ASF Trading/Tips/Tricks/Gems and Wisdoms: What YOU should know!

Good idea ….. A reference thread which will help bump interesting threads

 

1. Never forget that the market is rigged.

 

Here's a tip I thought I'd share

 

@tech/a 's Profit From Pennies Thread is one that has helped me (followed by the two Volume-Price-Patterns-Context and Catalysts threads). It was this thread that really peaked my interest in trading sub-$10 ASX equities. Although, 95% of the candidates that make it onto my watch list trade below $1.

 

Enjoy the trip tech/a
Come back with more tips...

 

here's mine.

if the market gives you an opportunity to close out your covered calls or naked puts for 20% or so of the premium you originally collected, YOU TAKE IT. no questions asked. push that buy button before you talk yourself out of it. and that applies to things like vertical spreads as well.

i was painfully reminded of why this is almost always a good idea just last week. i sold the aug 2 weekly $80 (ATM) puts on RIO about 2 weeks out from expiry as implied vol was elevated at 30'ish (due to the aug 1 earnings report) and i wanted to collect on the rapid decay, whilst being ok with long delta as the thing is still in a long term uptrend.

on aug 1 i could have closed it out for about 20c at the mid (<20% of the premium i'd collected), and i knew it as i was watching the options market during the day. but i didn't punch in the close order immediately. then i started to think, yeah the earnings numbers are coming out after the close which could potentially move it by quite a bit, but it's 2% OTM right now, that's a decent buffer, and i can collect about 0.25% of the stock price for one day's theta, why not just leave the position open for one more day and pocket that last bit of decay.

we all saw what happened to RIO's stock price on aug 2 after the earnings report came out...

 

I really enjoyed Craft's thread with regards to Wealth Creation:

https://www.aussiestockforums.com/threads/wealth-plan.33317/

- It encourages people to think long term
- It encourages people to stick to a plan
- Any Joe Blow can do it!

Edit: There was also a ripper quote from Trembling Hand back in the day. I hope I do this justice as I can't find the exact post.

"It's like seeing your mother in a crowd. You'll spot her immediately and no one else will know she's there"

 

For anyone starting out in trading can I recommend printing out the quote below and putting it in a prominent position where you'll see it every day.

From:
P2: A batch of FX market trades