# Convinced nothing works



## orix (24 August 2009)

Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e over the long run.


----------



## nunthewiser (24 August 2009)

ya might need to get a  job then champ


----------



## skyQuake (24 August 2009)

nunthewiser said:


> ya might need to get a  job then champ




I lol'd


----------



## Chris45 (24 August 2009)

orix said:


> Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e over the long run.




Probably the best example of the Zero Sum Game you'll find. The only winners are the brokers.


----------



## mazzatelli (24 August 2009)

orix said:


> Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e over the long run.




Unless you're a MM, they are -expectancy. Learn to adjust/lock
Otherwise take nuns advice


----------



## wayneL (24 August 2009)

Nothing works.
Everything works.

The toughest thing is that there is so much BS out there; which prompts people to do the wrong things.


----------



## Grinder (24 August 2009)

orix said:


> Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e over the long run.




Don't know how you trade but if your banking on a strategy to get the job done for you, you might as well take nuns advice. Like mazza said it's all about adjustments & risk management, untill you get that down pat it is all ****e.


----------



## Cartman (24 August 2009)

orix said:


> Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e over the long run.



]


Hi Orix ..... first post ... trading options !! .. More info required on your predicament/dissatisfaction  methinks !!


----------



## Timmy (24 August 2009)

Orix sounds like a client/victim of <insert name of any dodgy 'educator' here>.


----------



## Buckeroo (24 August 2009)

There seems to be a couple of first timers coming in with a bang just recently. Don't say a lot, just the initial tyrant

Coincidence?

Cheers


----------



## wayneL (24 August 2009)

orix said:


> Straddles, strangles, bull spread, bear spread, iron condors, butterflies...... Its all ****e *over the long run*.




There is actually an error of logic in the OP.

Let's look at the example of straddles and let's say some trader took every long ATM straddle over a long period of time. 

Well guess what? There are two sides to every trade.

If those long straddles are a loser over the long run, what does that mean?

Yep! You guessed it, if you wrote every corresponding short ATM straddle, in other words, you took the other side of every one of the first trader's trade, YOU ARE A WINNER OVER THE LONG RUN.

(N.B. *This is just an example and not a suggestion to trade short straddles*)

If you're losing on bull spreads, somebody else is making money on the bear spread etc etc.

This is what I mean by:

Nothing works.
Everything works.

FWIW


----------



## cutz (25 August 2009)

hi orix,

If you don't mind why don't you tell us what went wrong, at least maybe we can all learn something from it, i can only assume you've been caught out in this rally.


----------



## orix (25 August 2009)

Hello Wayne,
                 Your analogy of being on the right side of a straddle as being proof that systems do work seems to me to be the same as saying if you bet on black when the balls rolls onto a red number your system is still a winner. Everything works.... but does it work above and beyond chance.


----------



## gooner (25 August 2009)

wayneL said:


> There is actually an error of logic in the OP.
> 
> Let's look at the example of straddles and let's say some trader took every long ATM straddle over a long period of time.
> 
> ...




Except of course when both sides are dealing with a provider who charges huge margins and brokerage and thus is the only winner.


----------



## wayneL (25 August 2009)

orix said:


> Hello Wayne,
> Your analogy of being on the right side of a straddle as being proof that systems do work seems to me to be the same as saying if you bet on black when the balls rolls onto a red number your system is still a winner. Everything works.... but does it work above and beyond chance.



Yes.

The key is in pricing, viz, volatility. You take a volatility bet every time you trade options, whether aware of it or not.

To be successful in options you have to get good at trading volatility... (or be very good at picking direction). Straddles are a prime example of this.

The really big problem in Option Land is how they are being taught. Going back to the straddle, what "The Big O" teaches is a disgrace and a certain loser. It's not just them either, there are clowns everywhere. The Aussie scene is full of them.

If you can find the *right* information and grasp the right attitude to options trading and you're set IMO.


----------



## wayneL (25 August 2009)

gooner said:


> Except of course when both sides are dealing with a provider who charges huge margins and brokerage and thus is the only winner.




Well I can't help it if people insist on dealing with sheisters. 

I pay 75c per contract and refuse to play with super wide spreads.


----------



## cutz (25 August 2009)

wayneL said:


> refuse to play with super wide spreads.




LOL,

Only last week i commented on how XJO's on the ASX aren't too bad only to be tripped up yesterday with a half baked spread with way too much negative theta (the WOTM short leg was a problem i chickened out).

Time to scale back on the ASX i think and start getting accustomed to early starts.


----------



## orix (25 August 2009)

Wayne

If historic volatility is at an all time low.... so what. It doesnt mean that volatility will turn around and move higher (it may go even lower). Its as meaniningless as a share price being at a 52 week low. I bet if you trade volatility in that manner, that if you were to turn your thinking around and sell when volatility is low and buy when it is high you will end up at the same place. Sounds crazy but nearly everyone is wrong half the time so how can you go wrong? 

Short term (and to an extent long term) sharemarket movements are so full of noise and chaos i dont believe the key lies with trading greeks or trying to predict price fluctuations. Perhaps it lies in risk management but I'm not convinced there is such a thing. Its a buzz word in my opinion that doesnt really mean anything. If there is a risk management system that works over time on a 50/50 win/lose ratio.... show me it.


----------



## Knobby22 (25 August 2009)

Orix

You should read "The way of the Turtle". An excellent book with a lot of practical knowledge and experience. You need a different view on this. This will help.

I'm not a short term trader but the point is you need an edge. I have my edge. Others have theirs.


----------



## mazzatelli (25 August 2009)

orix said:


> If historic volatility is at an all time low.... so what. It doesnt mean that volatility will turn around and move higher (it may go even lower). Its as meaniningless as a share price being at a 52 week low.




Sorry. Vol [implied or stat] exhibits different sylized facts to financial time series.
Vol tend to vary within a fixed range [weakly stationary] and mean reverts, which stock prices do not [non stationary data].

Greeks are part of risk management

If you believe your statements, don't trade


----------



## Grinder (25 August 2009)

cutz said:


> LOL,
> 
> Only last week i commented on how XJO's on the ASX aren't too bad only to be tripped up yesterday with a half baked spread with way too much negative theta (the WOTM short leg was a problem i chickened out).
> 
> Time to scale back on the ASX i think and start getting accustomed to early starts.



 IMO It's a must if you want to trade seriously. I fought it for such a long time & regret not changing over sooner.



orix said:


> Perhaps it lies in risk management but I'm not convinced there is such a thing. Its a buzz word in my opinion that doesnt really mean anything. If there is a risk management system that works over time on a 50/50 win/lose ratio.... show me it.




Only you can figure that out yourself. I attribute risk mangement as the single reason to why I trade profitably now. Im a risk manger 1st & options trader 2nd.

happy to see carmen as the august girl. nice.


----------



## orix (25 August 2009)

mazzatelli said:


> Sorry. Vol [implied or stat] exhibits different sylized facts to financial time series.
> Vol tend to vary within a fixed range [weakly stationary] and mean reverts, which stock prices do not [non stationary data].
> 
> Greeks are part of risk management
> ...




Share price can be converted into stationary data through differencing. What is your point?..... Do you hold one form of pure data over another or what?

Options as a whole are part of risk management. The underlying share is part of risk management... not trading at all is part of risk management.... everything and nothing (to quote Wayne)....


----------



## mazzatelli (25 August 2009)

orix said:


> Share price can be converted into stationary data through differencing. What is your point?..... Do you hold one form of pure data over another or what?
> 
> Options as a whole are part of risk management. The underlying share is part of risk management... not trading at all is part of risk management.... everything and nothing (to quote Wayne)....




Vol is stationary as well as having clusters, asymmetry and continuous. This can be modelled.

When you apply transformation to non stat data [log/power/differencing] it's to filter trends and seasonal equations, before transforming it back. The time series itself is not stationary in variance.

Options can be traded as an asset class in itself. 

WTF are you talking about?


----------



## orix (25 August 2009)

mazzatelli said:


> Vol is stationary as well as having clusters, asymmetry and continuous. This can be modelled.
> 
> When you apply transformation to non stat data [log/power/differencing] it's to filter trends and seasonal equations, before transforming it back. The time series itself is not stationary.
> 
> ...




If you buy index puts against a long portfolio position you are hedging against downside and as such are actively involved in "risk management". Is that really hard to understand???????


----------



## mazzatelli (25 August 2009)

I am talking about risk management of trading options [not using options for risk management], hence the reference to Greeks, which relates to your "risk management system that works over time on a 50/50 win/lose ratio" rant a few posts ago.

What is the point of this thread?


----------



## orix (25 August 2009)

mazzatelli said:


> I am talking about risk management of trading options [not using options for risk management], hence the reference to Greeks, which relates to your "risk management system that works over time on a 50/50 win/lose ratio" rant a few posts ago.
> 
> What is the point of this thread?




Stop posting if you see no point to this thread..... And stay of the glue.....


----------



## Timmy (25 August 2009)

orix said:


> ... And stay of the glue.....




Welcome to ASF Orix - we don't encourage this sort of response to other members, no more please.


----------



## nunthewiser (25 August 2009)

orix said:


> Stop posting if you see no point to this thread..... And stay of the glue.....




LOL 

funny place forums ......ppl get abused for donating there hard earned knowledge 

funny that


----------



## trainspotter (25 August 2009)

Ha ha Nun .... you betcha brother !


----------



## nunthewiser (25 August 2009)

trainspotter said:


> Ha ha Nun .... you betcha brorther !




LOL hiya trainspotter .long time no see 

thanks for a lovely arvo and i owe u a crownie !


----------



## trainspotter (25 August 2009)

LMAO ... yeppers, it has been a while indeed ... nuffin like catching up with the same minded people and having a quiet ale or three in the arvo. Beautiful day ... fridge full ... sharemarket tips to be discussed ... all good. I owe you a Bourbon. The first of many.  Sorry about cutting our meeting short ... kids to be picked up etc. You know the drill.


----------



## Mr J (25 August 2009)

nunthewiser said:


> LOL
> 
> funny place forums ......ppl get abused for donating there hard earned knowledge
> 
> funny that




Orix is clearly in an emotional state, so we can't expect him/her to act rationally and be objective.



> If historic volatility is at an all time low.... so what. It doesnt mean that volatility will turn around and move higher (it may go even lower).




Based on the data (that it is an all-time low), probability suggests that it will likely rise over time. The issue isn't the situation, but how you trade it.



> Sounds crazy but nearly everyone is wrong half the time so how can you go wrong?




I would guess that most people are wrong most of the time, and you can go wrong by being one of them.



> Short term (and to an extent long term) sharemarket movements are so full of noise and chaos i dont believe the key lies with trading greeks or trying to predict price fluctuations.




The bigger picture is the sum of its parts. A chaotic shorterm does not create a predictable longterm. You're just under the illusion that the shorterm is chaotic because you don't understand it. It's no less 'predictable' than the longterm, and many people make a living off of it.



> Perhaps it lies in risk management but I'm not convinced there is such a thing. Its a buzz word in my opinion that doesnt really mean anything.




You utilise it whether you know it or not. Do you look before you cross the street? Do you lock you door when you leave the house? Most do, some don't. Those that don't will often suffer the consequences. It's no different with trading.



> If there is a risk management system that works over time on a 50/50 win/lose ratio.... show me it.




Sure, get 2:1 on your trade. The key to trading is to risk a sensible portion of your capital on a situation that provides a risk to reward that outperforms the probabilities of that situation.

As for whether trading is a bunch of BS, well consider the source. It sounds like you're losing money - who are you losing it to?


----------



## wayneL (25 August 2009)

I agree with J, Orix either wants to justify failure or is trolling... or both.

Like any trading, trading options requires a positive mathematical expectancy. None of us trading anything can overcome the cruelty of maths.

The sum of winning trades has to exceed the sum of losing trades in sufficient qunatity to make it worthwhile. All obvious stuff.

The problem with options is how they are promoted and taught. This is highlighted in the Youtube I did.

All of the well known and heavily marketed options courses are total rubbish and promote the totally wrong thinking in how to have long term success with options. They appeal to people's greed and have you believing there is some "secret" that if you just give them $5,000 for, you'll be a certain millionaire by next month.

When the reality hits, the instrument is blamed, the market makers... anybody but themselves. Anything, rather than doing the apprenticeship and the hard yards to succeed at what is a complicated business.

Orix does raise good points that do deserve good answers. His problem is that when they are given, he doesn't want to hear.

The volatility issue being a case in point. He regurgitates the seminar clown line, which he rightly questions, but when offered a different and more professional (and usable) view on volatility, he doesn't want to know.

That's OK, he's looking for reinforcement. If that's what he wants, he'll find it.


----------



## tech/a (25 August 2009)

If you cant profit in anything you do Trading/Property/Art/Coins/Business/Love/Weight loss/Smoking/
you have 3 choices.
(1) Do nothing
(2) Keep doing the same thing until someone else does something.
(3) Do something about it!


----------



## orix (25 August 2009)

Winning trades don't have to exceed losing trades if, obviously, you are making more money on your winners than you are losing money on your losers.....
As for the more professional view on volatility.... what was it?... that volatility mean reverts? If i have no idea when that will happen how am i to use that information. I am certain that if you backtest a system that shorts when volatility is high and goes long when volatility is low it will lose money. Prove me wrong..... 
Everyone has jumped to the conclusion that i have recently lost money (i haven't traded in two years) or been duped by some bonehead seminar (now thats funny).


----------



## sammy84 (25 August 2009)

nunthewiser said:


> LOL hiya trainspotter .long time no see
> 
> thanks for a lovely arvo and i owe u a crownie !






trainspotter said:


> LMAO ... yeppers, it has been a while indeed ... nuffin like catching up with the same minded people and having a quiet ale or three in the arvo. Beautiful day ... fridge full ... sharemarket tips to be discussed ... all good. I owe you a Bourbon. The first of many.  Sorry about cutting our meeting short ... kids to be picked up etc. You know the drill.




Get a room you two!


----------



## wayneL (25 August 2009)

orix said:


> Winning trades don't have to exceed losing trades if, obviously, you are making more money on your winners than you are losing money on your losers.....




Well you have a problem reading detail... apparently.



> The *sum* of winning trades has to exceed the* sum* of losing trades in sufficient qunatity to make it worthwhile.




If the rest of your post is true, it seems you are simply trolling.


----------



## Mr J (25 August 2009)

orix said:
			
		

> If i have no idea when that will happen how am i to use that information




Which only proves that you can't do it, not that others can't. Maybe nothing works for you, but much works for many others.



> Prove me wrong.....




Prove yourself wrong, or just don't worry about it. If you're convinced that one can't trade profitably, it's not up to anyone else to prove you wrong.



> Everyone has jumped to the conclusion that i have recently lost money




If you were trading well, you wouldn't have started this thread. The suggestion that nothing works are not the words of someone successful. I do not know whether you're referring to trading the market in general, or just shorterm or options. It doesn't really matter though.


----------



## orix (25 August 2009)

wayneL said:


> Well you have a problem reading detail... apparently.
> 
> 
> 
> If the rest of your post is true, it seems you are simply trolling.




Eh? the red highlights aren't helping. I assume you mean sum total in dollar terms which is not what you said.... 
Why am i deemed to be trolling if i haven't traded recently?.....


----------



## wayneL (25 August 2009)

I think it's impossible to make money from windows and doors. 

Sash, sliding, French doors... it's all ****e over the long run. 

:batman:


----------



## trainspotter (25 August 2009)

I had a troll once. Lovely critter. Lived down the back garden under the bridge with all my TTY shares.


----------



## wayneL (25 August 2009)

orix said:


> Eh? the red highlights aren't helping. I assume you mean sum total in dollar terms which is not what you said....



:sleeping:


> Why am i deemed to be trolling if i haven't traded recently?.....



Because if you haven't been trading recently, you have no basis to make the comments you made in the opening post, ergo, a troll post.


----------



## trainspotter (25 August 2009)

http://en.wikipedia.org/wiki/Troll_(Internet) for educational purposes only.


----------



## orix (25 August 2009)

wayneL said:


> :sleeping:
> 
> Because if you haven't been trading recently, you have no basis to make the comments you made in the opening post, ergo, a troll post.




I assume you never backtest or paper trade a new system. You only validate a new system until you start to lose real money..... right?


----------



## orix (25 August 2009)

Trainspotter
                You are very funny.... oh man..... you don't need to trade buddy. Hit the comedy circuit and make millions..... so many zingers from one guy.... wow


----------



## Bobby (25 August 2009)

tech/a said:


> If you cant profit in anything you do Trading/Property/Art/Coins/Business/Love/Weight loss/Smoking/
> you have 3 choices.
> (1) Do nothing
> (2) Keep doing the same thing until someone else does something.
> (3) Do something about it!




Yep I agree ( 3 ) ,  make an effort in any area  , you will then succeed  or succumb .
Those who follow ( 1 ) become center-links best customers


----------



## wayneL (25 August 2009)

orix said:


> I assume you never backtest or paper trade a new system. You only validate a new system until you start to lose real money..... right?



If you believe you can backtest an options trading strategy, you're barking up the wrong tree. A backtest cannot consider all the parameters needed in deciding to enter a particular strategy. A backtest cannot metamorphose strategies as market conditions develop. It cannot make a subjective judgement on option valuation.

If backtesting is an important validation for you, I strongly suggest to stick to stocks or futures. 

Just my opinion based on making my living from trading options.


----------



## wayneL (25 August 2009)

wayneL said:


> I think it's impossible to make money from windows and doors.
> 
> Sash, sliding, French doors... it's all ****e over the long run.




No comments on this Mr Orix?


----------



## mazzatelli (25 August 2009)

...


----------



## moXJO (25 August 2009)

orix said:


> Everyone has jumped to the conclusion that i have recently lost money (i haven't traded in two years) or been duped by some bonehead seminar (now thats funny).




May I ask what prompted the original outburst about options?


----------



## orix (25 August 2009)

wayneL said:


> No comments on this Mr Orix?




Agreed.... With the downturn in construction its really tough out there (and french doors aren't as popular nowadays)......


----------



## wayneL (25 August 2009)

orix said:


> Agreed.... With the downturn in construction its really tough out there (and french doors aren't as popular nowadays)......



HAHA well I can't argue with that!

I like French doors FWIW, but don't currently live where there are flies and mozzies.


----------



## BradK (25 August 2009)

wayneL said:


> it seems you are simply trolling.




What is trolling? Dont worry... got it from another post. 

Brad


----------



## skyQuake (25 August 2009)

I am curious about backtesting oppies strats. Lots of oppies are illiquid, and may not trade during the day, so you can't simply use last price.
And I do not know of a provider that supplies historical intraday bid/ask data for oppies, further making backtest difficult.
Anyone care to enlighten me on that?


----------



## mazzatelli (26 August 2009)

skyQuake said:


> I am curious about backtesting oppies strats. Lots of oppies are illiquid, and may not trade during the day, so you can't simply use last price.
> And I do not know of a provider that supplies historical intraday bid/ask data for oppies, further making backtest difficult.
> Anyone care to enlighten me on that?




For the retail trader, there is OptionVue's backtrader module.
Historical spot and option prices can be simulated in 15 minute intervals


----------

