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You literally can not replace the feel of a trader in an algorithm.
I think if you put ‘trader this is creepy intuition’ vs an Algo, the algo would have a better long term return.
However, if you attach a limited amount of capital to the same test, I think the script switches.
Traders do a lot of things right, the good ones are great at making money. They are even better at keeping it.
Where the trader is going to beat an algo, is in not blowing out. Algos are not truly written to not blow up.
Traders are born that way…frankly we all are. It’s called survival…
It’s an instinct.
Thus when I see a traffic light that says ‘sell vol’ and I don’t trust it, if I go short, it is at the smallest amount I possibly can.
A lot of times, it costs me money.
Tuesday, it did not. Because the VIX made one of the NASTIEST moves it has made in weeks.
The blue was Monday’s close, the Purple was Tuesday.
The move in volatility was not just big, it was across the entire curve. Every contract was up around 2 points in the back months
In May VIX moved over 5 points, and almost as much in June.
It is crazy how quickly risk off can come.
We are still technically in a contango, but ONLY in the cash now.
Is this a one off, or real? Take a look at our VIX edge from Tuesday, I think you know where to look.
Your Only Option,
Mark
By the way, if you really want to make money trading options without worrying about a market going up or down from here, MY indicator combined with my own proprietary system from decads of market maker experience lays it all out for you!