M3 - The best strategy?

Just a curious question for M3 traders, do you guys buy the course or learn by yourself from public video?
 
Neri said:
What about Ron Bertino and his Space Trip Trade?
Click to expand...

That's a good trade to start out with
In my opinion that's better than the M3 as far as safety and ease of management
The reason that it doesn't have any returns posted is because it's primarily a hedge type trade so it only makes money when the market goes down which is not very often like in 2017

He also has variations on the SST and also combining it with other trades like the RTT to get income
That's pretty much the type of trades that I am doing
I like it because it's a lot easier to manage As long as it doesn't come down too much I don't have to make any adjustments
The upside has a guaranteed profit so I don't have to worry about any adjustments on the upside like the M3

The hardest part is selecting the trade A trade that is shorter in duration than the STT and yet still has enough credit that is acceptable for the amount of margin used which can be difficult in smaller accounts and also some of the brokerages have poor margin management in which they don't account for the debit spread used so I can only use the PCS as the margin required to figure how many lots or the ratio of PCS to DS I can use on that particular account size
The distance from ATM is also important I try to place it as far as possible while still getting enough credit that I can be satisfied with This can be very risky in low vol environment as you have to get closer to ATM to get enough credit but so far it worked out well for me
 
status1 said:
That's a good trade to start out with
In my opinion that's better than the M3 as far as safety and ease of management
The reason that it doesn't have any returns posted is because it's primarily a hedge type trade so it only makes money when the market goes down which is not very often like in 2017

He also has variations on the SST and also combining it with other trades like the RTT to get income
That's pretty much the type of trades that I am doing
I like it because it's a lot easier to manage As long as it doesn't come down too much I don't have to make any adjustments
The upside has a guaranteed profit so I don't have to worry about any adjustments on the upside like the M3

The hardest part is selecting the trade A trade that is shorter in duration than the STT and yet still has enough credit that is acceptable for the amount of margin used which can be difficult in smaller accounts and also some of the brokerages have poor margin management in which they don't account for the debit spread used so I can only use the PCS as the margin required to figure how many lots or the ratio of PCS to DS I can use on that particular account size
The distance from ATM is also important I try to place it as far as possible while still getting enough credit that I can be satisfied with This can be very risky in low vol environment as you have to get closer to ATM to get enough credit but so far it worked out well for me
Click to expand...

Does anyone know how the STT did during the Feb down move?
 
status1 said:
That's a good trade to start out with
In my opinion that's better than the M3 as far as safety and ease of management
The reason that it doesn't have any returns posted is because it's primarily a hedge type trade so it only makes money when the market goes down which is not very often like in 2017

He also has variations on the SST and also combining it with other trades like the RTT to get income
That's pretty much the type of trades that I am doing
I like it because it's a lot easier to manage As long as it doesn't come down too much I don't have to make any adjustments
The upside has a guaranteed profit so I don't have to worry about any adjustments on the upside like the M3

The hardest part is selecting the trade A trade that is shorter in duration than the STT and yet still has enough credit that is acceptable for the amount of margin used which can be difficult in smaller accounts and also some of the brokerages have poor margin management in which they don't account for the debit spread used so I can only use the PCS as the margin required to figure how many lots or the ratio of PCS to DS I can use on that particular account size
The distance from ATM is also important I try to place it as far as possible while still getting enough credit that I can be satisfied with This can be very risky in low vol environment as you have to get closer to ATM to get enough credit but so far it worked out well for me
Click to expand...

Thank you very much. I found in his site also more trades for income with returns. It looks very good. https://academy.tradingdominion.com/ :) :)
 
The very important difference between any ATM and OTM strategies:
The further your shorts away from ATM, the less likely you are to lose but also the less likely to make any large profit, unless you are lucky and the market moves back inside your tent at the right time.
The closer your shorts are to ATM, the more likely you are to draw down/lose but also the more likely you are to make a large profit.
Roll Baby Roll is a very robust ATM strategy which is absolutely free for Capital Discussions members and which will outperform any OTM trade over the long run.
Here is the link to Round Table with Tom Hughes on Nov 19, 2015.

 
The hedge STT is protection for moderate down moves, e.g. 1 sd down at your duration. I just closed some STT's today for a profit in this down move. They have slightly negative delta and negative charm, so they get increasingly delta negative (stronger as a hedge) as time passes. If opened with long enough duration, e.g. 90+ DTE, the STT is like watching paint dry (very very low gamma). Their weakness is a sudden, large down move immediately after opening them. They need about a month to bloom and then you can use them against your ATMs like RTT, M3, etc. I sometimes widen then PDS to give them more crank to the downside, but doing so weakens them to the upside.

Posted by Wing
 
I suppose quick big move down is not good even for matured STT. It may not loose as much as fresh one but it's hedging power will almost disappear. You have to hope for vol drop.
 
I started trading the M3 live mid-late last year after extensive backtesting. I was in small profit up till the beginning of this year. My Feb and March cycles both hit max lose due to the IV spike in Feb and after the down move and IV spike this week, unless we get a bit of a rally or a drop in IV, April will also be a max loss - that's 3 max losses in a row, which is a scenario I had never hit in backtesting and it's not the best of starts after a few months of trading! I entered my May position on Thursday 45 mins before market close and due to the continued down-move and rising IV, that position has already had a big adjustment and is also down a bit of money too.

I have other accounts dedicated to different strategies like M3, Road Trip Trade (RTT), Bearish Butterfly and some TastyTrade style trades. All of them except the Bearish Butterfly are negative P&L since I started trading last year. My worst performing accounts are the M3 and the RTT. The RTT has been a disaster over the last year if you are a subscriber to the alert service, with minuscule wins for most of the year and then a few months of huge losses, leaving a damaged account. Also, do not believe that the RTT is one of those systems where adjustments are minimal. This is only true when markets are not moving fast. If they are moving, there will be plentiful adjustments to make and if you have multiple trades open like they do in the alert service, you will be getting hit with a lot of alerts, some of which are very confusing and unless you stay on top of them, your trade will go into huge losses very quickly with little to no chance of recovering!

For me, this market has been incredibly difficult to trade and discouraging. The moves are too large in either direction and when IV does spike, it takes forever to contract, meaning that you have to go closer to expiration to start realising any profits. If you are already less than 14-21 DTE and the IV spikes, your open trades are toast.
 
Anil said:
I started trading the M3 live mid-late last year after extensive backtesting. I was in small profit up till the beginning of this year. My Feb and March cycles both hit max lose due to the IV spike in Feb and after the down move and IV spike this week, unless we get a bit of a rally or a drop in IV, April will also be a max loss - that's 3 max losses in a row, which is a scenario I had never hit in backtesting and it's not the best of starts after a few months of trading! I entered my May position on Thursday 45 mins before market close and due to the continued down-move and rising IV, that position has already had a big adjustment and is also down a bit of money too.

I have other accounts dedicated to different strategies like M3, Road Trip Trade (RTT), Bearish Butterfly and some TastyTrade style trades. All of them except the Bearish Butterfly are negative P&L since I started trading last year. My worst performing accounts are the M3 and the RTT. The RTT has been a disaster over the last year if you are a subscriber to the alert service, with minuscule wins for most of the year and then a few months of huge losses, leaving a damaged account. Also, do not believe that the RTT is one of those systems where adjustments are minimal. This is only true when markets are not moving fast. If they are moving, there will be plentiful adjustments to make and if you have multiple trades open like they do in the alert service, you will be getting hit with a lot of alerts, some of which are very confusing and unless you stay on top of them, your trade will go into huge losses very quickly with little to no chance of recovering!

For me, this market has been incredibly difficult to trade and discouraging. The moves are too large in either direction and when IV does spike, it takes forever to contract, meaning that you have to go closer to expiration to start realising any profits. If you are already less than 14-21 DTE and the IV spikes, your open trades are toast.
Click to expand...

I hate to say it , but you are right. Even January/February 2016 seemed easier to trade. The only thing you can do is trade small.
 
The glass is half full, not half empty. I think this market could be setting up to be one of the best vol selling opportunities in YEARS.

Posted by Wing
 
I apologize for the crappy yahoo chart but that RUT weekly ATR tells me all I need to know about how difficult this market is. RUT is close to the same price as the beginning of the year yet the weekly ATR is at a level that we haven't seen in years. That is a lot of whipsaw that fly trades don't thrive in. For me, I am just waiting it out. For various reasons, it doesn't seem that the options pricing has caught up to this type of movement.

upload_2018-3-24_14-2-24.png
 
I think this is probably a good market for the Bearish Butterfly. It's able to withstand choppy and volatile markets and can handle huge down moves with ease. I've backtested this strategy and I love it. Anyone else thinking similarly?
 
Anil, thanks for sharing your experience. Although it is not a pleasant one it provides good info to be put alongside 'buy my strategy, it is the best one out there'. I agree with your conclusions and I hope loses are not devastating. If it to be at any comfort, most of us, if not all, went through this stage. I admire your confidence when after taking couple loses in a row you still put another trade. I advise caution, maybe hit the pause for a while. Market changed. How much? We don't know yet. It is possible that strategies that worked well in past few years won't work anymore. On other hand you can miss great opportunity. It is tough.

One thing is sure; nobody knows what will happen next. If you hear predictions, many with brilliant reasoning... some of them will be right others - wrong. I attach link to todays article in HZ, probably you've already seen it, if not take a time and watch attached clip. It is so actual. Not to say if it's predictions are right or wrong. You have to be ready for every possibility (within a reason), if not, I advice to at least reduce size.
If you miss opportunity, there will be many others to come, if you avoid disaster - you stay in the game. It's up to you.

(Oh boy, if I hear myself few years ago I'd ignore everything.)

www.zerohedge.com/news/2018-03-24/david-rosenberg-it-was-black-friday-black-monday
 
Marcas said:
Anil, thanks for sharing your experience. Although it is not a pleasant one it provides good info to be put alongside 'buy my strategy, it is the best one out there'. I agree with your conclusions and I hope loses are not devastating. If it to be at any comfort, most of us, if not all, went through this stage. I admire your confidence when after taking couple loses in a row you still put another trade. I advise caution, maybe hit the pause for a while. Market changed. How much? We don't know yet. It is possible that strategies that worked well in past few years won't work anymore. On other hand you can miss great opportunity. It is tough.

One thing is sure; nobody knows what will happen next. If you hear predictions, many with brilliant reasoning... some of them will be right others - wrong. I attach link to todays article in HZ, probably you've already seen it, if not take a time and watch attached clip. It is so actual. Not to say if it's predictions are right or wrong. You have to be ready for every possibility (within a reason), if not, I advice to at least reduce size.
If you miss opportunity, there will be many others to come, if you avoid disaster - you stay in the game. It's up to you.

(Oh boy, if I hear myself few years ago I'd ignore everything.)

www.zerohedge.com/news/2018-03-24/david-rosenberg-it-was-black-friday-black-monday
Click to expand...

I just read the article. I thought 1987 was the reason market circuit breakers were set in place though?
 
Circuit breakers were introduced to prevent such situations, yes. They likely will provide some help.
There are also scenarios in which circuit breakers will bring more harm than good. For example with dire marker conditions, after big down day, in after-hour trading circuit breaker is triggered. Next day we open gap down and within 15 minutes of trading (plus L1 and L2 breaks, if they are triggered at all) we reach L3 - full stop. So you have 15 minutes to close your positions and it is not only you in this position. If you are lucky and determined you may be able to buy some puts (you will be paying 2 or 3 times what you platform shows).
The same play next day.
And you are sitting with your complex positions to unwind.

As said, this is extreme.
Point is: circuit breakers or not, you should know what you are doing.

Scared? (
:)
[/URL] )

With pleasure I re-quote after KiwiDon:

"A Ship in Harbor Is Safe, But that Is Not What Ships Are Built For" John A. Shedd

Happy sailing.
 
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