jeffh0821

I personally am using a trend-following strategy and trendlines help me confirm the trend I am trying to follow. I would warn against using trendlines as S/R areas though. Generally speaking, I have not observed trendlines effectively establishing S/R levels - historical swing points areas do a better job of that. The breaking or confirming of trendlines, to me, only help to enforce or debunk the current trend, and help me understand which side of the trade to be on. The graph I am posting shows my daily setup. I use EMAs to confirm trends (I do a lot of confirmation) and channels on the EMA to help me gauge entry/exits. The trendline I have on the chart (I usually do not draw them - I eyeball them) tells me I better be on the long side of any trade in this trend. My strategy gave me three profitable trades within this trend. The profit was not huge, but it was consistent. What I am working on is a scale-in/scale-out modification that would allow me to take profit as the trend continues rather than just on select pullbacks. Hope this helps a little... Jeff

altradelab, I agree with you on zdo's posting. It is very cryptic and not what I would call constructive for what you are trying to accomplish. I disagree that you cannot make money with options on a consistent basis. It just depends on how you use them. I believe (hope may be a better word) that you and I are on the right path. Start simple, don't buy into the hype of "unlimited profit, limited risk" that less scrupulous brokers may advertise and find out what works for others and what you are comfortable with. I am personally happy with what I have achieved to date. Am I destroying the markets with astronomical returns? No, but I am happy with what I am doing and I continue to learn at the same time. Perhaps in a few months I'll learn something new and gravitate away from options. A "old coot" once pulled me aside and said that learning comes through practice, not results. I'm going to go ahead and keep plugging along. -Jeff PS. The recent decrease in overall market volatility (see a chart of the $VIX) is causing the premium on one of my positions to drop with no real corresponding move in the underlying. Learning: Even when the underlying moves in your direction - other market attributes contribute to the pricing of options. Be aware.

DbPhoenix, Thanks, I did not look at the Daytrader's Bible but will peruse it. I have looked at the charts posted but I noted the regular line and candle charts with volume indicators are also on those charts. I think my hangup is many PnF'ers are pure price action advocates. See support and resistance from price action only and trade accordingly. I am having a difficult time in my mind rationalizing that camp with the Wycoff camp. Thanks for the insight...

Unfortunately this thread has seemed to stall, but I'm curious why PnF charting is being discussed within the context of Wycoff? PnF charting specifically removes all factors (including volume) from consideration and focuses on price action alone. Wycoff, in my limited understanding of his teachings, was advocating price action + volume as a way to understand the relationship between supply and demand in a particular instrument. How do you perceive PnF charting applies to Wycoff's teachings and, more specifically, how could we use PnF charting to trade on Wycoff's ideas? - Jeff

altradelab, I am in a similar position as you - getting my feet wet in the options game. I made the same observation as you just did in your last post. I think far too often people get caught up in the "unlimited profit, limited risk" notion of options and their premium and they start swinging for the fences. I have had modest success with strangles/straddles in this market - but with what I think is a small profit target. My trading system automatically exits a leg of a position when I hit the predefined target - no questions. That means I miss out on a lot of additional profit as the underlying moves for me - but I don't have the heartache when the underlying retraces and I lose that value + the loss of time value. I'm still experimenting with a very tiny sandbox account and some paper trades. Real basic strategies right now: strangles, straddles and what I call "biased" straddles. Basically I set up a straddle where the ratio of call to puts indicates my bias towards a certain movement in the underlying. If the movement goes my way I generally get profit accumulation faster than if was to move against me - but in either case I have a small profit target and take it as soon as it is hit. Perhaps some others have better advice or methods to learn options trading. I'm certainly open to suggestions. - Jeff