ENTJ is what bridgewater looks for. entj are good “people”-people and can handle teams well.
looking at your forum posts sometimes someone could conclude you must reinforce your people skills ocationally 
you need a team to deligate, then you are good. alone you wind urself up in all kinds of ideas but never finish one to the level of completition.
Hey I was just thinking about this option thing in the general sense. Say you are in the business of trading forex for some odd reason despite the fact that you have absolutely no idea what you are doing, and you want to go long on GBPUSD 1000 pips Take Profit and 1000 Pips Stop Loss with a risk of £10,000 for arguments sake.
In the normal scenario, because you have no edge the Expected Value equation would look something like this:
(0.5 x -10,000) + (0.5 x 10000) = 0 - or slightly less taking commission and spread into account.
if on the other hand you decided to hedge your downside with an option that cost 3,500 the Expected Value equation would now look something like this:
(0.5 x -3,500) + (0.5 x (10,000 - 3,500)) = 1,500
There appears to be edge in that very simply.
Have a read of this old thread, pretty much along the lines of where you are going…
Interesting read either way…
Thanks for the post. I’m not sure they are strictly the same. I think and I might be wrong, but it appears on the face of it that you might be able to introduce edge into a trade simply by using an appropriately priced option to take the down side. The price of which would be that you would have to effectively pay some of your potential losses upfront by way of the option premium.
if I took a normal FX trade 1:5 R:R with a risk of £1,000 and potential 5k upside. I could potentially get in on the very same trade but with a risk of 5k rather than 1k and buy an option which costed say 1k.
So in this case I limited my losses to the 1k i paid for the option premium, but have had to pay that loss upfront. But now, since my trade has multiplied 5 fold in size compared to the first case; the potential upside is 25k not 5.
Usd pairs in freefall…UsdTry pressing down again on 100-day MA level…Have you got your triple rollover? Will you close the trade?
Greetings, I did get in yesterday for another test run on a single rollover (it closed profitably in the early hours of the morning).
Triple rollover with my broker is on Wednesday; wow that means one could can actually have multiple triple rollovers in any given week by using multiple brokerage accounts.
possibly…
well done!
what you are reffing to is a old strategy (and very commn in todays use, still) which hedge funds use to generate secure profit.
It called convertible arbitrage.
(Convertibles = Options)
it is most important to find a option which is in the money. once you found it you can buy with money you have or you buy or margin (with credit) times 4 or 5. now 5% gain in 3 months doesnt sound so awesome but combine it with a money put down of 20% and the rest on margin (leverage 5) and you have a gain of 25% if you dont convert your option, if the price rallies by 20% and you convert all your options you have a gain of 100% within those 3 months.
Funds usually take a delta neutral approach into this, you can increase your risk by not hedging in the security itself but hedging in another option on leverage, thus increase your delta but in same time increase your reward (alpha).
you get what i mean.
i wont type my fingers bloody onto what how where who so ill just copy pase:
Convertibles generally are the hybrid securities including a combination of a bond with an equity option.
A convertible arbitrage hedge fund typically includes long convertible bonds and short a proportion of the shares into which they convert.
In simple terms it includes a long position on bonds and short position on common stock or shares.
It attempts to exploit profits when there is a pricing error made in the conversion factor i.e. it aims to capitalize on mispricing between a convertible bond and its underlying stock.
If the convertible bond is cheap or if it is undervalued relative to the underlying stock, the arbitrageur will take a long position in the convertible bond and a short position in the stock.
On the other hand, if the convertible bond is overpriced relative to the underlying stock, the arbitrageur will take a short position in the convertible bond and a long position in the underlying stock.
In such a strategy managers try to maintain a delta-neutral position so that the bond and stock positions offset each other as the market fluctuates.
(Delta Neutral Position- Strategy or Position due to which the value of the Portfolio remains unchanged when small changes occur in the value of the underlying security.)
Convertible arbitrage generally thrives on volatility.
The reason for the same is that, more the shares bounce, more the opportunities arise to adjust the delta-neutral hedge and book trading profits.
Example of Convertible Arbitrage Strategy
Visions Co. decides to issue a 1-year bond that has a 5% coupon rate. So on the first day of trading it has a par value of $1,000 and if you held it to maturity (1 year) you will have collected $50 of interest.
The bond is convertible to 50 shares of Vision’s common shares whenever the bondholder desires to get them converted. The stock price at that time was $20.
If Vision’s stock price rises to $25 then the convertible bondholder could exercise their conversion privilege. They can now receive 50 shares of Vision’s stock.
50 shares at $25 is worth $1250. So if the convertible bondholder bought the bond at issue ($1000), they have now made the profit of $250. If instead they decide that they want to sell the bond, they could command $1250 for the bond.
But what if the stock price drops to $15? The conversion comes to $750 ($15 *50). If this happens you could simply never exercise your right to convert to common shares. You can then collect the coupon payments and your original principal at maturity.This looks interesting thank you for pulling that up. I will have a look at it in more detail at the end of next week. I am sure there are better ways to optimise your risk reward and so therefore make trading more profitable relatively more easily than relying on a brilliant edge.
Although I would be skeptical about the prospect of arbitrage, that does not mean there is some value in using this or a similar approach.
yes, the trick in trading is not to speculate or to guess direction, the art of trading is to know.
information/knowledge makes the money, not TA PA or FA or whatever.
secure income is what makes you being able to live from trading.
Hey i’ll write an EA to automate the trades over the next few weeks and see what results come up.
Hey Ropunzel, how are you? UsdTry has now spent around thirty(30) trading days stuck around the 100-day moving average level, so I presume that any ‘Big Short’ idea will have to wait. How is your ‘grab the rollover and go’ idea developing?
Just fine, I haven’t had time to write the Expert yet but I have been getting in on opportunities sporadically. I got in a big short a while ago although it was on a demo. I wanted to try out the trade with an option hedge to so how those trades might work, at the moment it looks like the FX trade is losing but making slightly more on the option, we’ll have to see.
How is your rollover trading? Do you need and expert to automate the trades for you, i’ve settled on 120 pips being the range for the stop loss and circa 12 pips for the take profit. To get in at 21:55, but the stop is not actually a stop it will be an order close when the OrderProfit() >= 12 pips profit and only after 22:01.
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You know nothing about my trading history an the fact that I do also make live trades and have been rather successful with them. Please jump off my thread and resist the temptation to flame anything I post in future; I find you very annoying and you regularly come up with useless points that only serve the purpose of trying to project yourself as a trading expert which clearly you are not.
Baypips for me is a forum to share ideas that you come up with on new ways to trade, either be it ideas on how to create edge or manage risk or whatever; a sounding board. So, myself and other people who use such forums for that reason are not so concerned with whether a particular situation or idea turns out to be a lame duck or a soaring success because the main point is not to try and achieve a fleeting social acknowledgement, validation or false recognition from a group of enthusiasts that you don’t know, can’t see and will probably never meet.
The last interaction I remember you from was on the lecture you wanted to give me so definitively on basic model validation techniques and machine learning, whereas I read those subjects in Computer Science MSc and thought the best way to shut you up was to demonstrate that you had absolutely no idea what you were talking about. Now this stupid post.
Rather than making broad generalisations about how wonderfully awful I am at trading presumably compared to your brilliance. Why don’t you actually address the topic at hand with solid and well reasoned arguments as to why a point of view is invalid in your OPINION.
Starting with - Why is a Carry Trade similar to a Martingale or are you saying that the common practice of hedging you trades with the insurance of an option that I am now learning how to use is like a martingale?
…hold that thought
Really, how is that.
so you acknowledge that you are [Removed due to a violation in our Forum Policy.]
And you are saying that I should rather seek advice from someone I do not “know” or who is demonstrably successful, and is unintelligent, and hasn’t given any time to educating themselves on the subject at hand and is also inexperienced.
got it.
That appears to be part of your whole problem, mate: you won’t listen to anyone because you think (actually sometimes wrongly) that they’re not on your educational level.
You might be right about that sometimes, but when you react as you have done to very experienced, successful people who are trying to help you (exactly as others whom you’ve then insulted have done in the past), it’s just a bit silly, isn’t it?
He missed that bit of your post, Charles. Evidently you’ve touched a very raw nerve. Or two. Or more.
A shame, but perhaps not a huge surprise.