Don, I want your help with naming a trading concept in options that works very well for me. So far I call it Chicken Trading... catchy huh.
Here's how it works. As I've pounded the table on so many times, most people don't have a problem buying, they have a problem selling. A Chicken Trade tries to solve that. You look for the same high percentage entry point on an active index or stock.
You enter the trade same as before, but here's the catch... as you're making your price to buy in you're also telling them your price to get out. That price has to be for less than you'd normally want to settle for on an option. You look very carefully at the intraday or intra3day range and find an exit with the highest probability of being filled... many times its 10% or 15% after commissions on both sides. You don't even want to know if the position eventually doubles or falls apart.. you're only trading that 3/8th swing on a 3.50 or 5.00 contract. You tell 'em your buy price and you tell 'em your sell price, which is really close. Then you wait for the phone to ring and say thank you very much.
Doing this consistently within bollinger, stochastic, rsi, momentum, Wilder's, pvi, occilations works a high percentage of the time and you make money.
The second rule is that if the price drops below your entry you dump it.. alway another trade around the corner.
This goes against the concept of sell your losers and let your profits run... after a while you'll have a much better sense of which they might be and you can hold off on the sell order, but still maintain the rule of selling if the trade sours.
Chicken Trading... maybe its a good name. :~)
Jim |
