There’s an interesting exchange where you can make “bets” on various stock indexes, commodities and events. It’s called NADEX. For instance you can bet that the S&P 500 will be over 1720 at 4:00 this afternoon. It’s somewhat like options except they are daily and weekly. You have a defined risk and reward which is based on the odds participants place on that situation happening. I have been playing with a demo account. I was contacted by someone from the exchange who sent me some handbooks about various strategies. The handbooks have charts and graphs talking about premium decays and the like technical stuff. I’m very reminded of options and futures books that lay strategies out like they are mathematical formulas – all very scientific and genius looking. Well reasoned and thought out, rational, sane, erudite, academic and totally impressive. The best minds are hard at work figuring this stuff out.
Here’s the deal ... ... ... . I read a lot and have many years of experience. I place great value on my brain to allow me to steer clear of folly and look for truths that are helpful. All that keeps me from making obvious mistakes that many others would make, but genius only goes so far. Getting it right is the gig. If you are trading, the direction and timing trump all else. Squeezing the right price and other issues are far less important that getting the big picture correct. It’s like a friend of mine who asked me about which options to buy to maximize the profit from his thesis. While there are several answers to his question, my ultimate answer was it doesn’t matter. Get the timing and direction right and all else will take care of itself. The big picture.
Many traders fret over exactly when to pull the trigger or agonize over the exact price. That sounds like they have control over what they are doing. Not really. They are fussing over the minor details and clouding a simple, basic decision. I almost always use market orders on my transactions. I want to be in or out. That’s my only decision. The rest will only determine how much I make - or lose. I’d rather be right on the big picture more often and make less on each trade than tire my brain out with trivial details in an attempt to get it perfect. There is no perfect.