SIUYA

yes. The higher the delta of the option the closer to replicating the underlying you will get. So ITM options have a higher delta than OTM options A lot will decide on how you wish to manage the options. Do you wish to just get an equivalent exposure at the time. (if so then you modify the number of options purchased depending on the delta), or do you want to risk a certain amount of premium in absolute $ amounts, or do you wish to get enough exposure so that if the market collapses then your exposure is a certain amount? yes. Selling is very different. Also an option price can be separated up further. Premium = intrinsic value + its time value + implied volatility value Understanding some basic option relationship values makes understanding options a bit simpler and tells you really where some costs actually lie. yes and no. As options are priced (see above) with a volatility and time component, then usually yes. Sometimes no as it depends on , how long it takes to occur, and what the implied volatilities do between purchase and sale. Also its does not have anything to do with trading below the strike price. As per the earlier question which strike to purchase ITM, ATM, or OTM may vary, as such the delta is how much change in the option price you can expect from a change in the underlying. eg; with a ten tick down move in the underlying, you should expect to see a 5 tick up move in a put that has a delta 50 (or 0.5 = 50%), a 3 tick up move in the delta 30 put. Now also remember that as an option becomes more ITM the delta increases. So as an underlying decreases the put delta might increase from delta 40 to delta 46 say. All depends on the components of the option formula, the strike, and the series (which month). These can be roughly worked out. the black and scholes and binomial formulas etc; pretty much work out the implied volatility component - the rest can easily be worked out. and this is important to remember ----Option fair values are theoretical only, and are priced relative to other options trading at the time. That is to say - if implied volatilites go down because there are lots of sellers then just because you have a fair value, does not mean everyone else has the same fair value.

probably true (and really again a bit about definitions) couldn't you could also say the same thing about fundamental analysis. There is the never ending debate about passive v active trading.....why pay someone to outperform an index when there is no scientific proven fundamental analysis that works and will outperform....and yet all these guys seem to think that active fundamentals research and 1000s company visits each year give them an edge.....the reality shows it probably does not.....hence maybe a lot has to do with what ever method you use as wrb said there is more to it. Plus DBPhonix and I as we define it there are two boxes - TA and FA - then there are subsets in all both those.....there is nuthing nuts about that - its a starting point. All the data mining you talk about.....if its data mining whereby no fundamental supply data inputs (eg; cash flows, sales, EBIT, weather patterns etc) then what other data is there except that derived from price (moon cycles really mean you are flying on Firday arvo) my imaginary lines do that- dont yours? You can use TA to manage probabilites not just predictions......its a road map not a horoscope. Just reading the latest market wizards book and reading one trader (Joe Vidich) quoting.... What is your opinion on stop orders? They are for fools. Do you use charts? Charts are extremely important. but I agree with your sentiments always interesting....any how Dude have a good weekend. Thanks.

In reality i guess this really does just boil down to definitions, one mans TA is anothers voodoo, is another persons regression analysis of correlation matrix ABC within a fuzzy logic. For the record Dude, my definition is just broader than yours thats all - I pretty much class everything as TA that is not based on fundamental valuations - along the lines of anything that can be derived from price including correlations with other instruments. (In your mind that might be a "weak" definition of TA - in my mind its pretty much the definition - as i agree with you there are higher levels of TA rather than just using a trend line etc; and its often sold as such) (When it comes to the systematic guys, how much "no discretionary input" is another point of definition they gave a presentation once and modified a few things....I was more interested in David Beech prior to that in the history section) (Plus Bravo to the dude as seems like its pick on the Dude day....... he conducted himself well )

unfortunately you clearly have not met the systemised managed future ctas who prefer to rely purely on price data for their decisions....but then a lot does depend on your definition.... while many might agree with your sentiments again its your limited definition of TA.....its a bit like saying my definition of it being daytime is when the sun is shining.....what about when its cloudy, raining, snowing. .......................... I think this is a fair assumption by you....but it does not mean that its right. One of the major reasons the professional traders dont say they use certain things such as TA is that their boss, their clients or they themselves dont believe in it. .....and so they dont become consistent in in it, or they dont admit it - a case of PYA (protect your ass) Many of them use a combination of things as others have stated, some use nothing but prices to derive decsions......my definition is broader than yours. and I think you are correct about the subjectivity of it all....simple TA might not work on its own, but it does not make it a crock of s..t. Applying it as a rules based system, combining it and even developing your own data can work....just as an example for someone that you might be interested in (I like these guys) Beach Horizon - Infrastructure and People - Managed Futures Commodity Trading Fund Management ---- note the history section. plus what about Mr Tudor Jones - he may not have been exclusively TA but I think his history showed he placed a fair bit of emphasis on it. just food for the mill.

As requested, I did attend the free trading room (I would even encourage others to do so if they want), I hope my review is seen as nothing more than my personal review. As far as i am concerned there is nothing to argue about here as its my own subjective opinion. period. However if any one has other questions about my thoughts feel free to post. I may be away from the computer in the coming weeks so apologies if replies are delayed. (side note - please dont see this as an excuse to bash, name call or what ever....otherwise you might just confirm your opinion requires an ignore button) review follows......... FELTON TRADING REVIEW This is a totally subjective viewpoint, with no affiliation with Felton trading, nor do I have anything against them or any other vendors or trading educators. I hope this is seen as a summary of what my thoughts are. These are all just my thoughts without too much editing, so apologies if they ramble, repeat or may not be too clear. As such there is not a lot to argue about….these are just my views. Pros and Cons (Positives and negatives) Pros (some of these can be applied to any educator and may outweigh for some people the negatives) Theory seems valid, methods and logic seem sound – it seemed orientated around scalping with the defined short term trend with a fair bit of discretion as to which and when to take trades. Seems like a lot of it could be automated (or semi automated) in order to help with decision making If you are a scalper it will appeal. Day trading only – suits many people Looks for lots of small wins – suits many peoples mentalities Trading lots of instruments – to clip the most opportunities as they arise Gives some good information regards sensible thoughts – eg; if you have computer problems stop trading. (But this is all common sense.) System seems well documented. Lots of education and talk about ideas and trading thoughts, One on one talks available, on both trading and mental aspects of trading. Keeps things simple and straightforward without too much jargon – good for new traders. Cons (some of these can be applied to any educator and are things to look at further) Not live but only SIM trading - the results represented were far too optimistic for real time execution. No matter the reasons and rationale given for why or why not – this does not accurately represent things in real life. Partial fills and slippage can easily radically change the results. (I also did not think the excuses were valid given the trading room setup to give live trades. Eg; the concentration needed is much more) I could see a track record, no independent monitoring, no broker statements, no transcripts of past trades on the websites. This should be offered up, otherwise why not – you should not need to ask. From the website – trading room recap is useless. Contradicts the above comments about it being systematic The disclaimer shows they are hypothetical results, READ THIS DISCLAIMER Very discretionary – few people will be able to replicate a good traders results. The margin between getting a scalping system right and wrong is very small. Ie; if you miss a few good trades, or get a few losses, then this can make a big difference. You will need to do your own study ultimately. So paying to learn another traders system to make it work for you will likely lead to frustration and you dropping the system. Learning bad habits can also be absolutely devastating and costly to some traders. These bad habits from scalping might be as simple as over trading, not letting profits run etc. As trading is largely psychological – trying to adapt someone elses’ system will likely result in failure. The systems seemed simple enough that you don’t need fancy indicators – you are scalping. There are probably other methods of developing this yourself. Claims of you need the feel – ie; the only way to get this is through experience. And yet on the website – “The Felton Trading Course teaches you a rock-solid time-tested trading method that is so objective that your computer can easily identify the market signals for you.” The system or parameters changes continually – this implies it can get expensive and is more based on selling systems…..you are a slave to the system, or the new improvements. Another user also thought this a negative aspect of the course. Lack of consistency may be a issue. Seems to require the software they provide. An extra expense – often a lot of these systems give different results after the end of the day so recapping the day might be confusing (not sure in this case) Nothing revolutionary in the software, or trading style, even though it may look like it. If it cannot be automated then it still requires a lot of discretion and market experience. Looking at systems based on % of winning trades v total trades etc; can be diverting from what is important. How does the BE trades get accounted for – this makes a massive difference to percentages. I could not see any brokerage attributed to the system. Risk Return profile they used initially for trades was negative (or inverted) ie; you risk more to make small amounts. You have to have a big win loss ratios – not just breakeven. Relies a lot on scalping with trend – eg avg win 185, avg loss 400, win rate 88%. Particular things that I really did not like and I would consider red flags – completely subjective Too much sales pitch. Lots of up selling – things like “one on one that cant be done in the public chat room ” – why? Back slapping to take 5 points (10ticks) on 6E by selling and trying to pick a turn…??? Too much back slapping and cultish behavior. Comments such as nice short on gold “missed that one” but then does not show why. Talks about needing limits which is like real life…..problem is slippage will kill you when only trying to get a few ticks. The SIM trading can be manipulated to be overly positive. Comment about – complaint that Roger is constantly tweaking and coming up with new things. Seemed to be a few issues with charts reoccurring, and too many issues Talking about we are working on trying to get more than 5-7 ticks – after twenty years trading this is still being worked on??? Still not found a dependable way to get more ticks. In the website there is talk “we use a powerful and unique approach to capture larger market moves with a special trailing stop technique that is only taught in Felton Trading.” Only after you pay….. Talked about systems requiring no subjectivity – yet his requires it Too much contradicting information. At one stage talked about “when we are trading live the market was really good – now in SIM it’s a bit quiet”……too much of a sales pitch about you should have seen it when it was live. Difficult to follow what they were talking about unless you had the same things up all the time…..eg; there was talk of gold, when the sheet was only showing a chart for the 6E and crude…..too hard to follow, and then not necessarily a lot of reasoning why, with a lot of discretion And the killer for me …. And lets face it – if you are running a business, these fee strucutres are designed for the business selling them, and this is fair enough….but it changes the dynamics. The one off up front payments. Even if these give you unlimited accesss to a room for future reference, they are like gyms – most pay for a year and dont use them. These are potentially way more expensive. The fact you need to actually fork out a lot of cash before getting the real trading “secrets”. And talk about we are the only ones with this system/indicators. The whole it is “so special” thing. Does not wash for me – money back guarantees and life time access is not worth it. It benefits only the business that offers it. A monthly payment mentorship or access to a room makes more sense from a traders point of view – even if it is for 6 months at a time. To pay the amounts mentioned are a big red flag. Once the results come in then people would be happy to pay for improvements…..or is the system so simple once learnt nothing more is needed? SUMMARY Vendor products are sadly directed at novice traders who unfortunately do not know any better and greed overrides their normally sound judgment (quote from somewhere else that i could not have said better). Too many novice traders are looking for a quick fix and one turnkey easy solution. This means that anyone selling a product – even if the product is a good one will likely attract more customers if they only upsell and positive sell their products. This is natural and a business decision that the vendors have made and do so rightly in order to best support their business of choice. I fully support them running their businesses. So on saying that, in trying to take all the selling and upselling negativity out of my assessment ….. Basically – why pay to watch someone scalp and try and learn a largely discretionary system that is ultimately expensive. If you are a trader, and you know that most people loose, then the best thing you have on your side is time – spend it to learn how to trade in a manner that suits you, SIM trade for a while, then trade with very small amounts. Spending more than 5-10% of your total trading capital on a system or mentor up front is IMHO not a good trade. The negatives to me outweigh the positives, and even a new trader will likely find more information from researching and studying – not just reading – the internet and other sites offering free information. On saying this, if you get value for money from hand holding, company and a system that in most likelihood can be learnt and certainly can be made profitable by anyone should they be so psychologically inclined then you may find value with Felton trading and from all stories I have heard about other trading rooms and systems – this one is certainly not what I would consider to be one of the bad ones, but I would find little value in it.

30? I'm out - is that like some Logans run reference (circa 1976), or the number of posts, or both - you are on the run now? Interesting idea of value.....I understand the first part - for most traders we are looking for value trades - ie; those with positive expected returns, or whatever makes you money, long or short. For the second part "the only hope is to find expected value" especially linking traders and investors together - what do you mean by that? I would think we would hope that a....the market is currently pricing the instrument with a different value to the expected future value, and b....we can then manage to caputre that difference thanks

That reminds me - everything is relative - in 2009 I was in Kolkata (Calcutta) India a very socialist province and we walked past a government building with a big protest sign outside it..... "Stop outsourcing Indian jobs" We did not have a camera but wish we had taken a picture.....I think they were worried about outsourcing to East Asia.

While I have no family, in relating friends experiences..... - leave the house - no matter how many times you ask them/tell them the wife and kids think if you are within 1km of the house you are fair game. - never discuss good or bad days.....just occasionally buy the wife flowers on random days to make her think its all good....or depending on how suspicious she is - you have been bad. - create a routine - good for both in and out of the house - unfortunately the consensus is when you run your own business (regardless of what it is) family life is tougher as its really always 24/7 - one of the best comments I have heard from a trader.....when asked at 2am in the morning and he was up answering a broker email - Angry wife "what are you doing?" his answer was "paying the school fees, medical insurance, mortgage and for your beauty treatments - which one do you wish me to stop paying?"

Close but no cigar comes to mind! interestingly enough if you subscribe to the whole, we get what we want from the markets, and the gamblers idea that a near miss on a win gives just as much mental reward then I guess he was still just as happy. I would have preferred to have a smaller amount in Sept, then Oct, then Nov, Dec,.....

sorry to hear about your Dad - make him proud -- you still can in SIM

is that why so many of them wish to migrate to the USA? must be to pay the higher taxes.

that reminds of some guy in Australia years ago (details are hazy and this was told to me so who knows...but general jist is the same) - he had sold his company for 30mil or so....was so adamant that the stock market was going to crash he ploughed a large proportion of his money into put options over the index. Told everyone on TV that was what he had done......lost the lot - that was in September 1987)

yes Karoshiman - poorly worded by me (I am not feeling myself the last few days)....we are agreeing. There can still be value in a company, even if its not recognised by the market initially. Eventually unless the management stuffs up, or the industry is in decline etc; that value is usually released at some stage via dividends, a take over, or the market recognising it. Companies can still grow assets such as plant, cash, inventories that are not recognised by the markets for a long time.....ideally we wish them to recognise it immediately after we purchase, or we manage to get on board as soon as the market recognises the value in a company.....but then as you point out the market is more inclined to want to try and recognise future value, not present value.....and in the case of a bubble fantasy sucker value Your point --- The moment you say "they don't recognize value" or "overshoot", you are imposing your view on the markets, I would disagree on......I can still clearly put an idea or measure of value on something and use that as a filter to attach probabilities to. How to act on it then is a different measure. (I am reading the latest market wizards book and one of the guys (cant remember his name off the top off the head) talks about this.) The markets it could be argued never recognize value.....and they most certainly will not recognise your own personal measures, but they are still valid to be aware of what at some stage will become unsustainable, or eventually will be recognised. As per all these things, timing is important....hence the value of TA. If you are not using leverage, not requiring to answer to investors, or to live off the proceeds of trading, then you probably would have made money from shorting the internet bubble. Personally I have always been a broad brush fundamental investor...eg; never invest in airlines or mining stocks....but its ok to trade them. With the internet bubble, I did not touch it....no value to buy it, no measure at the time for when to short it. (I did have one stock that i bought and rode - very small amount, for fun....bought at 30c, went down to 8.5c, rose to $7.02, i exited at $2.50....it was called sausage software, and you know what at the time sausages were selling for 6.99 a kilo.....thats how you measure value could have picked the top and been a genius) When it comes to stocks and long term investing, there is a whole other set of things that need to be taken into consideration - ie; is the management going to invest excess cash flows better than you, or should they return it as a dividend.....I think most of the fads that get passed through the corporate world are more about lining investment banker pockets than releasing true value. eg; share buybacks, dividend reinvestment plans, takeovers....generally occur at the wrong times....Maybe that could be a measure of value for a company - increased use of investment bankers reduces value

I am with gosu.....it seems easy, but once again most people cannot do it or they change their attitudes when they get to a certain $ limit. The easy way to look at it is in percentages, but its very different to think - "oh sh..t - I just lost a nice dinner/holiday/car/house/small country today" There is a certain talent some people have to be able to shove the $ amount aside mentally and just trade.....for some getting bigger is all they want to do, for others it affects them. (SIM trading does not count in any form - you may as well be playing monopoly)

ahhh Porter..... I have to love the free market capitalists who think that the government is what causes them to have all these problems and why its not worth setting up a business. These are the same people who then generally expect someone to pay for the roads and transport for their products, supply a steady form of policing so that their business is not looted, and ensure that people dont dump toxic waste in their water supply...... ....and correct me if I am wrong. American seems to have done pretty well from the mix of government intervention into their economy. Did he complain when the US subsidized industries to help them get going, or when farmers needed to survive help stay on the land. Is he up in arms about the fact that many farmers still get subsidies when they are not needed. Isn't America the land where the very rich pay less tax than the secretaries If that is truly what he believes - then he should either a....get a job and let somone else pay him, or b....join the government. (dont worry I hate paying taxes as well, but i also understand that someone has to pay for things.....maybe he should focus his attention on wastage, unnecessary bureaucratic and inefficient systems - otherwise he is just another Occupy Wall street hippy in suit)

karoshiman - you almost seem to be arguing against your own point. Often the markets dont recognise value or overshoot on value....hence a value investor is likely to always be getting into a stock when its in a downtrend, or out when in an uptrend. you then have the issues of even if a good company is well run it may be in a declining industry, or the company is making good money now but has road blocks ahead, or the management have a poor history of reinvesting that cash flow and profits.....etc;etc The best approach surely is to combine the two - work out what is good value and then let the market price guide you as to how best to extract that value......so how then do you value gold, oil, currencies ???

xioxxio - 100%. Most brokers/operators/sales traders say they are trading, when in fact they are doing something differently. There are very very few people who actively speculate as a trader as we know it. The banks are still slightly smart enough to know its a tough game - they would rather have "gimps" than traders.

"the present value of the market is on average the best estimation of its future value" could be said another way...... if you had to predict where the market is going to be in the future, then where is is now is just as good a guess as saying it will be up X points or down X points. (Also Blue have you read the Soros book about reflexivity....markets can be wrong and once they reach a tipping point so to speak they then the market behaviour influences the fundamentals of the market. Its an interesting conceptual read. Does not necessarily become a tip for better day trading )

As a hedge fund if you want leverage and shorting abilities you generally require a prime broker of sorts, and a lot of the larger prime brokers dont even look at you unless you have X millions. If you are required to replicate a portfolio approach then maybe a spread better is necessary when you are starting up and dont have the cash. (it does seem an expensive way to do things - however "everything is negotiable") I cannot imagine you could not do most things through a normal broker like Interactive brokers without the spread costs, and sticking within normal leverage amounts....however as I understand it pretty much every trade in the UK stocks is a spread bet/swap trade anyway due to stamp duty. (not my area of expertise so would need to investigate further.)

a good description from wrb.....you could also further divide up what people often refer to as traders within the corporate world as well. (in a general sense) Operators - those that execute the orders of others Prop traders - those that trade basically as speculators Fund managers - those that trade a portfolio of instruments usually under a mandate for clients eg; Asian focused equities Arbitragers and market makers - looking for mathematical edges and spreading trades taking small edges to set clients - often combining speculative trading as well As for qualifications - these days who knows -- most likely some computer science and mathematics to get a foot in the door, even then you are likely to start as a junior and just get lucky to move up. Retail the only qualification you need is a bank account

The secret,.... never be wrong in your predictions and throw so much cut and paste into a post it becomes confusing. I dont trade gold but now I have absolutely no idea about it. "The gold is approaching the lower limit of its medium term bearish channel at 1,579 suggesting a rebound. However, a break through this level will release good potential and initiate a more violent bearish channel........ ".....Gold continues to push to new highs for the week, ....The outcome of the Greek elections on Sunday seems to favour commodities in general but not necessarily gold......,In the world market, gold prices are expected to continue to stay under pressure and trade in the broad $1,575-1,650 an ounce range. The dollar is most likely to remain strong and bouts of euro strength may allow gold prices to move up. However, there is little support from the physical market. " I think the secret could be hiding in either instead switch to Crude.....or "If we look at the price of gold today at approximately $1,330, "......can I get gold at 1330 Andy.....no offense we are just pulling you leg, but whats the point? it is a bit confusing.

maybe Rocketdog has supplied an answer of sorts....... good luck happens when you dont develop and then practice bad habits. good luck happens you continue the things that you know do work and stop doing the things you know dont work bad luck is the inverse.

its a god point MM. lots of those floors are more market making and dealing rather than trading as we know it. There is also the associated bravado of sitting in among 100 other sweaty, beer swilling males all trying to pretend to be top dog......I am competing against no one....so the environment is different for a start. Plus while different people react differently on the outside, I wonder if we are all salivating hormones once in a trade, even when in a state of nirvana and outward calm, ready to explode when the missus gets home....yum, yum.

that is one flea bitten story

Mitsubishi should be called the HULK. In order to control the angry beast within he remains angry all the time. When it comes to trading room 101 - and i assume we are talking about trading pet hates as opposed to brussel sprouts. For my list focusing on trading....and as per everything its ever changing Bloomberg TV, admin I have to do (associated with regulations which are ineffectual - alla MF Global - (different for different trading people abnd structures admittedly) trading platforms that dont do what i want (but I guess 80-90% satisfaction is good - its the last 10% which is crucial) Next week it maybe different except the Bloomberg TV