Of course, if the market lets us know that the strategy is no longer working, changes would be in order. It is an amazingly simple strategy that really works with the one proviso, that you select a stock that stays flat or moves higher over time. Learn about the open interest of options contracts and what a high and a low open interest indicate about the liquidity of Sure, sometimes a trade lasts a few hours, but I always close the trade at the end of the day no matter what.
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However, such volatility also means huge returns for our winners, as our model portfolio shows. Often the greater the risk, the greater the potential gain, and that is true with our approach. But as our model portfolio shows there is the potential for great rewards with this approach. We discuss what we are planning to do in our one of a kind SPX Daily Outlook that is sent to all our members daily.
Our exit times vary based upon market conditions, but we are always out of the trade by the close of the day. Our members receive our newsletter each morning within minutes after the opening bell. Day trade SPY options.
Nothing is more liberating! We have traded equities, struggled with currencies and looked at futures, but nothing compares to stock options.
This is the fastest growing financial trading tool, once exclusive only to the institutions, now readily available to retail traders. Options provide stunning trading leverage while controlling risk. Given the inherent risk, you need to learn before you can earn. You are in the right place with us! We have you covered on both sides. If you concur, follow along and learn to earn. Conversely, master the mechanics of our strategy and pick your own positions.
Both are effective, economical methods to make serious money in the market. See what Trader Hugh considers trading daily. If, however, you want to truly understand the mechanics behind the numbers and become at one with the market, the Ultimate Package is the full training program. Become an expert trader. Our results are self-evident. We have been where you are, recalling the stress and expense of it all. Most traders run out of money and fail within the first year.
We work with you in becoming proficient for long-term financial success. No complex methodologies or high risk trades, just a simple formula that seems to work well for us. Together with superior client service, we aim to be your perfect fit. We do not overwhelm you with useless information or lock you into a long-term financial commitment. However a simple analysis proves that initial reaction wrong; following this simple strategy actually outperforms, by a small margin, a simple buy-and-hold SPY strategy.
We'll also neglect the effect of dividends; this is a valid omission since following the simple strategy with the actual ETF will have you as a valid holder of the ETF on each ex-dividend date. When we begin development of a model and look at optimizations we look at a range of data and statistics. The total percentage gain for this simple Buy the Close Sell the Open strategy is The first question one might ask is "Can we find a filter to reduce the average loss on losing days?
There are a wide range of potential candidates and strategies that one can investigate in that pursuit; for our study here again we'll stick with something very basic - the Simple Moving Average [ SMA ] for SPY.
Here's the hypothesis we'll test: Graph 1 below is a plot of the total percentage gain for a range of simple moving averages where the green line is the percentage gain when SPY is above a given SMA and the red line is the percentage gain when SPY is below a given SMA. So the first thing we notice is that there is indeed an optimal value for a SMA in this study there's actually two distinct peaks on the graph but we'll come back to that later and the optimal value for our SMA is Let's look at the statistics for this new strategy overall and for each Zone:.