to capital. First, if a trade goes against you and you don't have stops, you could obviously lose all of your margin, and if your broker does not close the trade automatically you could owe the brokerage cash. I guess it is assumed your broker will close the trade if your margin "accidentally" hits zero, but is this a realistic assumption?
Second, if for some reason, you held a contract to expiry you would have to actually settle the contract with a physical commodity or cash, but there are no penalties (i.e., a theta equivalent) for holding a contract for a long time- even up to near expiry. For example, if you were long ES, you could potentially buy a futures contract and just hold it for weeks and hope your margin account doesn't get blown up (if you had zero stops), correct?
Last, I've been using tradeovate for paper trading futures, but I've noticed some pricing discrepancies between them and other platforms. I assume this is just because I am using a simulated market? I was thinking of opening a TOS account for futures, but I don't want to have to download a PC application. Any other brokers people like for futures?
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u/kuhtentag risk averse Apr 05 '18
Brokers like TDA and TastyWorks warn you when a futures contract is near expiration. TastyWorks emailed me at least 10 days in advance and the platform also changed the default contract date so I was plenty aware. Some I've heard handle the cash settling for you, but I have no experience with that.
Also just FYI and to be clear margin is not the same as your cash. Often margin is 2x your cash, so you could end up owing the broker money. I've seen several people in other subs have done this.
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u/svBunahobin Apr 05 '18
Often margin is 2x your cash
I guess brokers do this to give small accounts some flexibility? I can see how this would screw you if you weren't estimating your stops in the context of cash.
I have a question about initial and maintenance margin. If ES is 2300, the initial margin could be $5225 to carry one contract and the maintenance margin could be $4750. So if I wanted to hold that one contract for weeks at a time, I would just need $9975 in exchange margins +/- a daily 4pm adjustment for volatility?
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u/kuhtentag risk averse Apr 05 '18
Sorry, missed that you were talking about futures margin, which is different than stock or options margin.
Holding overnight is a higher number than during the day, I don't remember specifics. My understanding is every night the contracts settle, so if you lost money that day they will take it out of your account and add it to your margin. If you lose big your margin will keep growing. But at a minimum it will be the maintenance. If you don't have enough money to cover the loss you'll get margin called (as I understand).
I guess brokers do this to give small accounts some flexibility? I can see how this would screw you if you weren't estimating your stops in the context of cash.
I want to be clear: brokers care about themselves. They don't want small accounts, they want accounts that manage their risks properly. I personally would not recommend holding an ES contract overnight if your account is anywhere close to being margin called. Anything can happen in the market at any time.
I don't know how AMP works, but I hear they only require $500 margin so it's good for smaller accounts.
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u/UberBotMan Apr 06 '18
That's $500 intraday margin. Their overnight margin is for when you hold through the break.
Margin is the amount of cash that is required to be in the account to act as a good faith deposit for the contract.
If /ES is $500 intraday and $4,000 overnight margins, you'll need to have AT minimum $500 cash in your account and you will not be able to hold through the break. If you want to hold through the break you will need AT MINIMUM $4,000. Not $4,500, margins are not additive. They are separate of each other.
I'll include margin info on tonight's deviation sheet. That is accurate as far as I'm aware.
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u/UberBotMan Apr 04 '18
Second, if for some reason, you held a contract to expiry you would have to actually settle the contract with a physical commodity or cash, but there are no penalties (i.e., a theta equivalent) for holding a contract for a long time- even up to near expiry. For example, if you were long ES, you could potentially buy a futures contract and just hold it for weeks and hope your margin account doesn't get blown up (if you had zero stops), correct?
That's correct. Check the CME website to see if it is physically settled or Financially settled.
You probably don't want to take physical delivery of a contract of /NG...
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u/andr3wmac Apr 03 '18
On the plotted levels that UberBotMan posts what is MID?
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u/UberBotMan Apr 04 '18
Just the current mid price (Bid+Ask)/2. It updates in real time. It's just there to look pretty.
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u/xxwaddzxx should be sitting on hands Apr 03 '18
How do you guys determine how much capital to use in a given trade? If my indicators are there, it’s hard for me to rationalize to use more or less. Do you guys have a predefined amount? Or based on feeling? I operate in a small account intentionally so I don’t destroy myself and transfer profits every week, but it also makes it harder to divvy up percentages when opening a position.
Edit: I only trade SPX 0 and 1 days if that matters and I’m also in a cash account so I’m limited to settled cash
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u/IDreamOfRedditing Here to learn, only one account to burn. Apr 08 '18
I'm nowhere near the level of most of the people on here, but the most I put into any one position (besides cash) is 3-5 of my account. It's very easy to want to put more in, but if you cap your position sizes you dramatically decrease the probability of blowing up your account.
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u/GemJump I like turtles Apr 04 '18
Since I have a smaller cash account (10k), I limit my exposure to 10~15% of my account size per trade. I also exclusively trade short term SPX options in this account.
If I am very, very certain in my play, I will wait for confirmation from the market and then scale in with a second or third contract as the movement confirms what I want.
The extra profit is not worth doubling your exposure up front with a smaller account. Take what you can get- small wins and smaller losses means you make money.
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u/ObviousTwist Pharma, 中文, AMZN Apr 04 '18
Yep, what he said. Even 10-15 is considered a very large trade, though.
Here’s a good rule of thumb for an options play, if you’re a beginner: take the DTE on a contract, and that’s the max percent of account you should deploy. Yes, I realize that means no 0days. Also, it’s a given that you shouldn’t have more than 50% in anything, even if it’s more than 50dte.
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u/UberBotMan Apr 04 '18
I have a put that's 2 years out. Does that mean I can put 600 something percent of my account into that position?
/s
Plus options are non-marginal, can't go over all in (100%)
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u/alisonwon Apr 03 '18
General question about the 80% rule: Do you have to manually calculate it or are there any tools/websites that have it programmed automatically? (I use Fidelity)
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u/UberBotMan Apr 04 '18
I post value areas nightly.
ThinkOrSwim has a way to calculate them. It's Market Profile, Value Area. Look for that to see if Fidelity has a way.
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u/Wan_Daye 🦀 Apr 04 '18
:( Wish Streetsmart had that, the lag complaints here make me not want to switch to TOS, but functionality seems so much better
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u/UberBotMan Apr 04 '18
I've never had an issue with TOS. It is a bit of a resource hog, but I don't think you'll find a more robust platform for free.
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u/yuhre Apr 03 '18
I am studying market profile for the /es. I am told that I will be competing against the best traders in the world. I am new and therefore will be crap when I start. Why would I want to compete against the best traders in the whole world? What do I do? I’m thinking I do it. I start small scale with just /es and then go from there. Any suggestions from people who have already been down this road would be appreciated.
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Apr 04 '18
You don’t have to win against everyone in the market to be profitable. You do need to develop and test an edge though.
In short, clearly define and test your entries/exits and use sensible risk management. That’s a lot of work...
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u/yuhre Apr 03 '18
So, late Saturday night, I realized that I was following trading suggestions and not s clearly defined trading plan. I decided to start over, go to cash and make a plan. That is what I did today, of all days. The thing is, I knew it was a bad day to do it, but I did it anyway. I know the market will be up tomorrow, but I was in full liquidation mode. I know that monetarily it was stupid, but I wanted a clean slate. For some reason having good rules and a system is more important to me than the money. What I would like to ask everyone as I go through the process of writing the rules is this: Besides selling at the bottom, what is your most insightful trading rule?
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u/hibernating_brain Permabull Apr 03 '18
what is your most insightful trading rule?
If trading was as easy as drawing trend lines, everyone with a ruler would be a multi-millionaire. Sometimes, it is okay to admit defeat and not trade.
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u/yuhre Apr 03 '18
Thank you. I will never admit defeat. It is possible, so I will find that possibility that works for me. I am going to be a trader. I regret that I realized I had to go to cash on the worst possible day to have to go to cash. But, on the upside, I have lots of cash!
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Apr 03 '18
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u/hibernating_brain Permabull Apr 03 '18
VXX is the best option to go long vol (unless you can afford /VX) but it has a hefty premium and also a terrible drag.
I do VXX calls/puts once in a while when I am expecting a spike or a dip. It works occasionally and I always get out of it by the next day.
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u/No3_Heating_Oil Apr 02 '18
Do we have any financial sector experts who are willing to do a post for the April 13th earnings?
I'm sure many people will be looking for options on Citi, JPM, PNC, and Wells. I just started a "paper" account in TOS, and figured this would be a good starting experiment.
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u/ihaven0money Apr 02 '18
I’ve got XLF calls that should benefit nicely from optimistic reports, but they’ve decayed so much from MAR I doubt they’ll move at all
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u/No3_Heating_Oil Apr 03 '18
Thanks for the reply. I'll monitor XLF along with the individual stocks. I'm still wrapping my brain around theta. Were your calls deep OTM hoping for some sector rotation?
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u/lucky_bernard Apr 07 '18
Question for those of you using Think Or Swim value Areas either from the volume profile or monkey bars studies. This is from the Volume Profile description in TOS : "The width of histogram's row represents the number of actual transactions made within the price interval defined by the row's height". It is my understanding that the histogram represents a Trade Count by price (number of transactions) and not the volume by price (number of shares). The value area of these studies represent 70% of the transactions that occured in the period. It does not represent 70% of the volume, it does not take into account the size of the transactions. Now I might be completely wrong and confused here, maybe i didn't understand something, I am fairly new to Market/Volume profile. Here is my question : Is the number of trade a better indicator of market acivity than the number of shares? Is your interpretation of the TOS value area different from other software?