6 Comments

1. 

   Shajina KP on April 29, 2020 at 5:21 pm

   Hello Mr. Nishant – Thanks for writing the great book! I have completed reading it today and surely it is one of the BEST!!. Very crisp and straight to the technical details/strategies.

   Quick question – In the current challenge, I see that you’ve executed all the trades (published ones) with Bull Call spreads. Is that because of better risk:reward ratio when compared to credit spreads? After reading your book, I was little biased towards the credit spreads considering the high probability of winning. Is there any specific reason for executing Bull Call over the Credit Spreads (other than risk:reward)?

   I’m a beginner in trading world, any insight would be greatly helpful.

   Thanks again for the awesome book!!

   Reply
   • 

     Nishant on April 30, 2020 at 7:44 am

     To answer your question, let us first talk about why people trade credit spreads in the first place:

     The reason why people do credit spreads is because with credit spreads you can choose the risk you want to take and also choose your own probability of winning. For eg. With AAPL trading at $290, you could sell a $270 – $265 bull put spread. That will bring in $100 but you are risking $400 on the trade. What you will notice is that with credit spreads you give yourself a nice cushion to be right. But risk/reward
     go hand in hand. So, in this case you would have a 70% probability of winning that trade. (The trading platform calculates the probabilities for you, which is where I got the 70% number). So, it looks like a really safe trade and it definitely is. But just notice that you are risking a lot of money and making very less if you are right.

     When I start out with my challenge, I am starting with $2500. With that small an amount, credit spreads just don’t work out. In my experience you need an account of $10k – $15k to use credit spreads effectively. With $2500, if your first couple of trades are losers, you can get wiped out before you even start. Whereas, with debit spreads I risk $250 with each trade and I can double my money if I am right. So, it grows my account exponentially as opposed to credit spreads.

     So, to summarize:

     Credit spreads are slow movers: With the $25k challenge, my goal is to grow my money very fast. Credit spreads are slow movers so they don’t work for what I am trying to achieve.

     With Credit spreads you are risking much more: With $2500 to start, we can’t afford to risk $400 to make $100 even if you are right.

     Debit Spreads double your money: With debit spreads, I risk $250 with each trace, and every time I am right, I have the potential of doubling my money.

     Probability of winning:  The broker platform will show you that the debit spreads I trade have only a 50% chance of success. which is equal to a coin flip. But since I use technical analysis to trade market extremes, the actual probability is more in the 80% – 90% range.

     Hope it makes sense. 

     Reply
2. 

   C T on June 5, 2020 at 4:28 pm

   Yes, makes a lot of sense and its clear as to what you do, how you do it and why you do it. I should have subscribed. Maybe next challenge. Really good stuff you are doing.

   Tks,

   CT

   Reply
   • 

     Nishant on June 6, 2020 at 6:45 am

     Thanks. I am glad you are finding my trades educational. The 11th challenge is currently under progress, and we are still accepting new members for another 2 weeks. You can join any time. email admin@tradingextremes.com for more info.

     Reply
3. 

   Ian on July 23, 2020 at 7:28 pm

   How is the end balance $3200? $2500 + $445 = $2945.

   Reply
   • 

     Nishant on July 23, 2020 at 8:17 pm

     Since I have multiple positions open and they all fluctuate on a daily basis. The end balance cannot be calculated based on a single position.

     Reply