Hey y’all,
I’m taking a quick break from a long, intense project to fire off this newsletter.
All morning, I’ve been working on a project in ThinkOrSwim, trying to pull some data and analyze an incredibly powerful strategy.
You’ll hear more about that someday in the future. Best to keep a lid on it for now.
But in this project, I’ve been going through old options data in ThinkOrSwim, testing some ideas and staring at charts of options price decay.
Sounds fascinating, right?
Well, the thing is… it is!
We have an inconceivable amount of data at our fingertips for FREE, and it’s basically a trader’s playground.
But it’s also incredibly frustrating…
Because even with the benefit of hindsight, the markets never do exactly what you want them to do, do they?
You’re certain an idea should work in a particular way, and then you look at the data, and it’s true… about 90% of the time…
But the markets are mercurial. They change quickly, at the whims of the latest piece of news, or even just because one skittish bear on Wall Street made a big money move. They’re hard to pin down.
Take Netflix (NFLX), for example. I’m in a credit spread that needs NFLX to close Friday at $700+ and I’ll make a nice return.
But the last few days have been rough despite the huge breakout Tuesday morning.
This morning, however, I checked the charts and got a fun surprise! NFLX had broken back about $700!
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I even thought about closing it out, taking a “breakeven” trade and not risking more downside pressure. But I figured, why not take my chances?
Well, here’s why not…
The markets changed again, quickly, and now it’s looking like a loser again. We’ll see how things shake out. At this point, I’ll probably just keep the trade open and take the full loss if I have to.
Here’s the thing: when the markets do this to you in a LIVE trade, it can be crushing and really disheartening.
But when you’re doing historical research and you see it happen, it’s a reminder that the market is always unpredictable.
And with so many strategies and an unswimmable sea of data at our disposal, you have to pick a strategy or strategies that works for you, then develop a thick enough skin to deal with it when things don’t go your way.
I think that’s the only way to see sustained success in the markets.
Hope you’re having more success this week than I’m having with NFLX! Reply to this email and tell me about your best trades this week… I might even shout you out in a future email!
For now, back to ThinkOrSwim. Wish me luck!
— Stephen Ground
Editor in Chief, ProsperityPub
