Psychology Squared
The greater the sample size, the greater the confidence...
Those that have followed me for the last several years, know that I am passionate about teaching. I have primarily run two courses per quarter - one on the GG Overnight System and one on Swing Trading / ER Strategies. A link to the recording on the core rules and methodologies for the GG Overnight System is available in the welcome email for premium subscribers to GG Alerts.
I’m happy to announce that I will be running a 8 session course on Swing Trading / ER strategies beginning next week.
The course is an eight-session experience that will begin with an intensive look at the fundamentals of directional and non-directional options strategies and how they overcome slow/rapid price increases in the underlying, high/low implied volatility, time decay, etc…. It will first teach the why, where, when, and how to use straight options, spreads, straddles, butterfly’s, calendars and straddles/strangles. It will then focus on real time market analysis (we will rely heavily on support resistance + Fibonacci and Elliott Wave Theory) to identify candidates for live cases in and around earnings releases. Options strategies will be constructed with a view to compare and contrast so that a choice can be made on the most probable and profitable opportunities. Trade plans will be developed and performance will be tracked.
As noted in the below syllabus, I will hold two separate sessions per week, one for European based members and one for North American based members. Some sessions will overlap as I will be travelling in both Europe and Canada during the second half of September. Sessions 4 - 8 will be held during the first 60 to 90 minutes of the US market open on Monday’s.
Attendance to Session 1 is open to free subscribers. Access to Live sessions 2 - 8 and recordings is COST FREE for premium subscribers of this blog.
Here is the syllabus:
The bigger the sample size, the higher the confidence…
Since I started Green Goose Trader on April 4th, 2022 and GG Alerts on June 7th, 190 alerts have been shared to subscribers of the various services that I run, including the GG overnight system and ER plays. Out of the 190 trades over the past five months, there have been:
9 break evens (4.74%)
61 losses (32.11%)
120 wins (63.16%)
The GG overnight gap system uses a position size of approximately $500 risk per trade; ER plays uses position sizes of approximately $250 risk.
The number of wins divided by the total number of trades gives a win/loss ratio of 62.63%. Total profits were $9,876 (excluding commissions) over the five month period, represent a profit factor of 1.86 and an average monthly profit of $1,975.20.
These numbers matter; they provide me with a huge amount of confidence in the systems that I run. But, one needs to be very cognizant of the fact that just because results show a longer term win loss ratio of 62.63%, that smaller sample sizes will vary above and below this number. If one week shows 85%, another week will necessarily need to show 40% .
Look at the GG overnight gap system on EEM for the three week period between May 9 - 31st, which is inside of the 5 month period noted above:
The monthly profit was outstanding considering a win/loss ratio of 41.67%. But this is because the first six trades not only had a high win percentage, there were outsized wins. If a new trader began the system in the middle of the month, they would have been crying and cursing me.
The message in the above discussion is that performance based on big sample sizes gives us our psychological edge. However, position sizing to accommodate (tolerate) strings of losses is the power of that edge. Call it psychology squared.
The secondary message is to track everything. Know your numbers. My go to is TraderSync as it allows me to slice and dice in my analysis.
Summer 2022 Earnings Season
Summer 2022 Earnings Season is pretty much finished. The bulk of earnings releases were made by mid August. There are stragglers out there and a few plays will be made in September. But I am calling the season closed.
Last week’s post Does Your Opinion on the Market Matter? is now unlocked for all free subscribers to this blog. The following is a summary of the plays that were pre-announced in the post:
HPQ Pre-ER Straddle
The HPQ straddle was exited at a profit on Tuesday, August 30th - just before it’s earnings announcement after market close for a total $672 profit. Success.
Below is HPQ’s entry into TraderSync.
OKTA Pre-ER Straddle
The OKTA straddle was exited at a $305 loss on August 31st. Here is it’s entry into TraderSyc (which by the way has a screenshot of its historical results so that I can go back next ER season revisit the play for a repeat.
CRWD Iron Condor
Entry: Tuesday, 30 Aug (Past performance 4 out of 4 wins), Exit: EOD on Wednesday, 31 Aug. This was a success. See the summary below:
OKTA Iron Condor
Following the straddle, I played an IC. Entry: Wednesday, 31 Aug (Past performance 3 out of 4 wins), Exit: EOD on Thursday, 1 Sep. This was a complete failure. I was assigned the short puts and had to exercise my long puts to get out of the position. In the end the total loss was max and only $195. Again - small position size keeps the pain low.
ORCL Pre-ER puts
On Friday, September 2nd I purchased 4 x ORCL Sep16 $75 puts for $2.42 each per plan. (Past performance 4 out of 4 wins for an average of 106.28% ROI for this play). Exit will be just before ER on Monday, September 12th. This trade is currently in play.
The following plays are being planned for the upcoming week:
To register your cost free spot in the upcoming Swing Trading / ER Strategies Course on Sunday, 11 September, please following the link below based on your location:
Earnings Iron Condors
ZS
Entry: Thursday, 8 September (Past performance 3 out of 4 wins), Exit: EOD on Friday, 9 September.
I set an order for ZS $133/138/172.50/177.50 for $1.70. It didn't fill.
Will there be recordings of the sessions? just wondering incase I miss any of it.