Your Questions About Successful Traders

Chris asks…

Sole traders; particularly those who have shop on eBay, how would you put this on your cv if you needed to get

a new job? eg if you had a perfectly successful business selling dvd’s on eBay for years, then they shut you out for virtually nothing, which happens a lot……..would you worry that you couldn’t get a new job because being a dvd seller doesn’t look that good on your cv, no matter how intelligent you are?

John answers:

Hello, what I think is that you can’t really put eBaying on your CV. As I also do eBay from time to time and it doesn’t really give any knowledge for the company to say you are good. Probably depending on what position you can say during your free time, you do sell on eBay and has been successful. But this would be good for say sales and marketing as you know how to market your items or for customer services if your feedback shows that.

But overall, eBay doesn’t really count as a job experience or anything at all. Not on a CV. Unless I’m wrong.

This is what I have just found:
http://www.cvtips.com/career_advice_forum/dont-know-where-to-put-ebay-selling-experience-on-resume-vt1047.html

Hope this helps and also become your “best answer” if possible. Thanks 🙂

Daniel asks…

Can anyone share their option trading strategies?

I understand all of the basics and what all of the types of executions involve. I am interested in deep strategies that have proven successful for different traders.

How do you select a candidate for the underlying equity? What do you look for and where do you go from there?

Do you trade options based on events like splits or earnings reports? What patterns do you use to make profit?

Do you use volatility to determine when to enter and exit?

What tools do you use?

John answers:

—Can anyone share their option trading strategies?

Instead of picking a strategy and trying to find a situation to fit it, I prefer to find a situation and try to find a strategy to fit it.

—How do you select a candidate for the underlying equity?

Something has to draw my attention to the underlying stock. Usually it is a news story or a research report, but it can be just about any “top ten” type of list, such as a list of the stocks with highest implied volatility.

I look at the company and its fundamentals. If I don’t understand what they do, what drives their profits, if the company is too highly leveraged, or if I don’t understand recent stock price changes, I look elsewhere.

I then look at the option chains to see if I can find an attractive trade based on my expectations.

—Do you trade options based on events like splits or earnings reports?

Sometimes.

—What patterns do you use to make profit?

I don’t use any formal technical analysis. I do try to avoid fighting the tape.

—Do you use volatility to determine when to enter and exit?

Usually, but not always.

—What tools do you use?

The tool I have used most is www.ivolatility.com.

—–

Some sample trades I have made:

In Sept, 2007, the “housing crisis” was just beginning. HOV, a housing company, reacted quickly. Given the bad times I thought to stock would fall, but not too far too quickly. I opened the following put ratio spread:

Bought 50 HOV Feb $7.50 puts @ $1.45
Sold 150 HOV Feb $5.00 puts @ $0.65

Total Credit = $2,500
Max Profit Possible = $15,000
Max Loss Possible = $35,000
Break even point at expiration = stock at $3.50

Since the stock was over $7.50 at expiration all the options expired worthless, leaving me a profit of $2,500.

—–

Here is an example of a spread with several adjustments.

(When I tried to post the trade and the adjustments I exceeded the max message size, so I will post links instead.)

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2752&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2799&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2906&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2909&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2922&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2956&tof=65&rt=2&frt=1&off=1

http://messages.yahoo.com/Business_%26_Finance/Investments/threadview?m=tm&bn=4686677%23optiontradestraderecommendations&tid=2752&mid=2981&tof=65&rt=2&frt=1&off=1
—–

Here is an example of a trade based on event timing and volatility.

A stock with a symbol CLPA was trading at about $33 per share. I sold naked puts (the equivalent of covered calls) on the stock eight months out with at $35 strike for $17.50 each.

CLPA had just submitted a new “cancer cure” drug to the FDA for approval. I decided to enter the trade because it was unlikely that the FDA would rule on the drug for months, I did not believe that IV could remain that high, and I did not know of any other action likely to have a major impact on the stock price.

About six months later, the stock was around $31 and I covered the short puts for $8.75 each.

I considered the following:

1 – When I established the position, I was risking $17.50 for a possible profit of $17.50. Now that I could close the position for half that amount I was effectively risking $26.25 for a possible profit of $8.75.

2 – I established the position because I did not believe the FDA would rule on the case soon. That was no longer true.

Michael asks…

Are day trading mentorship or coaching programs really worth it?

I’m contemplating between learning a few methods or hiring a private mentor to help me become a successful day trader. I’ve seen different mentorship programs out there, does anyone have any feedback?

John answers:

If you’re choosing between learning a few methods from a book or another non-live source, then you have to take and understand the message as presented, hope that the method(s) still work in today’s markets and then figure out how to apply it.

Learning from a pro trader is the best way to go. If you don’t have an accomplished friend or family member who is willing to show you how to be profitable, then a live, paid educational program is the way to go.

Try to find a coaching program that works for the markets you trade. Be careful though – there’s a lot of sites that will claim you can make over $300,0000 the first year of trading. Anyone who says that to someone just starting off is a scam. You need to make money by trading first, become consistently profitable and confident, then move on to more contracts, stocks, etc.

To learn day trading properly, I recommend Day Trade to Win. These guys teach E-Mini trading step by step and want to make sure you fully understand the material before trading live. They offer an eight week Mentorship Program, and from everything I’ve heard, it’s the best out there.

Make sure that you have enough finances to back up your trades though. Don’t go trading with your grocery money!

Paul asks…

Do any of the traders/investors here use the Average Directional Index (ADX)?

If so, do you find it successful in improving your trading?

John answers:

I gave it up long ago, too busy and too slow. It wasn’t telling me anything I couldn’t already see, and other simpler things are faster and easier to follow, like Zero-Lag Stochastics or Williams %R or Aroon. Throw in a couple of moving averages, and you can only keep track of two or three indicators, and after that, something has to go. Volume Profile helps with S/R.

Mandy asks…

Is 10% + profit per month good for trading intra-day stocks ?

I would like a mutual fund manager or a successful stock trader to comment

John answers:

Some top traders may do this for awhile….. But for all intents this is a ridiculous expectation that can only lead to quick portfolio destruction.

The average person that tries day trading has less than 5% chance of surviving in this industry. For the traders that are successful, year in and year out, the average return is 20% in a year (this number reflects only successful traders). This is a far cry from 10% a month.

Powered by Yahoo! Answers

This entry was posted in Uncategorized. Bookmark the permalink.