The purpose of this virtual portfolio is to teach how to become consistently profitable by following some basic trend-following strategies. All virtual trades are posted and updated live in the virtual portfolio, as well as in the daily post/comments.
In the comments we also discuss each position as well as strategies. Our focus is on discipline and money management. Our goal is to show that by keeping losses very small and letting run our winners it is easy to be profitable in the long-run.
Most of the trades are directional, naked options or stock. Sometimes we trade vertical spreads or more complicated positions for earning plays.
This virtual portfolio is targeted to virtual trades that we usually hold between 2-3 days and a couple of weeks.
All virtual trades are posted live in the virtual portfolio as soon as they are entered and in the comments as well.
We use different strategies in this virtual portfolio, one of them being the 5MA strategy, explained here. But we do not trade this strategy only. Most of our trades are based on technicals, support/resistance, patterns, candlesticks, pivot points etc. The constant is that we always define our stop when we enter the trade and we always respect risk management and position sizing.
For most positions, unless indicated, we buy ATM or slightly ITM naked calls or puts. We usually buy one month out, and never hold current month options 2 weeks before expiration.
R is how much we risk on each position. It is the difference between the entry price and the stop.
R should not be more than 2% to 5% of your virtual portfolio.
R is constant. It means that we should always lose the same amount when our stop is hit. If we risk 2% of your virtual portfolio on each trade and our virtual portfolio is $100K, then we should ALWAYS lose $2k when we get stopped-out. And it does not matter if the stock dropped 20% or 1% from our entry.
By defining our stop and our risk BEFORE we enter each trade, we can then calculate the number of contracts we need to buy to keep our loss at 1R when we get stopped-out.
An example of how we calculate position size:
Let’s say we buy AAPL calls when AAPL is at $152.25.
$151 is our stop.
Delta of the May $155’s is 0.50
Our total account is $25,000
Our risk on this trade is 2% of $25,000 or $500
Our risk is $1.25 on the stock
Our risk or maximum loss per option is $0.625, which 0.5 (delta) X $1.25 (risk on stock).
The number of contracts we should buy is our total risk divided by the risk per option: $500/(0.625*100) = 8
Edd Hendee reached into the chilled glass case containing cold cuts of steak, the classic Texas entrée upon which he built his restaurant and his fortune, proudly showing off his merchandise like a jeweler displaying his diamonds.
“This is a center cut filet,” he said. “It’s the very best filet you can possibly buy. And that’s why it’s expensive.”
And lately, at the Taste of Texas restaurant in west Houston, it’s become even more expensive.
“When the price goes from just under $20 a pound to ...
Many commentators consider what the Fed has done to be akin to providing stimulus, morphine, juice to an ailing economy.
We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.
Today we’re going to explain what the “final outcome” for this process will be. The short version is what happens to a cancer patient who allows the disease to spread unchecked (death).
In the case of the Fed’s actions we will see a ...
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
I find the following charts to be disturbing. These charts would be disturbing at any point in the economic cycle; that they (on average) depict such a tenuous situation now ? 58 months after the official (as per the September 20, 2010 NBER BCDC announcement) June 2009 end of the recession ? is especially notable.
These charts raise a lot of questions. As well, they highlight the "atypical" nature of our economic situation from a long-term historical perspective.
All of these charts (except one, as noted) are from the Federal Reserve, and represent the most recently updated data.
The following eight charts are from the St. Louis...
Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%. Large-caps faired the best, losing only 2.7%. That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine.
But once again, positive economic trumped the beating of the war drums. Retail Sales jumped up 1.1% over a projected 0.8% and last month’s tepid 0.3%, which was revised up to 0.7%. While autos led, sales were up solidly overall. Business inventories were about as expected with a positive tone. Citigroup (C) handily beat estimates to add to the morning’s surprises. As a result, the market was positive through most of the day, led by the DJI, up 0.91%, and the S&P 500, up 0.82%. NASDAQ had a less...
[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process.
The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here...
Market Shadows Excelled – With a 1.36% Weekly Decline
In the land of the blind, the one-eyed man is King. Our Virtual Value Porfolio took on that role this week as we lost a modest 1.36% of our value while the DJIA, S&P 500 and Nasdaq Composite dropped from 2.35% - 3.10%.
We remain bullish despite the shaky end of week sentiment. Our original $100,000 now totals $145,058 including our 2.8% cash reserve.
3D Systems shares had been in positive territory earlier in the session, up as much as 4.2% to touch an intraday high of $50.85. The stock bounced off a low of $47.17 in the early going, a new six-month low for the share price and a more than 50% drop from DDD’s record high of $97.28 reached back on January 3rd. Shares managed to stay in the green for much of the session before succumbing to selling pressure this afternoon. Options expiring next week suggests at least one trader is positioning for further weakness in the near term.
The 17Apr’14 $47 puts traded more than 2,000 times this morning against previously existing open interest o...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither MaddJack Enterprises, LLC
d/b/a PhilStockWorld (PSW) nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.