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Just wondering, why do you think the previous approach was more successful, as opposed to using mathematics and probabilities?
by srckinase123 6y ago
Just wondering, why do you think the previous approach was more successful, as opposed to using mathematics and probabilities?
- amerkhalid 6y agoMost likely it was my fault. One of the basic strategy I started to use was selling verticals with 68% chance of success with breakeven price at 1 standard deviation away. If you are right you should win $1 but if you are wrong, you lose $2. In theory, you would break even if you do just that (minus commision). But you can increase your odds of win by closing positions at 50% of max win or loss. You can further read news and reddit and close your positions earlier if something seems off. However, a lot of training videos such as TastyTrade said that news should be already reflected in the prices, so it should not require too much attention. The mistake I made was probably because I pretty much ignored online forums, news, etc. Maybe I started to read too much about algotrading and wanted to automate my trading. Last year, all I did was look at upcoming earnings, search each company on reddit, /r/wsb, Twitter, etc. If it seemed people are expecting that company will beat estimates, sell puts spread that is expiring same week. Due high volatility before earnings, you can earn decent premium even with only a few days left before expiration. Also since we have been in bulls market, so I selling puts was kind of safer bet.