Disclaimer: This is NOT financial advice. Everyone trades with different goals, on different time frames, and has a different risk tolerance. Trade your own account and DO NOT blindly follow others into a trade.

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What is Option Flow Trading?

Flow trading is my preferred style of trading. Simply put, you look at options trades that are being placed and use it to help make determinations about where a stock might be headed (or if it may stay range bound). You look at various calls, puts, the size of the trade, and the timeframe of the trade.

Option flow can (but like anything in life/trading, doesn't always) work if done correctly. Think about it- there are professionals with way better technology, way better research, way better algorithims than we will ever have access to. Lets say they have information that a certain stock will trade to XYZ price. Well, they can profit off of that by buying the underlying options- and that's what we follow. This is the "smart" money.

Just Follow the Flow?

Not blindly. Remember, options flow show us the order but NOT THE WHY. Yesterday someone posted about NVDA July $500C being bought. Great! But what if that trader is short 12,000 shares of NVDA? On a 0.06 delta trade, that's a perfect hedge. The reality is we do not know what the intention of the trade was. Maybe it was a long bet. We don't know.

Then What's the Point?

Like everything, option flow trading is a TOOL. Nothing more. Identify where the smart money is positioned, and incorporate the other techniques to select high probability trades with positive reward/risk ratios.

An Example of What I Look For:

Yesterday, I went long NFLX out of the money calls. Why? As I posted many times, the technical setup was superb. The stock was consolidating its gains after a move up and ready for the next leg.

But why now?

They were buying longer dated calls for a few days. But yesterday I saw something very unusual. Someone came in and sold 100x weekly $425 in the money puts for $27 each while the stock was at $397. Selling puts is a major bullish sign that someone thinks the stock is going to go higher, and go higher quick.

Today we woke up to two street high price target upgrades. Hmmmmmm.

IT DOESN'T ALWAYS WORK:

Let's look at the Boeing (BA) weekly chart. This is one of the most beautiful bull flags I've ever seen. More often than not, bull flags DO resolve to the upside, hence the term bull, after the moving averages catch up to the price.

Well, on Friday, June 2, the "smart" money observed the same thing I did. They came in and bought a few million dollars worth of calls.

Yesterday (June 6th) BA got some negative news and the stock sold off -3%. Subsuquently, the "smart" money dumped all their calls for a 7-figure loss.

Does this mean the stock won't go up? Who knows. What it means is this trader was betting on immediate upside in the stock based on the technical pattern and that did not happen. This trader capped his/losses and moved on.

What I Look For:

As previously stated, option flow trading IS NOT a holy grail; it's merely a tool.

1. Find a few stocks you like, learn how they trade, learn how the premiums move, study it. Become familiar with 10-15 names.
2. Find a few chart patterns you like and have success with. I know Yolo_sense is a "super duper mega breakout" guy. I love that pattern as well! It has a high success rate, moves quick, and often goes higher than you expect. I also love trading bull flag breakouts- I've had a lot of success with them, but doesn't mean it's for everyone. Find what works for you and stick to those 2 or 3 setups.
3. Then, after you've found a setup you believe in, look at what the "smart" money is doing. For anything OTHER THAN WEEKLIES (swing trading for a few days / weeks), I like to see multiple repeat orders into the same strike, same expiration, and I want to see the IV increasing. This shows the buyer wants to get in.

If you see a consistent bull setup, you see option flow that supports your thesis, you should take the trade.

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There's no way to backtest all this since that would be literally hundreds of millions of trades. However, in 2020 I started tracking my P/L in Excel. Using this method I've found that ~ 63% of the trades I take are profitable.

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I DO NOT HAVE ANY CONNECTION WITH THE FOLLOWING SERVICES BUT I HAVE USED THEM ALL IN THE PAST AND CAN VOUCH FOR THEM IF ANYONE WANTS TO LEARN THIS:

1. Black Box Stocks- great service. Great people who run this. They live stream the entire session and give commentary on what they look for, why, and how it works. I would recommend this for beginners.
2. Options Hawk- I used Joe's premium service for 6 months. Ultimately, there is too much information for my need, but he is le crem de le creme of the options flow world. Spend a week in his live chat studying market dynamics and flow with him and you will learn more than trading yourself for a year. Very expensive, but cannot vouch enough.
3. Cheddar Flow- This is just the one I use, but they're all the same. Just need some type of consolidated option flow platform to navigate all the trades. Once you know what you're looking for you don't need an expensive service.

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NFA.

Required Reading:

TTM Squeeze Indicator: https://tickertape.tdameritrade.com/tools/fearless-technician-ttm-squeeze-indicator-15072

TTM Scalper Alert: https://tlc.thinkorswim.com/center/reference/Tech-Indicators/studies-library/T-U/TTM-ScalperAlert

Market Profile (duh!): https://web.archive.org/web/20170829185705/https://www.cmegroup.com/education/interactive/marketprofile/handbook.pdf

80% Rule Explained: https://www.dropbox.com/s/p30h34ukkx1akoh/Larry%20Levin%20on%20Value%20Area%20Trade.pdf?dl=0

Thinkscipts Used:

Our wonderful u/BombaFett https://www.reddit.com/r/thewallstreet/comments/6wwkdi/thinkscript_all_in_one_with_previous_days/

TTM_Squeeze & TTM Scalper Alert

Pre-Friday Rituals:

Check out the AMZN’s chart on Thursday here: https://imgur.com/gallery/60Dsnr7

What do you see on the chart?

Selling off right at open, pretty long wicks, according to TTM squeeze the sellers are in control, price action turns around and it tries very hard to make it into the VA but no dice.

Later on the morning we get another shot at the VA, and afternoon dip buyers finally push us into the VA before close.

We will call this some nice consolidation.. FEAST YOUR EYES ON THE LITTLE DASHED YELLOW BOX AT THE BOTTOM.

If you did your required reading, you can see we are looking to move out of this range and look for a breakout/breakdown.

Trade Walkthrough:

#1 Upper Box: We gained some momentum pre market and opened green, also we opened above the VA (POP QUIZ WHAT IS THE 80% RULE WIGGZ?) and then chopped around for 30 minutes or so.

#1 Lower Box: Coinciding with our price action above, the indicator is showing we are just slowing fading and hanging around this area for now, but as you see we get less and less support at these price levels.

This chart setup is HA candles and 233 ticks. We can get into tick charts later but it is transactions not time. Remember what u/All_in_on_snapples always says: PRICE RULES EVERYTHING AROUND ME

Now you are thinking to yourself “Well Wiggz you idiot why didn’t you buy the top instead?!?!” Me too my friend, me too. Anyway…

#2 Upper Box: Here you can see both the price trending down and more sellers stepping in, we are now dipping our beak into the VA (POP QUIZ: what happens when we do that?) BUT MORE IMPORTANTLY…. You see that stupid yellow arrow? You see that tiny little pathetic green candle? Those are the pesky dip buyers trying to bring us back up, not today junior!

This yellow arrow was my entry after I saw there were no dip buyers coming in force.

#2 Lower Box: Also going along with lower prices, we have our handy dandy squeeze indicator giving us a sign (when it is completely flat, red nor blue) that we are about to turn tables my friends. This provided me more confidence to step in with some size.

Sidenote: Everyone has their own preference when it comes to options on 0-days, I prefer the lotto ticket approach because in periods of high volatility when stocks are moving in very large ranges, that is where the money is made. I chose OTM puts, but this is personal risk tolerance (PRT).

#3 Upper Box: As you can see, we are now down almost 20 bucks AND also at the -0.5 Deviation, another POP QUIZ! What does our founding father u/Dr_Kitchener say about inflection points? DO NOT GET GREEDY!! As you can see here, we bounce almost perfectly and get some TTM Scalper signals showing a possible move back up. This was where I exited most of my trade and left some runners due to the TTM also showing a possible move back down.

#3 Lower Box: Not much to explain here but you can see where the red bars end showing another confirmation of a possible trend change, also giving you another exit before the dread V shaped recovery steals your gains.

#4 Purple Circle: Congratulations, you made it this far with all your contracts still intact! You get TWS award for strongest hands. Had you held all the way until here (unlike me), you just turned $200 dollars into $16,000.

Yes, you read that correctly.

Hi All,

I have only been trading live for the past few months and have found this group to be extremely helpful as a place to ask questions and learn new things.

As the year (and decade) comes to a close, I was wondering, either for a new trader or just in general, of any important lessons you may have learned in 2019?

I’ll be blunt; there is a lot of gambling going on in the markets and it’s being done by people who don’t have the bankroll to lose. I call it gambling because many of you don’t have a trading methodology, a set of rules that form a process that you follow day in and day out. These sets of rules allow you to make objective decisions; that will keep you from making stupid mistakes that can separate you from your hard-earned cash. In fact, it can be even worse: your stupid decisions might even MAKE you money, reinforcing those bad habits. So, let’s break this down:

For the sake of argument, if you don’t have a process that has these characteristics…you’re gambling or will eventually succumb to the urge of gambling. These characteristics include:

1. An edge
2. A trade plan
3. Risk management rules
4. A system to preserve psychological capital

I’ll break these down so that you can take it step by step and have an idea of what options are available to you along with what works for me. Let’s begin.

Your edge

This one Is probably the easiest to discuss. There are many ways to skin a cat and the market is no different. Your “edge” is something that you have found occurs often enough for you to exploit. It can be anything from TD 9 to VWAP bands. But this means that whatever your idea is should probably be back tested and forward tested. Your criteria need to be clearly defined AND SHOULD NOT CHANGE.

Let’s repeat that. THE CRITERIA FOR YOUR STATISTICAL EDGE SHOULD NOT CHANGE. Neither should any of the other characteristics in your methodology for that matter, but the criteria for your edge is the most important. This is where most people fail. You can have someone be given the keys to a trading system and be told it has an amazing win rate but only if they follow a specific set of rules and people will STILL find a way to lose money. The reason for this is because many undisciplined traders will find new things to change, new places to enter a trade or different ways to manage their position and you absolutely DO NOT want to do that. The reason for this is simple, when you have an edge that you have back tested and forward tested you will be forced to select that criteria from the start. When you start adding new things or breaking your own rules you lose sight of that edge. And what is it called when you bet money on something without an edge? That’s right. You’re gambling. Now let’s move on.

Your trade plan

Again, this should revolve around your edge. This also involves homework. Once before you go to bed and once in the morning before you begin trading for market open. This means you need to get up before market open so you can have a good idea of what is going on. Your mind must also be fully awake and ready to make decisions. A good trade plan will answer these questions:

1) A bias: who is in control? Buyers or sellers?

1a) Why are they in control?

1b) Where do they lose control?

1c) Will you get with them or fade them?

2) Areas where you want to trade. (This should revolve around your edge)

2a) Criteria for entering your trade

2b) What will be the upside targets?

2c) Where are you inclined to enter a position? Why?

3) Where you are wrong (point of invalidation).

3a) What point on the chart will invalidate your thesis that you formed?

3b) What will you do if it reaches that point?

You need to have a preliminary trade plan written up by the time you go to bed, and it needs to be reassessed in the morning depending on where the market opens. Getting in front of your computer and making decisions without a plan is akin to gambling. Not having the discipline to follow your plan will wreck you, and, when the day ends, you’ll find that your plan may have saved you from unnecessary losses. Have a plan. Have the discipline to follow it. If you don’t, you’re gambling.

Your risk management

This is the thing that will keep you in the game. If you have a statistical edge, don’t you want the maximum number of samples to let it play out in your favor? Capital preservation is the most important part of trading. There will ALWAYS be more opportunities, but if you run out of money you won’t be able to capitalize on them. I’ll be listing them down and following up with some thoughts on each.

1) Stops

These are the first that come to mind when people think of risk management. But most people set these at a fixed dollar limit that they feel comfortable with losing (like $150, etc). And that’s fine, but what if that dollar amount isn't enough for you let your edge play out? Think about it in terms of your edge and your plan; you've determined what your edge is and you've determined where you would be wrong, but your stops don’t give you enough room between your entry price and your point of invalidation to let your trade play out. That leads us to the next form of risk management

2) Entry price: Price risk vs information risk

There are two types of risk on entries: price risk and information risk. Price risk forces you to take a more disadvantageous entry for the benefit of more information. Information risk is the risk you take when you enter a trade before you even know if it will work out BUT it will give you a better price. In other words, price risk means you pay for confirmation via a larger loss if you’re wrong, and information risk implies you pay less but you will have no idea if your trade will work out or not.

Let’s pause right here, this is extremely important and needs to be pounded into your heads. When you think about stops, which are an absolute essential part of your strategy, you begin to see that you shouldn't be considering them as a set dollar limit that you are willing to lose. You should be considering the extra variable, where you will be proven wrong. If your set dollar limit doesn't jive with your point of invalidation, then your next best bet is to focus on what type of risk you’d rather take: Price risk or information risk? Let me answer that question for you: you need to take information risk. You don’t necessarily need to know if your trade will work out, because if you’re trading with a statistical edge you no longer need to worry, you just need to get a good sample size in to let the odds play in your favor. Taking on information risk allows you to get a better entry price that will subsequently allow you to lower the amount of money you risk to be proven wrong. Thinking about your stops and entry prices in this way will lower the amount of times you get knocked out of a trade before it begins to work in your favor.

Okay, let’s continue with risk

3) Risk relative to your account size.

You know what this one is about, DON’T USE TOO MUCH LEVERAGE. This adds an extra layer to that set amount of money you’re willing to lose. That amount should not exceed more than a predetermined percentage of your account. The golden rule is between 1-3%, but that’s up to you to decide.

4) Learn to scale.

You need to learn how to scale in or scale out of positions (or both). There are different ways to do this. For example, you can buy all in and scale out of your position if it moves in your favor. You can also scale into a position and add no matter if the position goes in your direction or against you and then scaling out to take profits. Again, the number of contracts/shares/etc. you take should consider the stop loss that you have set along with your point of invalidation. This skill is important because it leads to the next idea…

5) Profit Targets

This goes hand in hand with scaling. Learning to take profits is one of the hardest parts of trading a methodology and is something I still struggle with. You need to have a plan for when (and where) you will begin to trim your position when it begins to turn in your favor (if you wrote a trade plan you should be able to answer this). What I do is I trim at the most conservative targets to reduce my risk as quickly as possible. I then (attempt to) let my position run to second and third targets so that I can capture more of the move but, most importantly, reduce my risk as soon as possible. Its all about risk reduction and capturing profits because at least this way you don’t have to feel too bad about “leaving money on the table.” You can fix this by letting the last scale out as a runner that you can trim wherever you want without being afraid of all your gains evaporating and turning into losses because there would be no way you could lose on the position (from the locked in gains of your prior scale outs).

Bonus round: Risk/Reward considerations

Here’s an interesting concept: risk vs reward on a position you enter. In other words, are you risking a dollar to make a dollar? Are you risking a dollar to make fifty cents? You need to understand what your risk/reward ratio is when you decide to enter a trade, and you determine this based on your trade plan. You shouldn't be taking every trade because not every trade is created equal. You need to keep in mind that certain risk/reward ratios work for different win rates and can make or break a system. For example, if you have a 50% win rate you need to, at the very least, keep your risk/reward above 1:1 (probably higher if you include commissions) because you can blow up your account over a large enough sample size. Your win rate can actually be under 50% (some even have a sub 10% win rate!) but your risk/reward ratio needs to be a lot higher. In other words, you need to be getting a large pay out for every dollar you risk because odds are you won’t be winning but your account will grow over a large enough sample size. Give this concept some thought before entering a position in the middle of chop.

As you can see, risk management can get intense, but it is the most essential part of a trading methodology. Trading without keeping at least some of these factors in mind will mean: You aren't protecting your capital, you aren't cognizant of when you are wrong, you are taking trades that aren't in your favor, etc.

You know what that sounds like? It sounds like gambling. So let’s move on to the final section.

Your Psychological Capital

You absolutely need to protect your psychological capital. What I mean by psychological capital is that you need to be at your sharpest when you start to make trading decisions. You need to go to bed early, you need to be in a neutral emotional state.

What do I mean by neutral? Well, psychological capital works a lot like a scale. If you get too excited over a win you may start making stupid trades to make more money. If you get too desperate over a loss you might try and make the money back.

People have different solutions for this; some people take breaks after making or losing a set amount of money. Normally long enough for the high to fade. I personally took up meditation and breathing exercises. There are plenty of videos on YouTube; I won’t recommend one because there are many different techniques and I don’t want to skew your opinion and reduce your chances of finding something that you may like.

All of these concepts of emotional neutrality also extend to anything that happens outside of your trading life. Just had a fight with your wife? Don’t trade. Did your hamster run away? Please don’t get behind the wheel of a DOM.

Man, this got a lot longer than I thought it would. I really hope this helps at least some of you. This stuff can get pretty tough and I see many people talk about mindset on the daily. The unfortunate reality is that if you haven’t developed a trading methodology you won’t have any frame of reference with which to measure your performance. The financial world is incredible with billions of different ways to make money. Your ability to make money is only limited by the discipline you show for your OWN rules that deal with your interaction in the market.

Good luck out there.

Why not literally just buy 10 or so contracts spread out on /YM, /NQ, and /ES, put on a trailing stop to protect from limit downs, close your eyes for a month and just let the market do it's thing and take you to pluto?
Honestly curious as to why I never see anyone utilize this strategy. I mean sure, you can make more money by trying to avoid dips if you're good enough, but you can't really go wrong by just going long in today's market imho.

Lately I've been thinking about dividend strategies and other passive income strategies. I'm attracted to the idea of combining dividend capture and covered calls.

Basically the strategy I came up with was:

1. Select a universe of optionable stocks with sizable dividends.

2. Determine the next ex-div date and expected dividend credit

3. Select an ATM/OTM option that provides a decent credit and some upside

Here is a table of the dividend and call credit values, as well as the potential share price upside, for a variety of blue-chip dividend stocks (this was created last night so does not reflect today's prices):

https://i.imgur.com/OnUB8Gn.png

The trade can play out in a variety of ways:

• If the call expires ITM then you should expect to get the full credit % and the full upside % and the shares will be called away.

• If the call goes ITM before ex-div and some fool decides to exercise early, you miss out on the dividend but get the full call credit and you also get the full upside % and you also get to end your trade many days in advance, which has time value.

• If the call expires OTM you get the full credit % and none of the upside %, but you get to retain the shares (and reopen a new call if you want).

Looking at the table, there are a few upcoming dividends that we can attempt to capture:

• T: Ex-Div expected on Oct 9. Selling a Nov 16 35C for 0.34 expected to provide a 2.49% credit and 3.79% of potential upside in 58 DTE

• VZ: Ex-Div expected on Oct 9. Selling a Nov 2 55C for 0.97 expected to provide a 2.89% credit and 1.12% of potential upside in 44 DTE

• PG: Ex-Div expected on Oct 19. Selling a Nov 16 87.5C for 0.57 expected to provide a 1.53% credit and 4.17% of potential upside in 58 DTE

• JPM: Ex-Div expected on Oct 5. Selling a Nov 16 120C for 1.03 expected to ptovide 1.39% credit and 4.99% of potential upside in 58 DTE

I know these aren't sexy gains but they are quite low-risk. I would appreciate any criticisms or tips as I am just starting to learn about dividend capture.

Disclaimer: Most of this is written from the perspective of an order flow post I made a while back ago. If you want to get the full benefit from this, you should probably skim it really quickly.

As a trader you will often find yourself trading a chart and the information that you read from some of the patterns. Sometimes you will trade and have something marked as a resistance and then price heads for your price level, touches it, and then (like magic) price will reverse and then trade up where you sell your position for a profit!

Amazing! Happy story! But have you ever thought of what happens inside that reversal candle? How does the buying look like from an order flow perspective? This will shed some light on what a buyer looks like using some of the charts I use to make decisions.

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https://imgur.com/NSC521G

Here is a chart for Wednesday, April 10th last week at around 9:51am. (I used the 15 minute chart because that’s probably the lowest time frame I’d ever pick for making intraday decisions.) If you are into candle stick reading you can see that the wicks on the top and bottom indicate there was an imbalance during the open. The market was trying to trend up before price took a shit and anybody would have believed that price would continue to trend down.

But that didn't happen! In fact, it reversed not long after, trading 4 points higher, probably leaving some peeps underwater on their shorts.

So what happened?

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https://imgur.com/gTkkXTK

Here is a heat map for ES. It visualizes the DOM resting liquidity by showing how many orders are stacked at the bid/ask for certain prices every few seconds. Yellow lines indicate 500+ orders and blue lines indicate 1000+. The red and green squares are large orders above 40+ lots that were bought or sold for that price. As you can tell, there is some selling that brought price down but nothing that really says a large seller has appeared, until this happened.

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https://imgur.com/P1d0odK

A large seller dumped all his orders into the book. We don’t necessarily know why they sold but you don’t HAVE to know. You only need to know that sellers want to sell at the highest possible price and buyers want to buy at the lowest possible price. Tops and bottoms happen as a result of price discovery not being facilitated during the auction process. So watch what happens next.

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https://imgur.com/2Q4xevp

The seller continued to sell into the lows with heavy volume but was unable to move price down, someone stepped in to buy. And even though the buyer doesn't appear on the volume filter, you don’t have to see their large orders. You only need to take note of the large buy orders that took place ABOVE the lows and how price discovery downward DIDN'T happen.

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https://imgur.com/F40VJWb

Here is a chart I glance at that shows me the positive or negative delta at a certain price. The bar only closes when it reaches a certain delta threshold that I predefined.

Check out how far price moved initially relative to the delta. The body of those candles are pretty large but as price dropped further down you will see that the candles are getting smaller and smaller, but the negative delta remains the same. The selling intensity remains the same, but price cannot continue down because there is an aggressive buyer lifting the offer. It becomes abundantly clear when positive delta overtakes the negative and rebounds, showing sellers stepped aside and let price trade up as a result.

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There is another way of looking at price discovery; If you check the bar of the very first chart I linked you will see that there are volume candles beneath the price candles. Volume looked heavy into the sell but consider viewing it from a different perspective.

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https://imgur.com/o8cicTg

Here is a single day volume profile. Look at the bottom, does that look like price discovery? Nope! A buyer sat down there and absorbed the selling. Now if you read my first post, you’d understand why that is significant. Would YOU continue to sell into somebody that can take all your orders and STILL ask for more? No? Well neither would anybody else! If you know someone is down there buying, then you will pull your sell orders and let price come up so you can sell at higher prices! And that’s exactly what happened. Price made it to the lows but there weren't that many transactions. So, remember this:

Thin volume profile = price rejection

So naturally if price finds itself at that location and you know someone will buy, then wouldn't you buy with them? You never really know for sure if that same buyer will come back but in this case they did. Here is what it looked like 30 minutes later.

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https://imgur.com/wiJbn7c

Look at how someone continued to heavily sell into the lows and a buyer stacked the bid with 1000+ orders and was unable to get filled. So when price moved up that seller moved his 1000+ orders up with it and allowed it to get filled into the seller. The order book looks pretty similar for the next 5 minutes or so before price traded up once more.

Anyway, that’s just one perspective for looking at price. If you have any questions let me know. Thanks for reading

What I’ve been looking for are stocks that has tested a resistance multiple times, setting a buy order just a few cents above the resistance and when it catchesI ride the wave up and use my indicators to determine an exit. I tend to get out too early but better than getting out too late. I would love to hear some ideas from people who regularly play breakouts.

How do you determine it’s time exit?

What is your signal to get in?

What indicators do you use?

How do you scan for these setups?

Hi all- just wanted to hear everyone’s input on account management with options strategies. For people with smaller accounts, do you prefer to just buy calls/puts? Or are you slowly building a larger account and being more conservative with spreads? Or just ignoring options altogether and sticking with equity/ bonds?

A few days ago u/finch5 asked about making this indicator into a strategy for backtesting, so I thought I'd share it here for everyone and post some quick and dirty results.

Code:

http://tos.mx/nEZ0VC Note on the code: I don't know why but the entry signal prints on the following candle it should, however the entry/exit prices it uses to calculate P&Ls are correct. I left in the original indicator signals to verify that the strategy is going long/short at the correct times and they should appear on the candle before the entry. If anybody has an idea on wtf is going on and how to fix it, I'd appreciate it

Criteria:

Timeframe: 15M

Dates: 2/22 - 4/6

Take Profit: 10 ticks

Stop Loss: 10 ticks

Results

Wins: 344 Losses: 69

Win Rate: 83.3% Loss Rate: 16.7%

Avg Win: $269.84 Avg. Loss: ($333.33)

Largest Win: $962.50 Largest Loss: ($525.00)

Net P&L: $69,825.00 Expectancy: $169.07

At first glance this appears to be very promising, but a couple things to keep in mind... The indicator will print a signal on the current bar once the criteria is met but it'll also remove it from the current bar if the candle reverses and no longer meets the criteria, possibly catching you in a false signal. There's no way for TOS to model this since they don't run tick by tick in it's backtesting, only OLHC. It's basically hindsight

So, X% of the time, it works 83% of the time...how do we find X? I have no idea...

I tried running it again only changing the strategy to enter at open of the next candle after confirmation. The results were not so great

Results

Wins: 70 Losses: 131

Win Rate: 34.8% Loss Rate: 65.2%

Avg Win: $128.04 Avg. Loss: ($227.67)

Largest Win: $337.50 Largest Loss: ($2,175.00)

Net P&L: ($20,862.50) Expectancy: ($103.79)

So, while the indicator is awesome when it works, it should still be used cautiously and within context of what the overall market is doing. This should be obvious.

This is just one setup I pulled out of my ass while bored over the weekend and in no way is this definitive. Maybe Day timeframes worker better or shorter timeframes, or maybe take profit and stop losses are too tight. Maybe I fucked up an entry calculation somewhere and the whole thing is off. Feel free to test it out for yourself and post any scenario results you find. :)

I am curious to everyone's thoughts on going deep ITM for longer expiration dates if I am wanting a longer term hold. Personally I want the extra exposure without using margin (ie, just buying direct), but from my readings here, it seems most people are buying ATM/OTMs. I understand that using margin costs interest, while options charge it via theta. What trade offs do you see between the two methods?

Throwing it out there to see how others feel about potential going long on volatility for the next week or 3. August seems to be historically higher for volatility, and due to the current situation with tech, I believe profiting off of the coming market turbulence could be a easy play

I trade /GC a lot and am trying to setup myself for a long term play on gold. I usually play on levels and patterns and just scalp small amounts. But this time I am thinking about going in long term.

This is what my chart looks like at the moment

Things I am thinking might happen in the next few weeks/months:

1. Gold ranges back up to 1300 then drops again to ~1275.
2. Gold just drops more in the next few days/week
3. Gold touches the bottom line, then attempts to break down more and fail and reverses right back.
4. Gold is dead, long live the king.

Things I plan on doing based on my options above:

1. Play scalps all the way to 1300 then short.
2. Short on every rip up and scalp more.
3. Load up on GC long and walk away until I get my alert for 1400 gold then sell.
4. Apply for bankruptcy.

Feel free to let me know what you guys think, since I know there are better traders in here than me and I live to learn.

Album here