Thread by @KatariyaPran

Part of msg I got as a DM
Everyday I collect data fr nse eod files and try to extract meaning information. Like oi built up, delivery change on dly, wkly and monthly basis
From this I can conclude stock is going to be range bound or trend move.

Basically he was asking how I decide whether a Stock will be range bound before selling a Straddle and telling me about the analysis he does before he reaches that conclusion. There was more that he does but let's stick to this.

My answer is that I do it on instinct. I basically watch about 20 or so underlying on a constant basis and when I feel that a Stock is not or has stopped trending and the IV's are ok, I sell a Straddle. No complicated analysis for me and I'll tell you why.

Basically a Straddle has about a 70% chance of finishing in the green. With proper and timely adjustments it can be extended to 85 or so %. Will it really benefit me if I can extend the odds by another 5% by doing more analysis? I don't think so

On the contrary by wasting time in doing this, I will miss out on a number of Trades. I am a firm believer in the law of large numbers and I would rather do a large number of small high probability trades than a smaller number of highest quality ones with bigger size

I know that 10-15% of these Trades won't work out but my emphasis is to manage them well and get out with as small a loss as possible. I'm flexible on management of the Trade and I don't have exact rules of what to do when. As long as majority of my Trades work out, I'll be fine

It's quite possible that in 2 identical situations I might follow 2 different courses of action in managing the Trade. I'm a discretionary Trader. I draw my analogy from Sport. Mike Tyson said that everyone has a plan until they get punched in the mouth.

So I go into a Trade with a good attitude and a flexible approach rather than with a definite plan. When you're facing Bumrah or even Ashwin you have to take immediate action on what is bowled at you. There's no time to calculate speed, angle of descent, possible bounce etc

You have to react to all these instinctively and play the ball on the merits which appear at that point of time. On a different day you might play the same ball differently. I'm not in the camp which holds that a particular type of ball must be played in the same way every time

Experience, instinct, the way you're feeling, current confidence level how Trading has been going lately...all these factors will influence your next trade and personally I don't think it's a good idea to seek to find ways to override them. Better to use them for your benefit