Quick recap
Ernie’s daily routine and eating habits, puppy behavior problem, trading strategy inspired by Russell, discussions on risk management and adjusting exposure to market conditions, trade performance and market conditions, using averages in trading strategies, displaying a gray area in the risk analyzer, tracking the trailing stop loss, reducing exposure during periods of low volatility, and trading strategies based on overnight market movements.
Summary
Daily Routine, Puppy Problems, Electrolytes, Red Meat Indulgences
Ernie initiated a discussion about their daily routine and eating habits, mentioning their preference for red meat and occasional eggs, with occasional indulgences in scallops or swordfish if prepared by their wife. They also shared about their need for electrolytes and their unique way of consuming them. Ernie then transitioned to discussing a problem with their puppy, who had learned to open a waste basket and distribute its contents throughout the house. They shared their attempts to address the issue by purchasing a puzzle feeder, but the puppy had managed to overcome it. Ernie concluded by expressing frustration about the puppy’s behavior and their inability to correct it.
Trading Strategy and Market Closing Insights
Ernie discussed a trading strategy inspired by Russell’s suggestion, which involves placing a trade prior to market opening with the center strike set at the close of the session. Ernie demonstrated the strategy using a trade filled just before the market opened, with the center strike set at 4,800 and a limit order of $4.50. Kevin and DaveBrown discussed adapting this strategy to different markets and emphasized the importance of waiting for the market close before initiating a trade. The conversation concluded with Kevin sharing insights on market trends and the significance of trading during uptrends.
Investment Strategies and Risk Management
Kevin and Ernie discussed investment strategies with a focus on risk management. Ernie shared their approach of adjusting their exposure and risk according to market conditions, while Kevin suggested the need to adjust risk-to-reward based on market retracement. Ernie also introduced the concept of mulling around or the roundabout approach in trading, which involves gathering information before making decisions. They touched upon the idea of not missing out on trades and the potential of adjusting trading methods to improve results. laura asked Ernie about the put or call indication in their trading log, to which Ernie admitted its lack of informational value and stated they don’t include it.
Trade Performance and Market Influence Discussion
Ernie and laura engaged in a conversation about trade performance and market conditions. Ernie clarified that their trade performance is not influenced by the market and shared their trading habits, including their usual entry time. laura inquired about Ernie’s experimentation with different entry times and whether they would suggest a consistent time. Ernie recommended a specific timeframe over a specific time and shared their experiences with earlier trades capturing more of the bigger move. Ernie also mentioned that they had started placing more trades before the market opens due to their busy schedule, and they had not observed any performance difference depending on the day of the week or time of day. Ernie also expressed skepticism towards the statistical average approach.
Trading Strategy: Averages and Reflection
Ernie and laura proposed using averages in trading strategies, suggesting a three-day weekly trading plan to control averages and allow for reflection, a suggestion Ernie agreed with. Kevin, however, voiced concerns about potentially missing market opportunities with this approach. The team acknowledged the shortcomings of this method but agreed that it still provides useful information. laura highlighted the benefits of interactive discussions and the importance of asking questions. Ernie emphasized the importance of controlling exposure and timing when entering the market, noting that the morning session is generally the best due to less volatile market conditions and potential for greater impact on option pricing.
Date and Price Slice Adjustments in Risk Analyzer
Kevin and Ernie discussed how to display a gray area in the risk analyzer by adjusting the dates correctly, with Ernie explaining the need to set the upper date to tomorrow’s date and the lower center right date to today’s date. laura then sought Ernie’s help in understanding how to set a price slice for the current price, which Ernie, laura, and Troy worked on figuring out together. Troy suggested leaving one slice unlocked to track the current price, while Ernie suggested using the dollar sign to fix the slice to the price. They also discussed the possibility of adding a break-even slice, but concluded that this was not straightforward.
Tracking, Exiting, and Analyzing Trades
Ernie shared their method of tracking the trailing stop loss by manually monitoring the price movement while they’s away, and using their tolerance level to decide when to exit a trade. laura, Ernie’s colleague, understood their process and asked questions for clarification. Towards the end of the meeting, Troy demonstrated how to set break-even slices on their trading platform, which Ernie found useful. Ernie also mentioned that a developer is working on a separate app that will superimpose zones and volume profiles for better market analysis. Lastly, wayne expressed interest in discussing their account privately with Ernie.
Risk Management and Trading Strategy
Ernie discussed their strategy of reducing their exposure during periods of low volatility in the market. They shared that they have been gradually decreasing their exposure, which has led to smaller wins and losses and a tighter equity curve. Ernie also emphasized the importance of managing risk and suggested that contracting exposure can lead to better performance. They mentioned that they have had a streak of 11 losers in a row, which is beyond statistical averages, and they are determined to keep those losses small. Ernie also shared that their average risk-to-reward ratio is close to 12, higher than their total average, by pushing trades further out and managing trade size. laura and Troy participated in the discussion, with laura inquiring about how Ernie limits risk and Troy emphasizing the importance of managing trade size.
Trading Strategy: High Risk, High Reward
Ernie and James discussed a trading strategy that Ernie uses selectively, which involves putting on a big trade when the market pricing is unusually low. Ernie explained that they looks for high volatility that would cause pricing to be abnormally low, then waits for accelerated premium decay as volatility drops. They demonstrated this with a chart, showing a recent instance where they took advantage of a large drop in the market the previous day, leading to an unusual pricing scenario. Ernie emphasized that this strategy should not be used frequently due to its high risk nature. James suggested testing this strategy on a machine, which Ernie agreed to set up.
Trading Strategies and Market Analysis
James and Ernie discussed trading strategies based on overnight market movements. Ernie shared their approach of waiting for significant drops and placing large orders if the price is favorable. James proposed dynamically adjusting the center strike based on market movements, an idea that Ernie found time-saving. Ernie also discussed their approach to market pricing and volatility, emphasizing opportunities in price ranges around 29 to 31 dollars and recommending ‘analyze mode’ for tracking pricing. JonathanLA added a metaphorical perspective. Ernie also shared experiments with a time-based strategy but found execution challenging. They emphasized the importance of putting on a capital-efficient trade and managing profits effectively. Towards the end, Ernie and vcoate arranged a phone call after the market closes to discuss an account issue.
