A Profitable 0DTE Strategy & a Better Method for Managing Risk
A Profitable 0DTE Strategy & a Better Method for Managing Risk
By:Eric Villa
Our best stories on YouTube this week
- A 30-year trader sees “a smarter way to day trade.”
- Headlines predict a stock market crash. The data says otherwise.
- Our tastylive researchers just discovered a new 0DTE best practice.
- Long, short or neutral, this strategy is consistently more profitable than passive investing, according to a tastylive study.
Investment Guru Tom Preston offers smarter approaches to day trading
Although enticing, day trading puts the odds against most traders, as highlighted in multiple Reddit posts. To thrive in this challenging arena, it's essential to approach with caution and consider smarter strategies to enhance your chances of success. Last week, Tom Preston outlined his advice to two traders who found themselves losing money day trading in the pilot episode of Money Makeover, uploaded last week.
Takeaways:
- Learning by doing, along with trying different strategies, is more valuable than costly courses.
- The statistical and fundamental odds are against day traders, making it crucial to explore alternative investment options, such as options trading.
- Building and programming trading bots with high-probability strategies can be more effective than relying solely on day trading.
Is the stock market supposed to crash now?
Seasonality, especially during the months of September and October, has long been associated with potential downturns in the stock market. However, a closer look at historical data reveals a different picture. Our analysis challenges the notion of negative seasonality and explores the market's resilience.
Key Takeaways:
- Historical data shows October and November have often shown positive returns.
- Market crashes can occur unexpectedly, emphasizing the need for vigilance.
- Market volatility, though unpredictable, often results in a market rebound.
Researchers discover a new 0DTE best practice
Zero DTE (Zero Day to Expiration) options present an appealing opportunity for highly active traders. Our research piece delves into the factors contributing to the success of zero DTE trades, emphasizing the role of implied volatility rank (IVR).
Takeaways:
- IVR plays a significant role in determining the success of zero DTE trades.
- The impact of IVR on zero DTE trades is still a subject of uncertainty.
- In low IVR conditions, average profit tends to be negative, while high IVR environments yield significantly positive results.
- One strategy consistently proves successful in various volatility environments.
How to manage your biggest risk in options trading
Research on Delta explores the importance of risk management in options trading and presents insightful findings. It highlights the flexibility of options trading compared to traditional equity trading and offers guidance on tailoring positions for profit in any market direction.
Takeaways:
- Being aggressive or hands-off with adjustments often produces similar results in trading.
- Options trading provides an advantage in tailoring positions for profit without relying on directional assumptions.
- Short premium positions, even when directionally incorrect, have performed well over a seven-year period.
Research suggests being slightly directionally long or short does not harm performance, emphasizing the need to choose strategies that align with individual investment goals.
Eric Villa is a YouTube specialist at tastylive.
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
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