What will HowardCohodas's month on month return be for March?

[Depth Trade]

Howard , let me give you a lesson on trading options Son. First off, you have to have an idea of where the market is going and know what the heck you're doing..

Buying slv spread call-put
April 15 2011 Exp.

37c 1.15- 35p 0.16
Paying 0.99
:whistling

Still holding this spread.

Current value
37c 1.95- 35p 0.06
value 1.89
+90.91%

 

[HowardCohodas]

Hey HoCo,
You describe yourself as a sharpshooter and also a first responder.
Is that some sort of hedging strategy or do you make money from both sides?
Richard

I'm not a sharpshooter. I am an instructor. Many students have never handled firearms before. I thought it prudent to take a class in being a first medical responder as a precaution.

 

[HowardCohodas]

Howard,

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

Picking up pennies in front of steam rollers. That is the specific criticism of your strategy.

You are systematically selling options, without systematically viewing them as overpriced. The premium you receive from your short options by definition will not cover your losses in the long run, once bid/offer spread, slippage, risk of market gaps and commission etc. is factored in your strategy is guaranteed to lose.

Now, as the steamroller analogy is meant to show, people employing these strategies often have good results, they make money - for a time. Then comes the day that they lose all they have made and more - that is not a dramatized statement, it is a statement of fact.

As I understand it the main tenets of your strategy are some form of money management - this is irrelevant, you cannot money manage away the risks you are exposing yourself to. And, mainly I think, a "probability of touching" measure that is supposed to ensure you set the condor wide enough that you hardly ever get into trouble. Well, and this is fact based, the problem is that the market already has "probability of touching" factored in by way of lower premiums for further OTM options. This means that you are at best (at the very best) merely playing a 'fair' game - you widen the condor, you receive less premium, a smaller future loser wipes that profit out. You tighten the strikes, get more premium but have more losers.

You have said that you don't think 9 months of results is enough data, but then you bandy your account balance around as if that is proof it is a good strategy! The conflict present in that behaviour is staggering. You could carry on like this for several years before you really blew out. I don't care if you do all your money, I kind of hope you do as maybe then you'll realise what is going on - my only motivation for posting this is intellectual, as in I have some kind of need to step in and correct blatant and dangerous errors, as I think people like MG and Arab do as well.

That is all. Cheers.

I'd like your permission to include a slightly modified version of this post in my restricted thread. You would have approval of suggested modifications so that I can still reference you as the poster.

 

[Mr. Charts]

I'm not a sharpshooter. I am an instructor. Many students have never handled firearms before. I thought it prudent to take a class in being a first medical responder as a precaution.

In case you got it wrong......?
Good to see you taking care to cover any untoward events in your gun-toting persona...
Perhaps that's a concept worth considering in your trading persona?
The walking and getting nowhere thing looks safe enough
Richard

 

[HowardCohodas]

http://en.wikipedia.org/wiki/Confirmation_bias

'Know thyself' Howard (and I mean in an Aristophanic sense)

Good one. It would seem many of us here wear this badge, including me. It's a constant battle, but I doubt any of us will ever declare victory over it.

 

[HowardCohodas]

HoCo, I admire your persistence and have nothing against you, you make me smile, but do consider where persistence morphs into foolhardiness.

That's a great point. This video, like the interview now removed, and many of my posts that get me into trouble here were a consequence of answering yes. Sometimes saying yes does not always inure to one's benefit. I am a work in progress.

 

[HowardCohodas]

In case you got it wrong......?
Good to see you taking care to cover any untoward events in your gun-toting persona...
Perhaps that's a concept worth considering in your trading persona?
The walking and getting nowhere thing looks safe enough
Richard

Not only can I not argue with anything you state here, but you also brought a smile to my face this morning. Thanks.

 

[amit1986]

Howard,

What component of your trading system do you believe gives you an 'edge*'?

*A trading edge is a unique skill/strategy that differentiates a trader from other traders in that the said trader is able to consistently rake in profits.

 

[TheBramble]

amit - consistently raking in profits isn't indications of the existence of an edge. A point I was hoping Howard would develop with me further yesterday when I simply asked if his system was showing a profit, but he didn't respond, which we both knew he wouldn't, for reasons both he and I are alredy well aware.

Howard knows the Black Swan will be his undoing. If the Swan can get you and take you out of the game (which it can for HC), you don't have an edge, no matter how rosy your P&L looks at any time before the event.

He knows it. We know it. And he won't respond to it because that isn't the purpose of this little drama, in which I have once again allowed myself to become a complicit benefator.

This whole sheebang is just going round and round in circles. Which is the purpose.

 

[amit1986]

Bramble,

Successful traders are consistently profitable. The only variable is the frequency of "consistency". Some are consistent daily, some weekly, some monthly - all depends on the trading system and the trader. But having a trading edge means one is able to consistently be profitable. It's a skill that is developed with time.

My question to Howard is what he believes to give him his edge. Is it the formation of iron condors as a trading strategy? Is it that Probability of Touching program he uses? Money management? Combination of the above?

Once Howard identifies what he believes to be his 'edge', discussing why it won't work could be easier.

 

[HowardCohodas]

In real money account since Aug 2, 2010,

end of Feb, average month on month return = 11.4%, total return = 112.2%.
end of Mar, average month on month return = 7.3%, total return = 67.4%​

 

[arabianights]

Bramble,

Successful traders are consistently profitable. The only variable is the frequency of "consistency". Some are consistent daily, some weekly, some monthly - all depends on the trading system and the trader. But having a trading edge means one is able to consistently be profitable. It's a skill that is developed with time.

My question to Howard is what he believes to give him his edge. Is it the formation of iron condors as a trading strategy? Is it that Probability of Touching program he uses? Money management? Combination of the above?

Once Howard identifies what he believes to be his 'edge', discussing why it won't work could be easier.

Money management can never be an edge. It just keeps winning strategies in the game and optimises account growth. It can't turn crap into gold.

 

[HowardCohodas]

Bramble,

Successful traders are consistently profitable. The only variable is the frequency of "consistency". Some are consistent daily, some weekly, some monthly - all depends on the trading system and the trader. But having a trading edge means one is able to consistently be profitable. It's a skill that is developed with time.

My question to Howard is what he believes to give him his edge. Is it the formation of iron condors as a trading strategy? Is it that Probability of Touching program he uses? Money management? Combination of the above?

Once Howard identifies what he believes to be his 'edge', discussing why it won't work could be easier.

Permit me to answer the question in more than one post.

With respect to consistency, I keep records on results in several different frames of reference. I seek your advice in which one or more of them would help further this discussion.

1. by Month
2. by Week
3. by Spread
4. by lump of quarantined funds (generically called Iron Condors)
5. by time in market (weekly vs. longer)
6. by index (NDX, RUT, SPX)
7. and combinations of above (think pivot table)

There have been two significant changes and several minor ones in my trading since the beginning. Most of the changes were inspired from what I learned here. The two major changes were elimination of SPX and increasing cash reserve.

 

[TheBramble]

Successful traders are consistently profitable. The only variable is the frequency of "consistency". Some are consistent daily, some weekly, some monthly - all depends on the trading system and the trader. But having a trading edge means one is able to consistently be profitable. It's a skill that is developed with time.

I think I'm probably aware of all that amit.

My point, obviously not made that well, is even with consistent profitability, if your trading account is either in its entirety or for the most part at any time at risk, then you don't have an edge, regardless of how long you turn in a consistently profitable performance.

An edge consists of turning in consistently profitable performance and being able to survive a catastrophic market event.

 

[amit1986]

Money management can never be an edge. It just keeps winning strategies in the game and optimises account growth. It can't turn crap into gold.

But surely, by consistently withdrawing a percentage of profits (say 50%) every month and setting them aside, in the limit, you will eventually get to a point where your "set aside" account will exceed your primary account and you will only be risking profits in the event a black swan event occurs. Even if it occurs before then, at least you won't lose your total account.

 

[amit1986]

An edge consists of turning in consistently profitable performance and being able to survive a catastrophic market event.

Yes, we are in agreement.

 

[amit1986]

Permit me to answer the question in more than one post.

With respect to consistency, I keep records on results in several different frames of reference. I seek your advice in which one or more of them would help further this discussion.

1. by Month
2. by Week
3. by Spread
4. by lump of quarantined funds (generically called Iron Condors)
5. by time in market (weekly vs. longer)
6. by index (NDX, RUT, SPX)
7. and combinations of above (think pivot table)

There have been two significant changes and several minor ones in my trading since the beginning. Most of the changes were inspired from what I learned here. The two major changes were elimination of SPX and increasing cash reserve.

Let's keep it simple Howard

What I asked is what skill you believe you have that has allowed you to be profitable over the last few months. The final monetary result isn't of concern to me, but rather, what special advantage you believe you have over the majority of other traders who are not profitable.

 

[HowardCohodas]

Let's keep it simple Howard

What I asked is what skill you believe you have that has allowed you to be profitable over the last few months. The final monetary result isn't of concern to me, but rather, what special advantage you believe you have over the majority of other traders who are not profitable.

Very good. I'll review what I have posted in the past and edit according to what I've learned since. Might take a day or two, and I'm traveling again Fri to Sun. I'll provide my best understanding in my best English ASAP.

 

[TheBramble]

OK. Here's a a partial quote of a post Howard put up on another trading board.

"My goal was to take a modestly complex strategy, break it down and create a relatively short set of rules to trade it. Along the way, I believe I have reduced the risk as many gurus teach it and introduced opportunities to improve return.

I have yet to encounter a black swan event in real money trading (paper trading and back testing don't count). Provided my account survives such an event (it will happen, we just don't know when)". my emphasis

There are many reasons why HC's system is flawed and some of these issues these have been debated, or rather reiterated, ad nauseum. But for that simple comment above which I have highlighted, regardless of his misunderstanding the markets he’s in and the instruments he’s trading or any other factor, that comment alone is sufficient reason for Howard not to be trading it. Certainly not to be considering training others to trade it.

In all the acres of verbiage that have ensued since he kicked off on this ‘adventure’, and with all of Howard’s apparently eager desire to learn from those that do have an idea, I have discerned absolutely no movement toward any greater comprehension on his part, or any real indication that he has the capacity to modify his views, even where he realises it is in his own best interests.

I wonder what the fascination was that we all had with this? Strange.

 

[arabianights]

But surely, by consistently withdrawing a percentage of profits (say 50%) every month and setting them aside, in the limit, you will eventually get to a point where your "set aside" account will exceed your primary account and you will only be risking profits in the event a black swan event occurs. Even if it occurs before then, at least you won't lose your total account.

no sir.

You could do the same with a toin cossing account. Bet on heads and withdraw everytime you're up X amount. Doesn't make it profitable.