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29 May, 5 tweets, 1 min read
CHRONOLOGY OF SUCCESSFUL TRADING

• Learn basics of trading but no breakthrough for many months
• Find a good strategy or trading idea
• Implement that idea with some capital
• Start adding more capital because of good returns
• Start making decent returns for few months

1/
• Lose all previous month returns in a week
• Hault trading for some days
• Go back to the drawing board & improve the strategy
• Start again with 2nd step
• Repeat for n number of cycles (n depends solely on a trader's skill & huslte)
• Create a decent trading career.

2/
With experience the trader will start retaining the profits, and stop giving it all away during drawdowns. A stage comes when drawdowns are minimal & only trading opportunities are cashed in. This is because the trader finds an optimum balance between risk & good returns.

3/
While all of the above is visible, the invisible hustle of developing trading psychology plays the most crucial part in succeeding. It is often looked upon as something which can be easily dealt with by reading few books, but practically is the most difficult to master.

4/
There are times when the trader becomes over confident & gets this feeling that he has 'made it'. This complacency is what makes the cycles keep repeating over & over again. Takes lot of time for the trader to become humble enough & accept market as all supreme.

5/

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More from @SarangSood

Sarang Sood Profile picture
23 May
Indeed Pathik bhai, it's the most dangerous scenario for any kind of option writer. The way i handle it is by converting a straddle/strangle into ratio spreads which i have explained in the past in the below tweets. Usually it's only one side where premiums are spiking. +
So we need to stay away from that side & convert our position to the opposite side in ratios.

Many go the 920 straddle way, that is exiting the losing leg & running the profit one. The only problem with that is that by doing that they have exited the non-directional realm +
& gone the directional way. So if market reverts then they have no way to hide. So it's kind of a hit or miss type of situation they get themselves in.

Curated below few of my past tweets on this subject & how i handled my position. +
Read 8 tweets
Sarang Sood Profile picture
23 May
@Pathik_Trader Indeed Pathik bhai, it's the most dangerous scenario for any kind of option writer. The way i handle it is by converting a straddle/strangle into ratio spreads which i have explained in the past in the below tweets. Usually it's only one side where premiums are spiking. +
@Pathik_Trader So we need to stay away from that side & convert our position to the opposite side in ratios.

Many go the 920 straddle way, that is exiting the losing leg & running the profit one. The only problem with that is that by doing that they have exited the non-directional realm +
@Pathik_Trader & gone the directional way. So if market reverts then they have no way to hide. So it's kind of a hit or miss type of situation they get themselves in.

Curated below few of my past tweets on this subject & how i handled my position. +
Read 8 tweets
Sarang Sood Profile picture
22 May
PSYCHOLOGICAL EFFECTS OF POSTING MTM SCREENSHOTS

We all see traders posting their profits regularly on twitter. This post is not about how geniune they are or not. Let's not get into it. It's about how posting regular profits affects the psychology of the trader posting it.

1/
After posting series of screenshots & receiving all the acknowledgement from the followers, the ego gets a nice boost. This feeling is even more overwhelming than the actual satisfaction of the profit earned. That is the extra dopamine which we receive from the praise.

2/
Since it's market we are dealing with, there will be drawdowns sooner than later. This is where the trader starts dubious activities. It's actually very normal behaviour because the ego doesn't let go easily of the initial boost received which can be in just a matter of days.

3/
Read 11 tweets
Sarang Sood Profile picture
14 May
A THREAD

Topic: Why triple straddle has no real benefit.

A triple straddle is essentially an ATM Straddle & one or two step away straddle on either side. The position is almost neutral strategy just like any other neutral straddle or strangle.

1/
We can also view the position as an ATM straddle, a strangle & inverted strangle.

For example

Nifty: 14700

Triple straddle: 14600,14700,14800

Another view:

14700 straddle
14800-14600: strangle
14600-14800: Inverted strangle

2/
So the real question is what is the advantage of an inverted strangle over it's otm counterpart?

The answer is none.

They both have same premiums/theta. Only that slippages will be high in inverted strangle when we do the required adjustments plus liquidity issue.

3/
Read 7 tweets
Sarang Sood Profile picture
3 Apr
A lot is said about achieving simplicity in trading. How we need to keep our strategies simple, with objectively defined entry & exits, position sizing, risk management etc

But if simple things work so well, why does one naturally complicate them in the first place?

1/
To answer this we need to understand simplicity.

Is a Tendulkar straight drive which looks so simple, actually that simple?

Is a surgery which looks complicated, actually that difficult for an experienced surgeon?

Same goes for all the professionals in their fields.

2/
To create a simple profitable system requires lot of practice. We need to complicate things 1st inorder to understand what is essential & what is not. If on the onset we start resisting a little complication, then it only means we are not willing to go the distance.

3/
Read 9 tweets
Sarang Sood Profile picture
13 Feb
CATEGORY OF DAYS FOR OPTION SELLERS

This thread is about how premiums behave in different setups. Though identifying them early takes years of practice, being mindful of what's happening in the present can give us an edge. So we can be better prepared with our strategies.(1/n)
1) Gentle decay in premiums/ less delta moves

Such days are pure delight for option sellers. The adjustment cost is less because of less delta moves, so vega realisation is more. Usually such days are plentiful when Vix is below 15. (2/n)
2) Decay with High delta moves

Such days are common when Vix is high. Since delta moves are more, vega realisation is less because of high adjustment cost. Those who don't adjust their positions usually miss out on it's profit potential. (3/n)
Read 9 tweets

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