Author Archives: Conor Browne

Archive, Zoom Daily

Daily Meeting for Tuesday January 23

Posted on by Conor Browne

Navigating Low Volatility Markets and Exploring Different Trading Strategies

• Discussion on Adding to Butterfly Trades: The meeting opened with a focus on the criteria for adding to butterfly trades, emphasizing the importance of maintaining risk-reward ratios and adhering to maximum position sizes.

• Market Volatility Observations: Ernie noted the challenges of trading in a low volatility environment, suggesting small and narrow trades as a strategy, while also acknowledging the unpredictability of market moves.

• Influence of Economic and Geopolitical Factors: The conversation shifted to the impacts of economic news and geopolitical events on market volatility, highlighting the complexities of predicting market movements.

• Comparison of Trading Platforms and Indices: There was a discussion about the differences in trading on various platforms like SPX and NDX, focusing on aspects like liquidity, volatility, and trade size.

• Use of Technical Indicators: The use of Hull Moving Average and Kaufman’s Adaptive Moving Average for trend prediction was debated, with a conclusion that consistent execution of a basic strategy is more crucial than the indicators used.

• Reflection on Market Behavior and Strategy Execution: The session concluded with reflections on the current market behavior, emphasizing the importance of adapting trading strategies to the market’s volatility regime and not overthinking trade executions.

Summary

Ernie led a comprehensive discussion on various aspects of trading, particularly in the context of a low volatility market. The conversation covered strategies for adding to butterfly trades, maintaining risk-reward balance, and the importance of not exceeding maximum position sizes. Ernie stressed the need for adaptability in trading strategies based on the market’s volatility regime and cautioned against over-reliance on technical indicators for trend prediction, suggesting that consistent strategy execution is key. The discussion also touched on the effects of economic and geopolitical factors on market volatility, as well as the nuances of trading on different platforms like SPX and NDX. Ernie encouraged a focus on the process and structure of the trading approach, emphasizing the role of discipline and consistency in successful trading. The session ended with reflections on the day’s market movements and a reminder about the importance of strategy adaptation to current market conditions.

Archive, Zoom Daily

Daily Meeting for Monday January 22

Posted on by Conor Browne

Mastering Trading Strategies: A Comprehensive Approach to Trading Success

• Trading Platform Specific Issues: Addressing questions about trading platform functionalities, specifically Fidelity’s platform, and how to manage butterfly trades effectively.

• Shu Ha Ri in Trading: Explaining the concept of Shu Ha Ri (learn, detach, transcend) as it applies to trading, emphasizing the need for continuous learning and mastery in trading strategies.

• Strategy Life Cycle Process: Discussing the life cycle of a trading strategy, including idea generation, development, curation, and live campaigning, underscoring the importance of disciplined and rigorous trading practices.

• Pattern Recognition and Statistical Analysis: Introducing Tom Bukowski’s pattern recognition research and its application in trading, highlighting the importance of context in interpreting chart patterns.

• ActiveTrader Pro Platform Considerations: Sharing insights about the ActiveTrader Pro platform, including its efficiency in executing trades and handling SPX trades outside market hours.

• Capital Preservation Focus: Reinforcing the importance of capital preservation, especially in low volatility conditions, and the approach to managing profits based on various market conditions.

Summary

The daily meeting addressed various aspects of trading, starting with specific issues related to the Fidelity trading platform and how to effectively close butterfly trades. The concept of Shu Ha Ri was introduced, explaining the stages of learning, detaching, and transcending in mastering trading strategies. The discussion emphasized the need for continuous exploration of new strategies while mastering the primary strategy. The importance of recognizing chart patterns with statistical significance was highlighted, referencing Tom Bukowski’s work on pattern recognition in trading. Insights were shared about the ActiveTrader Pro platform, including its capabilities and limitations. The focus then shifted to the strategy life cycle process, underscoring the necessity of disciplined and rigorous practices in trading. Throughout the meeting, the emphasis was placed on capital preservation, especially in low volatility conditions, and the importance of not jumping hastily from one strategy to another. The meeting concluded with a reinforcement of the importance of mastering the fundamentals of trading and adapting strategies to market conditions.

Archive, Retrospective

Retrospective for January 21

Posted on by Conor Browne

Adapting to Market Volatility: Insights and Strategies

Quick recap

Ernie shared his trading experiences and mindset, highlighting the importance of not focusing solely on win rate but also on preserving capital and being comfortable with small losses. The team also discussed the current state of the market, with Ernie predicting a potential rise due to inflation and the Federal Reserve’s monetary policy. They also discussed their trading strategies, with Ernie emphasizing the importance of managing premium decay and focusing on the directional aspect of the strategy. Towards the end, Ernie discussed the potential risk of overconfidence after a series of successful simulated trades.

Summary

Trading Strategies and Mindset
Ernie and Laura had a conversation about trading strategies and the mindset behind successful trading. Ernie shared his experiences, mentioning that his trading week was somewhat successful, with mixed results but no significant losses. Laura praised Ernie’s handling of challenges and his confidence in his methodology. They also discussed the importance of not focusing solely on win rate but also on preserving capital and being comfortable with small losses. Ernie emphasized the need to understand the edge and avoid risky strategies that could lead to big losses. Kevin agreed, highlighting the importance of accepting small losses.

Austrian Economics and Trading Insights
Kevin, Ernie, and Laura had a discussion about a book on Austrian economics. They appreciated the author’s storytelling approach and the comparison of Austrian economics to the evolution of conifers. They highlighted the importance of skills like controlling drawdowns and staying in the game. Ernie clarified the role of market makers in the stock market, emphasizing their role in providing liquidity rather than manipulating the market. Laura expressed interest in learning more about order flow, which Ernie acknowledged as challenging but important. The discussion concluded with Kevin emphasizing the need to learn from experienced traders.

Trading Strategies and Market Analysis
The team discussed trading strategies, with Ernie elaborating on a fisherman’s net analogy, comparing it to their wait-and-see approach. Kevin and Laura added their insights, noting that the added money butterfly does not significantly impact their strategy. Later, Dave raised concerns about changes in the meeting link and calendar, which Ernie acknowledged and attributed to user issues. Ernie also mentioned potential changes to the daily meeting link to improve functionality. The team also discussed the current state of the market, with Ernie predicting a potential rise due to inflation and the Federal Reserve’s monetary policy. Ernie also demonstrated a technical analysis exercise, predicting a value of 5,239 using an ABC correction. Towards the end, they briefly touched on astrology’s influence on the market.

Roundabouts, Boston Driving, Investing Strategies
The conversation covered various topics, beginning with a discussion about the reemergence of roundabouts in Connecticut and their presence in Massachusetts. The discussion then shifted to a humorous conversation about driving in Boston. The conversation took a financial turn when Ernie shared his intention to start investing in long puts, a strategy he believes will allow significant profits when the market collapses. Ernie also explained his trading strategies, emphasizing the importance of a capital-efficient trade with a minimum 1:9 reward-to-risk ratio. Jill, a new participant, sought clarification on short strikes on the butterfly, which led to a conversation about their trading strategies.

Trade Strategy and Volatility Management Discussion
Ernie Varitimos discussed the trade strategy that adjusts widths according to volatility and risk tolerance. He highlighted the importance of managing premium decay and focusing on the directional aspect of the strategy. Ernie explained that their profit management framework dictates when to exit a trade, not waiting for the market to pull back. Ernie also shared insights on the potential returns of their strategy, ranging from 25% to 1,000% return on risk. Herb Lauw added that he uses the volume profile to follow the trend and pick a direction. Ernie emphasized the importance of considering the overall volatility regime when determining the cost and potential profit of a trade. He also discussed the behavior of the premium in the final hours of the 0 dte te and how it decays, emphasizing the need to play both the premium decay and be in the right place at the right time to capture additional profit.

Trading Ranges and Volatility Adaptation
Ernie Varitimos discussed his approach to trading ranges in response to changing volatility. He stressed the importance of not treating every trading day the same and adjusting to specific conditions. He shared his experience that there is no significant difference in his performance or return, regardless of when he trades. Ernie also emphasized the importance of continuous adaptation and improvement in his strategy, which involves collecting a wide range of data and making micro adjustments weekly. He also shared his personal trading strategy, which involves putting on trades before the market opens or around 9:45 to 10:15. Finally, he explained the advantages and disadvantages of trading the E-mee features.

Ernie’s Performance and Strategy Discussion
Ernie Varitimos discussed his recent performance, which saw a drop in his win rate to under 50%. He identified a significant drawdown but clarified it wasn’t a major one and shared his strategy of becoming more conservative to protect against long losing streaks. Despite a 13 out of 15 losing streak, Ernie was only 1.6% down. He emphasized the importance of understanding the reasons behind mistakes and adjusting strategies accordingly. Ernie also discussed the use of the profit taker, explaining it was not mandatory but a tool to raise awareness. He also addressed questions about the impact of holding a trade through the day and the reliability of trading simulators. The discussion concluded with Ernie sharing some of his successful trades.

Simulator Practice for Trading Beginners
Ernie Varitimos discussed the importance of practicing on a simulator before using real money, suggesting that beginners should aim to do 1-2 trades a day. He emphasized the need to focus on execution skills rather than accumulating simulated dollars. Ernie also highlighted the potential risk of overconfidence after a series of successful simulated trades. Towards the end, he explained a strategy where insurance trades are placed three months out, with the goal of then investing in undervalued equities if the insurance pays off.

Archive, Zoom Daily

Daily Meeting for Friday January 19

Posted on by Conor Browne

Strategic Discussions on Directional Trades and Managing Risk in Market Volatility

• Discussion on Hull Moving Average: The meeting begins with a debate about the effectiveness of the Hull Moving Average as a directional indicator and its reliability in predicting market movements.

• Market Direction and Probability: Emphasis is placed on the acceptance that market direction is essentially a 50/50 proposition, and that long-term trends matter more than daily fluctuations.

• Volatility and Market Exposure: The conversation shifts to adjusting market exposure based on volatility, with strategies for expanding exposure in high volatility situations and contracting in low volatility environments.

• Implementation of Strategies: The participants discuss various strategies like the Batman and single out-of-the-money butterflies, focusing on their execution, risk-to-reward ratio, and the importance of staying within maximum daily risk limits.

• Experience Sharing and Strategy Testing: A portion of the meeting involves members sharing their experiences with different trading strategies, including an overnight Batman strategy and its performance analysis.

• Profit Management Framework and Decision Making: The meeting covers the application of the profit management framework, emphasizing the importance of being mechanical in trade entries and using the framework for making informed exit decisions.

Summary

The meeting was a comprehensive discussion on trading strategies, particularly focusing on the Hull Moving Average, the understanding of market direction as a probabilistic outcome, and the importance of aligning trades with market trends. The participants delved into various trading strategies, including the Batman strategy and single out-of-the-money butterflies, discussing their execution and risk management. Key insights were shared on adjusting market exposure relative to volatility and the significance of following a profit management framework for decision making. The meeting was interactive, with members contributing their experiences and insights, leading to a holistic understanding of risk management and strategic trading in volatile market conditions.

Archive, Zoom Daily

Daily Meeting for Thursday January 18

Posted on by Conor Browne

Comprehensive Analysis of Trading Strategies in 0-DTE

• Overview of daily market conditions and decision-making process for bullish or bearish trades, including consideration of recent economic reports.

• Detailed discussion on the use and setup of volume profile in trading, highlighting its role in identifying market structure and significant price levels.

• Insights into the effect of volatility on option premium decay, especially in relation to butterfly trades, and the rationale behind morning trading.

• Strategies for entering trades based on various factors, including risk tolerance, direction, and timing, with emphasis on morning sessions.

• Exploration of the profit management framework, including the impact of volatility on decision-making in different market zones.

• Q&A session addressing specific trading queries, such as last-hour trades and translating volume profile insights from futures to SPX trading.

Summary

This meeting included an assessment of the current market situation, including the influence of economic reports. The focus then shifted to a comprehensive tutorial on using volume profile in trading. Ernie explained its importance in identifying key market structures and price levels, such as support and resistance zones. A significant portion of the discussion revolved around the impact of volatility on the decay of option premiums, particularly in butterfly trades, highlighting why trades are often initiated in the morning when volatility is typically higher.

Further, the meeting delved into the strategies for entering trades, considering various factors like account size, risk tolerance, and market direction. The presenter underscored the importance of timing, particularly in the morning sessions, to leverage the benefits of higher volatility. Additionally, the profit management framework was discussed in detail, explaining how different market zones and times of the day affect trade management and decision-making.

The session also included a Q&A segment, where specific trading queries were addressed. These ranged from the effectiveness of last-hour trades to the applicability of volume profile insights from e-mini futures to SPX trades. The meeting emphasized the necessity of logging, journaling, and reviewing trades to develop a deeper understanding and consistency in trading. Overall, the meeting provided in-depth insights into various aspects of trading within the Zero DTE service, emphasizing the importance of strategy, market awareness, and disciplined review processes in successful trading.

Archive, Zoom Daily

Daily Meeting for Wednesday January 17

Posted on by Conor Browne

Dynamic Trading Strategies and Risk Management

• Discussion on Entry Strategies: The meeting included a detailed talk about various entry strategies for zero DTE (Days to Expiration) trades, including placing trades prior to market opening based on the previous day’s closing prices.

• Risk Management Techniques: The conversation shifted to managing risks in trading, with a focus on adjusting trade sizes and choosing appropriate risk-to-reward ratios, especially during periods of low volatility.

• Use of ‘Big Ass Fly’ Strategy: Ernie shared his experiences with the ‘big ass fly’ strategy, a trading approach involving wide flies, and discussed its selective use based on unusual pricing opportunities.

• Exploration of Time-Based Trading: The group discussed the idea of time-based trading, where trades are set every 30 minutes, and the challenges associated with its practical implementation.

• Technical Insights on Trading Platforms: There was a technical tutorial on setting price slices and understanding the probability area in Thinkorswim’s risk profile, enhancing analytical capabilities for traders.

• Philosophy of ‘Roundabout’ Strategy: The meeting touched on the ’roundabout’ strategy, emphasizing the importance of staying in the market to catch significant moves, and the unpredictability of retracements.

Summary

Ernie delved into sophisticated trading strategies and risk management tactics. The discussion started with an examination of different entry strategies for zero DTE trades, emphasizing the importance of aligning entry points with the previous day’s market close. The conversation then transitioned to risk management, highlighting the significance of trade size adjustment and the utilization of risk-to-reward ratios, especially during low volatility periods.

Ernie shared insights into his use of the ‘big ass fly’ strategy, noting its effectiveness but cautioning about its selective application based on pricing anomalies. The group also explored the concept of time-based trading, acknowledging the practical challenges in its execution. Technical aspects of trading platforms were discussed, with a focus on setting price slices in Thinkorswim for better trade analysis.

Finally, the philosophy of the ’roundabout’ strategy was discussed. This concept emphasizes the importance of continuous market involvement to capitalize on significant market moves, while acknowledging the unpredictable nature of market retracements. The meeting offered valuable insights and practical tips, fostering a deeper understanding of dynamic trading strategies and effective risk management among participants.

Archive, Zoom Daily

Daily Meeting for Thursday January 11

Posted on by Conor Browne

The Importance of Process in Trading and Personal Growth

• Discussion on Process vs. Outcome: Emphasis on the importance of focusing on the process of trading rather than the outcomes or specific financial goals.

• Consistency and Probability in Trading: Insights into how consistent application of a strategy, even with a series of losses, can lead to overall success by playing probabilities.

• Reflection and Mindfulness in Trading: The role of self-reflection, mindfulness, and detachment in improving trading decisions and personal growth.

• Challenges of Repetition and Experience: Acknowledgement of the difficulties in staying consistent and the importance of repetition to gain experience and confidence.

• Adapting Agile Methodologies in Trading: Analogies drawn from agile methodologies in business, emphasizing quick delivery of value and adaptive planning.

• Overcoming Cognitive Dissonance: Addressing the challenge of cognitive dissonance in trading, where traders might struggle to accept the reality of probabilistic outcomes.

Summary

This daily meeting focused on the significance of process over outcome in trading and personal development. Ernie highlighted the importance of being process-obsessed, emphasizing that consistent profitability in trading is achieved through a steadfast commitment to a well-defined process rather than chasing specific financial goals. The discussion also touched upon the role of mindfulness and reflection in making better trading decisions and the challenges of gaining experience through repetition. Ernie drew parallels between agile methodologies in business and trading, suggesting a focus on delivering value quickly and adapting to changing situations. The session also addressed the common issue of cognitive dissonance among traders, where many struggle to accept the probabilistic nature of trading outcomes. Ernie encouraged the attendees to focus on how well they execute their trading strategies, underscoring the importance of process, practice, and personal growth in achieving long-term success in trading.

Archive, Zoom Daily

Daily Meeting for Wednesday January 10

Posted on by Conor Browne

Trading Strategy, Discipline, and Process Over Outcome

• Strategy Emphasis: The meeting repeatedly emphasized the importance of adhering to a predefined trading strategy, highlighting the significance of process over outcome and capital preservation over profit-making.

• Role of Indicators and Analysis: There was a discussion on the utility and limitations of various indicators like volume profile and candlesticks, with a focus on how they contribute to situational awareness rather than being primary decision drivers.

• Managing Emotions in Trading: The discussion touched on handling emotions like euphoria and disappointment, stressing the need for detachment and focusing on process rather than individual trade outcomes.

• Scenario Planning and Decision Making: The importance of planning for different market scenarios and having preconceived action plans for each was highlighted to enable better decision-making under various market conditions.

• Trading in Different Volatility Regimes: The meeting covered strategies for trading in different volatility regimes, discussing when to hold or fold trades, especially near the end of the trading day.

• Developing and Refining Skills: The necessity for repetition, discipline, and continuous learning to develop trading skills and build intuition was emphasized, akin to mastering any skill or sport.

Summary

This session focused on refining trading strategy, understanding the use of tools and indicators, and managing emotions and decision-making in trading. Ernie, leading the discussion, emphasized the importance of process over outcomes, advocating for a disciplined approach to trading that prioritizes capital preservation. He discussed the utility of indicators like volume profiles and candlesticks in providing situational awareness but cautioned against relying solely on them for trade decisions. The conversation also delved into managing emotions such as euphoria and disappointment, emphasizing the need for detachment and focus on the trading process. Scenario planning was highlighted as a crucial aspect of being prepared for various market conditions. The session also touched on trading in different volatility regimes and the importance of continuous learning and repetition to hone trading skills. Overall, the meeting reinforced the philosophy of disciplined trading, focusing on process and strategy over short-term outcomes.

Archive, Zoom Daily

Daily Meeting for Monday December 18

Posted on by Conor Browne

Adapting Trading Strategies in Low Volatility and Diet Discussions

• Diet and Nutrition Focus: Discussion about Ernie’s red meat-centric diet, including his avoidance of chicken and pork, and preference for red ruminant meats like beef, bison, venison, and lamb.
• Dietary Health Benefits: Ernie explains the positive effects of his diet on his energy levels and health, mentioning his reduced cravings for sweets and carbs.
• Trading Strategy in Low Volatility: Ernie delves into his trading approach during periods of low market volatility, emphasizing the importance of quick profit-taking and the challenges posed by low liquidity.
• Technical Analysis and Trading Tools: Discussion on the use of various trading platforms like Thinkorswim and TradeStation, focusing on their analytical capabilities and suitability for different operating systems.
• Market Behavior and Entry Strategies: Insights into adapting trade entry times and strategies based on market volatility, with an emphasis on risk management and reward optimization.

Summary

In this daily meeting, Coach Ernie addresses a variety of topics, beginning with personal anecdotes about coping with a storm and power outage. He then shifts focus to his diet, discussing his preference for red meat and the benefits he has experienced, such as consistent energy levels and diminished cravings for sweets and carbs. The conversation moves to trading strategies, particularly in the context of low market volatility. Ernie emphasizes the importance of swift profit-taking due to the increased risk and lower liquidity in such conditions. He also discusses various trading platforms and their functionalities, underscoring their importance in effective technical analysis. The meeting wraps up with Ernie providing insights into market behavior, the timing of trade entries, and the importance of managing risk and maximizing rewards in trading strategies.

Archive, Zoom Daily

Daily Meeting for Tuesday November 21

Posted on by Conor Browne

Mastering 0-DTE Strategies: Coach Ernie’s Comprehensive Guide

• Impact of Thanksgiving on Trading: Coach Ernie explains how Thanksgiving affects trading schedules, particularly in futures markets, and the dynamics of Black Friday in retail and online stores.

• VIX Influence on Trade Decisions: Discussion on how varying VIX levels influence the width of butterfly spreads, with a focus on adapting strategies to current market volatility.

• Iron Butterfly vs. Call/Put Fly Mechanics: Detailed comparison between iron butterflies and call/put flies, emphasizing the importance of understanding their similarities in risk and profit potential despite different entry methods.

• Premium Collection and Trading Psychology: An in-depth analysis of the concept of premium collection in trading, challenging traditional perceptions and highlighting its multifaceted nature.

• Practical Trading Advice and Management Strategies: Coach Ernie shares insights on trade management, the importance of simplicity in strategy, and avoiding common pitfalls like over complication and emotional decision-making.

• Scaling Trading Size and Managing Psychological Impact: Personal experiences and advice on gradually scaling trade size to manage psychological stress and maintain effective trading discipline.

Summary

a comprehensive range of topics was covered, tailored for members of the 0-DTE service. The meeting opened with a discussion on how Thanksgiving impacts trading, especially in the futures market, and the cultural and economic significance of Black Friday. Ernie then delved into the influence of the VIX on trading strategies, specifically how it dictates the width of butterfly spreads, underscoring the need to adapt to market volatility.

A significant portion of the meeting focused on deconstructing traditional notions of premium collection in options trading, particularly in the context of iron butterflies and call/put flies. Ernie emphasized the similarities in risk and profit potential between these strategies, regardless of whether they are entered as a debit or credit. This discussion aimed to challenge and refine the participants’ understanding of premium dynamics in trading.

Ernie also provided practical advice on trade management, stressing the importance of keeping strategies simple and avoiding the urge to overcomplicate or constantly adjust trades. He highlighted the psychological aspects of trading, including the impact of scaling up trade size. Personal anecdotes and experiences shared in the meeting underscored the importance of gradual progression in trading size to manage stress and maintain discipline.

Throughout the session, Ernie encouraged open discussion, addressing various queries and concerns from participants. The meeting concluded with plans to transcribe, summarize, and categorize the discussion for easy reference, demonstrating a continuous effort to enhance the learning experience for all members of the 0-DTE service.