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Preview: Comments on TraderFeed: The Psychology of Market Volatility

Comments on TraderFeed: The Psychology of Market Volatility





Updated: 2016-08-14T03:34:09.589-05:00

 



Hi,Thanks for the insightful comments on the post....

2008-05-21T06:57:00.000-05:00

Hi,

Thanks for the insightful comments on the post. I really like Brandon's approach of trading multiple strategies, and using those strategies to adapt to shifting market conditions.

My approach to position sizing is to take pretty much the same risk on every trade over time. That means that I tend to reduce my size as volatility increases.

Brett



Brett,Spot on with this article I think, I have no...

2008-05-19T07:29:00.000-05:00

Brett,

Spot on with this article I think, I have noted the follow through has shrunk in the market and there are many impressive reversal moves going on.

I'm interested in how you position size based on volatility, have you expanded on this previously?

I had an idea to correlate my returns, which thrive when there is follow through with the VIX, then I read your blog and it covers everything I was thinking and then some, guess I should start reading your archives more closely!

Cheers,
Andrew
www.humblemoney.com



Brett,I have no idea how this applies to day-trade...

2008-05-18T17:53:00.000-05:00

Brett,

I have no idea how this applies to day-traders, but as a swing/position trader what I've been doing is basically running two types of strategies. When volatility spikes in a major way, I've been selling options...with the trend (nobody wants to step in front of a bus). When volatility is down, then my regular delta-neutral strategies work just fine. This seems to be working well for me in the last 6 mo. as long as I remember to wait until we have a really major spike in vol. I got a little over-eager last month and got into a bad one, but luckily I was able to unwind without a loss.

Last year's craziness was hard on me, b/c I didn't have the options selling to fall back on at first. I think it would be really hard for a day-trader to run two strategies this way, since they don't have as much time to think about their actions.



Hi Brett,I really enjoy your Blog and I think you ...

2008-05-18T10:15:00.000-05:00

Hi Brett,

I really enjoy your Blog and I think you provide important information for traders.

I just wanted to make a minor correction on your post...

You keep referring to the VIX as volatility. It is not the volatility of the market; but the implied volatility of the options.

The volatility of the market is past. Implied Volatility is what option traders expect(future) by how much premium they are willing to pay for an option.

Anyways, Keep up the great work!

Barlow
http://jbarlowsmith.blogspot.com/



it's interesting you have heard alot of complaints...

2008-05-17T15:17:00.000-05:00

it's interesting you have heard alot of complaints from traders who are frustrated with the markets intraday. because i've seen this coming several months ago.

have you noticed the number of retards cnbc has brought into the market? with the likes of jim cramer or fast money or whatever the hell they air on their network, lots of 20 somethings or old investors want their hands in trading. they hear options trading or technical analysis and they think they have obtained the key to market success.

you can see this from the amount of technical analysis related discussions on chat rooms, message boards, all across the internet basically. with so many books and very easy access to information on the internet, many people can start to dip their toes in.

but as you know, known information is useless information. i have never seen such a time where so many people were paying so much attention to oversold stochastic and the downtrend line on the s&p that we have just broke several weeks ago

EVERY GODDAMN RETARDS were expecting a turn back down when the markets touched the trendline. and that is a very good sign that it probably will not happen.

you have reasoned that the reason why traders are having difficulty during these recent times is due to low volatility. and that is something i have not thought of but surely understandable.

but i was thinking it was due to the many influx of new traders who are simply using the same strategy we have been using.

just look at the commercials on tv. the brokers used to advertise about retirement and long term investments.

now? they are talking about short term trading and options trading. they have commercials where a freaking baby is trading or a 20 something is trading behind a multi monitor setup with a xbox 360 sitting next to it

can you believe that? that is the kind of environment we are in. everyone wants to get rich, and do so quick

since it's so hard to get jobs for new college graduates, this risky and potentially high reward nature of trading can be especially appealing, which could explain influx of so many 20 year olds

the only thing that makes a successful trader is to anticipate other traders' minds, period. with so many information laid out for free on tv or the internet, we will be looking at a new market environment.



I think you might like my new self-published book....

2008-05-17T13:30:00.000-05:00

I think you might like my new self-published book. My book, "The Four Filters Invention of Warren Buffett and Charlie Munger" examines each of the basic steps they perform in framing and making an investment decision.

Warren Buffett mentions the Four Filters this way: "Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag." These Four Filters can enhance the probability of our investment success.

My book is available at www.frips.com and, it includes a valuation case example of Kraft, KFT.

Here is a 10 min. audio book summary:
http://www.frips.com/4fsummary.mp3



As you I belong to the more risk-sensitive (minori...

2008-05-17T13:16:00.000-05:00

As you I belong to the more risk-sensitive (minority - I guess) of traders who were struggling with high vola. January I was flat before commissions, but February and March were quite good. My experience in January was that prices were cutting without hesitation through restistance/support levels. You could feel the market wobbling - a lot of uncertainess - searching for a new wide range value area. I was struggling with my trading approach and had to adapt my tight stops, but even then it was very difficult. Sometimes I thought these equity indices act like grain futures as they were spiking some days in January. It was a different market but it did not last long.

Cheers,
Markus



I totally agree with you. I have been trading for ...

2008-05-17T07:25:00.000-05:00

I totally agree with you. I have been trading for 20+ year's. My style today is much different from when I started. I have seen many, very good traders fade away because they refused to adapt.

Great post, I enjoy reading your blog.