Tasty Trade

I’ve been seeing these Tasty Trade guys for a while now and never really got into them because in many of the shows I watched they never really outlined any specific trades.  When I look for new strategies I mostly want to hear people give a detailed analysis of their trades, so I can see the mechanics and know how to test it out myself.  I am a very process oriented person and need to have things spelled out.  Most of the Tasty Trade shows I had seen talked about different types of trades but they didn’t go into depth as much on how to execute.  

After going through their site a bit more I did find some more in-depth analysis of trades along with some invaluable information and now I have started watching their show regularly.  What I find very helpful is that they provide statistics that will give you the confidence in placing your trade and since a large part of trading is managing emotion, this is immensely helpful.  Plus it helps to hear other people talk about their trading experiences and you don’t feel like you are alone in your fears or even your successes.  

Tasty Trade

Tom Sosnoff is one of the creators of the Think or Swim platform that mostly everyone uses to research and/or place trades.  I use it to research and paper trade ideas and then I go to my other account on Trade King to actually place my trade (low cost commissions are essential for me right now).  He has a wealth of knowledge on trading and more important for me … a wealth of knowledge in options trading.  

I watch and listen to many of the financial shows you can find online and on TV and I have learned more from watching a few episodes of Tasty Trade than from a year of watching those other shows.

I highly recommend checking them out and listening/watching some of the interviews in their archive section.  One of the more touching aspects of the site are the segments where Sosnoff coaches his daughter on how to be a trader and after several episodes she is practically a Jedi.  

Using Fibonacci To Time Your Trades

After some more study about how to better time my trades, I had an epiphany today.  If I could use the Fibonacci series on time cycles I can plan the best moment to place a trade.  Of course there is no crystal ball but nature’s own math can help you come close to being in harmony with the “organized” chaos of the market. 

I was introduced to the Fibonacci Queen Carolyn Boroden through watching Jim Cramer.  Her analysis turned on my light bulb about using the Fibonacci series over time and not just over price action.  I started using the Fibonacci time tool in Think or Swim this morning on my Facebook trade and realized that I could have made a better decision about timing my entry point than I did.  I entered in on Monday when I could have waited till Tuesday before I entered the trade.

If you look at the chart you can see where I placed the Fibonacci tool at the beginning of the trend and it traces the moment where I could have placed the trade.  I placed my trade on Monday (yellow circle) but I should have placed my trade on Tuesday (blue circle).  The line drawn in black shows the Fibonacci measurement at where I should have been focused.

I used the tool on the 5 minute and 1 minute chart too and it works just as well.  This is groundbreaking for me because I learned from trial and error that it is always best to wait for a pullback before entering a trade but the key is timing the end of the pullback.  This Fibonacci tool will help me plan my entry a lot more efficiently. 

Trading Notes From December 2014

I wasn't able to post as frequently over the holidays so I am putting my trading notes for December in one collective post.

Trading Notes 12-11-14

After pulling out of this Facebook trade I learned some valuable lessons . One key lesson is to always take profits when you can even if you think the stock is going higher if you set a stock price target stick to your game plan

Looking forward for the next couple weeks I want to see what the historical data is on certain stocks, are they usually up or down going into the new year.





Trading Notes 12-17-14

I felt good about my trade and I had done all the necessary research in Facebook I looked at the technical analysis as well as the fundamental analysis and there were great news stories that supported the stock going higher.

I held off on making a Monday trade because I remembered what had happened in the previous weeks.

So I placed my trade on Tuesday as I had planned I waited for the stock to go down after it had bounced and it was heading back to an area of support.

What I hadn't planned on were the global market conditions. With the declining price of oil along with the Russian currency collapse in the upcoming Federal Reserve meeting the market was very fearful. This caused Facebook stock to plummet despite all of the positive signs of growth and stability in the company. Even with the announcement of China allowing Facebook into the country the stock went down.

This made me nervous about staying in the trade but I wanted to see what the Federal Reserve was going to say. My management strategy was to roll over my credit spread into the next week's options. That would have given me some extra time for my trade to play out.

When the Federal Reserve at their conference call said that they were not going to raise rates, this caused the market to shoot up higher making my trade a profitable one.

Some of my takeaways from this experience are to always believe in yourself. I had done the research and new at what levels to enter and exit my trade.

I also knew that the probability of me winning was 78% and this was what I needed to believe in. Yes I could have made more money but I stuck to my plan and made what I wanted to make on this trade.

Weekend Theta Does it Work?

So you think you are going to make some money over the weekend with time decay….

Not according to this study:

 

The Tasty Trade guys talk about the myth of weekend theta decay.

Long Straddle and Strangles

I had an idea over the holidays to play one of the energy ETFs by watching to see if it will go higher or lower very quickly. I was late in taking this trade because I missed the opportunity when oil was going down really fast. But I now know how to play volatile markets more effectively. The strategy that I really like is the strangle option play. This is where you buy and out of the money put and an out of the money call. You are basically playing both sides of a trade.  One of the options will expire worthless while the other could potentially be a big winner. This will only happen if the stock moves quickly in one direction. Otherwise both options will expire worthless. So I call this my lottery play.  Instead of going to buy Powerball tickets I can buy options contracts when the market is really volatile.  This way I have the potential of making a lot of money very fast.  I will only allocate small amounts of money for these plays and I will only take them when I know the market is moving up and down erratically.

The straddle play is not as appealing to me because I don't want to lose large amounts of money for a risky bet. Both of these plays are betting that the market will move fast in one direction.  I would rather play the cheaper of the two. A straddle play is basically buying near the money or at the money options on either side and again hoping the market moves fast in either direction. with this play you are paying more money up front and of course you can potentially make more money but it is still a risky bet.

Trading notes 1-1-15

After watching the market over the last few days and seeing the Santa Claus rally I feel confident that my instincts are good about where the market is going.

There may be a pullback at some point these next few weeks so I am going to watch the market carefully. People are getting out of positions now that they couldn’t have at the end of the year because of tax implications.  I am of course going to play the probabilities but I want to time my trades more effectively.

The stocks I am watching are Apple, Yahoo and Facebook I think that Apple may pull back based on the lack of confidence in their upcoming products. I think that Yahoo can go either way based on what Marissa Meyer announces in the next few days or weeks about what they're going to do in regards to their Alibaba shares. I think that Facebook is the more promising company for growth because it has a lot of other businesses under its umbrella I just think the other people playing the market don't have the same confidence in the company because they don't trust a young Mark Zuckerberg. But as Facebook keeps outperforming and over delivering I think the stock will go higher.