The concept of portfolio trading systems has a couple of layers. One layer is to utilise high-probability trading systems matched with suitable options strategies so as to harness the strengths and mitigate the weaknesses of the systems. Another layer is to utilise a counter-trade system after a trade has been placed. The counter-trade is not expected to generate high profits unless the original prognosis fails. And yet another layer is understanding the portfolio risk exposure to a black swan event, and ensuring that the risk exposure is managed to stay within acceptable limits.
Members have more information on the concept, and the trading systems available in the member shop embrace this approach to trading.
Trading can be quite confusing to people at the start of their trading path, and options can appear even more confusing and thus frightening. This is a shame, as that perception drives many new traders into other instruments such as CFDs and futures. Now, everything has its place, and options trading may not suit some people and their preferred style of trading; however, it isn't too hard to grasp. I believe that I can help people break down the perceived barriers through clear steps, and then let them make informed decisions about the suitability of options in their trading.
I have a basic course developed that can be purchased at the shop, and it includes helpful links, slide shows, documents and videos as well as some personal tutorial time if needed for when you get stuck. The intent of the Options Basics course is to get you up and running and hurdling over the perceived barricades; then you can make a decision as to whether there is value in your joining the Portfolio Trading Systems club.
When I started down this path of trading, I tried establishing a network of other traders to grow and learn together. Since I was so interested in options trading and found very few others in my location, I started a club that met weekly in Newcastle, Australia. I consider that decision as being the most instrumental action I ever took in regards to my trading. That club is still running and meeting weekly, and I will be continuing the idea of physical meetings regardless of where I am during my travels.
As a member of the Portfolio Trading Systems club, you will be invited to physically attend meetings, and the meetings will be available via webinar as well as being recorded for online viewing later.
The physical meetings will be held wherever I am at the time, typically in Newcastle, Australia; however, as I wander around the world, I will notify members and meet with them and telecast the webinar from a suitable location.
Keep an eye on the events page - and also consider joining an organisation of like-minded people such as the Australian Technical Analysts Association (ATAA) or the International Federation of Technical Analysts (IFTA).
I have developed a categorisation of options traders to better understand their goals and depths of knowledge. This has come about due to conversations and interactions over the years with many options traders, both institutional professionals and amateurs (serious and hobby).
I have often found options traders who believed they fully understood options trading because how they were trading was working for them. I have no problem with people having success, but being able to drive a car does not make you a mechanical engineer. There is always more to learn, and without knowing the limitations, it is difficult to manage the risks.
Therefore, I have developed three categories of options traders which I describe as the
· With Stock trader
· Leverage trader and
· Curve trader.
As a member, you will receive further details on the categorisations and the suitable options strategies for the different categories to assist you with your own personal development.
In the future, the document will be made available to subscribers.
I believe, and share with people, that options trading requires four levels of planning. Usually, a trader requires only three levels of planning:
· business plan
· system plan and
· trade plan.
However, options are different to all other trading instruments due to the asymmetry of the options pricing model and the impacts of implied volatility. This very uniqueness is what makes them such a flexible and safe trading instrument, once the risks are understood and managed. That flexibility and risk management is achieved through correct application and management of various options strategies. The need to understand the construction, management, adjustments and best exits of options strategies presents the need for the strategy plan.
So, I believe that there are four levels of planning for options traders:
· business plan - vision, goals, money, mind, methods, etc
· system plan - scans, prognosis, etc
· strategy plan - construction, weaknesses, strengths, adjustments, etc and
· trade plan - entry rule, five exits rules, records, reviews etc.
To clarify, these are levels of planning, not actual plans. It is quite feasible to combine a strategy plan within the system plan by adding the relevant strategy information into the system plan.
This approach is built into all my systems, along with templates and suggested wording for your own plans. More information is available to members.
In the future this document will also be made available to subscribers.
When an options trader starts trading the options price curves of an options contract or strategy (as a Curve trader would), then it becomes necessary to be able to match strategies to a trading opportunity. When I developed the simple Six Markets Tool, the intent was to keep new traders safe from incorrectly employing the wrong strategy into the wrong situation. Since that time, it has also developed into a tool to focus traders onto systems and strategy, development and education.
There is no magic in the tool, as it is just a simple table-based format, but the magic is in how people change their approach in trading certain strategies, and how they focus their education on necessary requirements.
I use this Six Markets Tool in all of my trading system plans so that people can understand the reason behind the use of certain strategies with certain systems.
More details on the tool and its use is available to members.
The Compass Sundial is a lovely little device used by travellers for navigation. I sit one on my desk when developing systems, or when I am trading in tight time frames such as the two-minute charts. It has three adjustable legs to ensure it is level. I consider these legs as Money, Method and Mind, which I need to have balanced for me to perform well. Once the compass sundial is sitting level, it is rotated to find North (direction of the trade), then elevated to the correct latitude (loss and profit targets), and then the time can be read from the sundial (timing).
These three elements of Direction, Targets and Timing are all-important when I am entering and exiting any trade.
Overall, this approach to Mind, Money, and Method for the trader, followed by Direction, Targets and Timing for the systems, strategy selection and the actual trade is something I consider important and is built into all of my trade planning and execution.