The single, most important thing you've learnt as a trader

[matty2.0]

To be humble.

 

[AzzaB80]

To think in terms of risk, not potential profit

 

[Mr J]

You know everything.

While that may have been sarcastic, I readily admit how little I know about anything. I'm blunt, not egotistical.

He talked about predicting price as in an absolute $value

I don't see why he would. Of course predicting price to that extent is impossible, but since he talked of delta neutral strategies, it's very reasonable to assume that he's talking about price direction.

 

[Uncle Barry]

Good evening.
3, three things/items, not 1, one
must be mastered.

and then understand your failing and accept them,

Fear
Greed
and Denial

master all three, you are in control of your mind and your actions.

Kind regards,
UB

 

[jono1887]

dont average down.


ever!

 

[mazzatelli]

I don't see why he would. Of course predicting price to that extent is impossible, but since he talked of delta neutral strategies, it's very reasonable to assume that he's talking about price direction.

I thought it was reasonable to assume one would predict price direction and magnitude to assess an appropriate risk reward
E.g. I think XAO will touch 4900 - i.e. bullish and up ~200
So ultimately it entails predicting a $value with the degree of accuracy at the traders discretion.

I must be bored, lol

 

[Mr J]

A rough prediction of magnitude, but doesn't the same have to be done for volatility prediction?

 

[mazzatelli]

A rough prediction of magnitude, but doesn't the same have to be done for volatility prediction?

I'll keep to cutz' original point, as I can't vouch for how he trades. Delta neutral is not necessarily a bet on vol, though considering it helps.
Some have no view on price OR vol. They hope to neutralise delta accumulation and earn +theta, the trade off is hedging losses and transaction costs. Trading vanillas to gain exposure to vol is not pure, as there is interrelationships with other Greeks.

But we've gone off topic

 

[Mr J]

I can bring that on-topic. Another contender for most important is always to keep learning and adapt.

+theta

Time decay? Doesn't this require an opinion as well?

 

[mazzatelli]

Time decay? Doesn't this require an opinion as well?

J, as each day passes, holding all other variables constant, the option will lose part of its value. There is no stopping the clock.
The only thing you can do is choose to have it work for or against you.

 

[Mr J]

Of course .

 

[wayneL]

A rough prediction of magnitude, but doesn't the same have to be done for volatility prediction?

Volatility can be hedged, rather than predicted... but you can predict (or project) if you want.

 

[wayneL]

Volatility can be hedged, rather than predicted... but you can predict (or project) if you want.

Quite often, a volatility prediction is ipso facto a prediction in direction also, because of reverse correlation (or not, as the case may be), but not necessarily.

Mean reversion is also a valid vol play.

 

[Mr J]

Volatility can be hedged, rather than predicted... but you can predict (or project) if you want.

Hedges still require favourable probability though to overcome the cost of the hedge. By 'predict', I mean to roughly predict the probabilities, not to actally predict the result.

 

[wayneL]

Hedges still require favourable probability though to overcome the cost of the hedge. By 'predict', I mean to roughly predict the probabilities, not to actally predict the result.

Hedging volatility is different to hedging price.

 

[cutz]

Some have no view on price OR vol.

Exactly,

This ties in to my original statement, recently i stopped trying to analyze charts and biasing a position because i felt the index was going to do one thing i felt that it's impossible predicting.

I've even come to the conclusion that day to day, week to week, month to month price action is a random affair.

The only thing i'm sure of is what mazza pointed out about theta.

 

[wayneL]

Exactly,

This ties in to my original statement, recently i stopped trying to analyze charts and biasing a position because i felt the index was going to do one thing i felt that it's impossible predicting.

I've even come to the conclusion that day to day, week to week, month to month price action is a random affair.

The only thing i'm sure of is what mazza pointed out about theta.

Ahh Sister Theta, that cruel mistress. Better to let her mess with the guy on the other side of the trade.

Agree.

 

[mazzatelli]

Exactly,

I've even come to the conclusion that day to day, week to week, month to month price action is a random affair.

hehe...oh no
We could have a MM in the making : Don't join the dark side!!:vader:

 

[Mr J]

I've even come to the conclusion that day to day, week to week, month to month price action is a random affair.

Everything is random until we connect the dots .

 

[wayneL]

Everything is random until we connect the dots .

Yes, but the dots can only be connected in retrospect. Trading on the hard right edge, the next dot is unknown