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Are Two Heads Better Than One? Team vs. Individual Trading█ Are Two Heads Better Than One? Team VS Individual Trading Performance The age-old question of whether two heads are better than one finds new relevance in the world of stock trading. A comprehensive study titled "Are Two Heads Better Than One?" delves into this question by comparing the performance of individual traders and two-person teams in a simulated share-trading environment. This article explores the key findings of the study, provides actionable insights, and discusses how traders can apply these insights to enhance their trading strategies. █ Key Findings of the Study The research examined the trading performance of novice traders, both individuals and teams, in an electronic share-trading simulation. The results offer a nuanced understanding of how team dynamics and individual attributes impact trading outcomes. ⚪ Firstly, the study found no statistically significant difference in trading profits between teams and individual traders. While teams showed higher average profits, the variation was not substantial enough to declare teams as definitively better. Interestingly, profit volatility was more sensitive to trading activity in teams than in individuals. ⚪ Confidence emerged as a crucial factor in trading performance. Traders with higher confidence, whether trading alone or as part of a team, tended to achieve better results. However, this confidence needed to be task-specific, focusing on particular trading activities like setting bids and asks, rather than a general sense of capability. ⚪ Another significant insight was the impact of trading activity on profitability. The study revealed a negative relationship between the number of trades and profit. In simpler terms, traders who engaged in fewer transactions generally earned higher profits. This applied to both individuals and teams. ⚪ The dynamics within teams also played a role in trading performance. Teams that displayed a positive attitude towards the trading task and perceived it as less difficult performed better. Additionally, mutual respect among team members correlated with less frequent trading and, consequently, higher profits. █ Actionable Insights for Traders The findings of this study offer several actionable insights for traders looking to improve their performance. ⚪ Balancing Confidence with Caution Confidence is a double-edged sword in trading. While it is essential for making decisive moves, overconfidence can lead to excessive trading, which often diminishes profits. Traders should aim to build confidence in specific trading tasks through practice and education. For instance, focusing on developing skills in setting precise bids and asks can enhance performance without falling into the trap of over-trading. ⚪ Optimizing Trading Activity One of the most actionable insights from the study is the importance of trading less frequently. Traders should adopt a more strategic approach, focusing on the quality of trades rather than quantity. This means conducting thorough research and analysis before making a trade, and resisting the urge to engage in frequent buying and selling. Implementing rules that limit the number of trades per day or per week can help maintain this discipline. ⚪ Enhancing Team Dynamics For those trading in teams, fostering a positive group attitude and mutual respect is crucial. Effective communication and collaboration can significantly improve trading outcomes. Teams should regularly discuss strategies and specific trades, ensuring that all members are on the same page. Moreover, teams should strive to build a cohesive unit where members respect each other's abilities, as this can lead to more deliberate and profitable trading decisions. ⚪ Training and Development Trading firms can leverage these insights to design better training programs. Emphasizing the importance of confidence in specific tasks and the dangers of over-trading can help traders develop more effective strategies. Training should also focus on building strong team dynamics, teaching traders how to communicate effectively and collaborate efficiently. ⚪ Performance Monitoring Traders should regularly assess their performance, paying close attention to the correlation between their trading activity and profits. Tools and metrics that measure both confidence levels and trading frequency can provide valuable feedback. This data can help traders make informed adjustments to their strategies, ensuring they stay on the path to profitability. █ Conclusion The study "Are Two Heads Better Than One?" offers important insights into how individuals and teams trade. Although two heads are not always better than one in terms of profits, the research shows that confidence, trading activity, and team dynamics are crucial for trading success. To improve trading results, traders should: Balance confidence with caution Trade less frequently but more strategically Strengthen team dynamics Focus on specific training Regularly review their performance Whether you're new to trading or have experience, remember to prioritize quality over quantity in your trades. Build confidence in specific tasks, and if you're working in a team, create a collaborative and respectful environment. These approaches will enhance your trading performance and lead to more consistent and sustainable profits. █ Reference Heaney, R., Foster, F. D., Gregor, S., O'Neill, T., & Wood, R. (2010). Are two heads better than one? An experiment with novice share traders. Australian Journal of Management, 35(2), 119-143. doi:10.1177/0312896210370078. ----------------- Disclaimer This is an educational study for entertainment purposes only. The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs. My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
OANDA:DE30EUREducation
by Zeiierman
TPL.N0000Buy zone and Strong Support zone mentioned in above chart. Disclaimer: The information and analysis provided in this publication are for educational purposes only and should not be construed as financial advice or recommendations to buy, sell, or hold any securities. The author and TradingView are not responsible for any investment decisions made based on the content presented herein. Always consult a financial professional before making any investment decisions.
CSELK:TPL.N0000Long
by rukshan2102
LOLC.N0000Death cross is now appearing daily chart. Closely monitor the GAP indicated in chart and fib levels as well. Disclaimer: The information and analysis provided in this publication are for educational purposes only and should not be construed as financial advice or recommendations to buy, sell, or hold any securities. The author and TradingView are not responsible for any investment decisions made based on the content presented herein. Always consult a financial professional before making any investment decisions.
CSELK:LOLC.N0000Long
by rukshan2102
Nvidia -> Slowing Down And Now?Hello Traders and Investors , my name is Philip and today I will provide a free and educational multi-timeframe technical analysis of Nvidia 💪 Looking at the monthly timeframe you can see that after Nvidia retested previous support and the 0.786 fibonacci retracement at the $110 level, there was a solid rally towards the upside. Also on the weekly timeframe you can see that we had a juicy inverted head and shoulders reversal pattern and I pointed out all the reasons why I do expect the upcoming pump of roughly 120% towards the upside. Looking at the daily timeframe now you can see that Nvidia is a little bit overextended is also slowing down with momentum so there might be the possibility that we will see a short term correction after Nvidia actually breaks the current uptrend line. Keep in mind: Don't get caught up in short term moves and always look at the long term picture; building wealth is a marathon and not a quick sprint 📈 Thank you for watching and I will see you tomorrow! My previous analysis of this asset:
NASDAQ:NVDAShort
by basictradingtv
62
How The Economy Affects The Stock Market ? How The Economy Affects The Stock Market ? There are many factors that affect how the stock market is doing, and whether it’s moving up or down: the political climate, social factors, interest rates, trends and shifts in what investors prefer. So how does the economy affect the stock market? If the general population feels as if the economy will soon be taking a turn for the worse, they tend to sell stock because bonds and treasuries offer a safer return. On the flip side, when people are feeling confident and optimistic about the economy, they tend to buy stock, taking more risk for greater reward. From a high-level approach, when people feel good about the economy, they tend to buy more stock. When things are happening in the world make them feel unsure, they will be more conservative, and might gravitate toward lower-risk investments such as bonds and Treasury bills. .
NSE:NIFTYEducation
by dsp21486
Cash Secured vs Naked PutsI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails. They start trading and realize it doesn’t work this way. The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades. Cash Secured vs Naked Puts What I want to talk about right now is the difference between cash secured vs naked puts. If you've been following Coffee with Markus, then you know that recently there was a comment from someone who said “They are the same thing!” Of course, that is not the case. So in this article, I’ll show you the differences between cash secured vs naked puts. I’ll also explain why I highly recommend that you trade cash secured puts when trading the Wheel strategy. Selling A Put Option When you sell a put option it means that you have to buy the stock at the strike price that you sold it for if the contract is exercised at expiration. This is very important, and you are obligated to do it. So, therefore, obviously what you want is that the stock stays above the strike price that you chose. Because in this case, you just keep the premium. Now, let me give you a very, very specific example here. Put Example: IBM So recently, I sold a 115 put on IBM . I did this with three days to expiration and I received a premium of $43 per option that I traded. Now, I traded two options, or two contracts. So this means that I received $86 in premium. If you divide this by three days, this means that we are looking at approximately $29 per day in premium, which is what I’m looking for. I mean, this is how I have achieved the very systematic results here of 22.7% over the last three months, and if I can keep this up, this would translate into 19.8% per year. So thus far, what does it have to do with cash secured or naked puts here? In this example, as long as IBM stays above 115 until expiration, I would just keep the $86 in premium and the option expires worthless. However, if IBM would close below 115 at expiration, then I have to buy 100 shares of IBM at a price of $115. So in my case, since I have sold two options, I would have to buy 200 shares of IBM at $115. This means that I would have to bring $23,000 to the table. But here’s the deal. In order to sell these puts, my broker only required around $4,400. Let’s take a look at this. See IBM here, it says capital required $4,453. That’s only 20% of the money that I actually need to buy the shares. The Differences Between Cash Secured vs Naked Puts Now let’s talk about the difference between cash-secured puts and naked puts. Cash secured puts mean that you have $23,000 in your account to cover the stocks if you are getting assigned. So if you only had $5,000 in your account, you could still place the trade. As you can see, the broker only required $4,453. However, you wouldn’t have enough money to actually buy the shares if you got assigned. This means that you sold the naked puts. You just don’t have enough money. You just had enough money for the broker, what he required to sell it. So why would the broker let me sell the puts for only $4,400 when I need $23,000 to buy the shares if I get assigned? Well, here is why the broker does it. He does it for two reasons. Reason number one, most options expire worthless. And number two, even if they don’t expire worthless most traders buy the option back. So they close it before they expire and the broker knows that. That’s why he’s only requesting 1/5 of the buying power that you need for buying the shares. And that’s all good as long as you close your position before expiration. However, when trading the Wheel, you actually want to get assigned. It is part of the strategy. You see, we not only sell a put option, if we get assigned we will sell calls and get the premium. So the question now is… What Happens If You Don’t Have Enough Money And You Get Assigned? Let’s say you have $5,000 in your account and you entered this trade. Now IBM is below 115 at expiration and you have to buy 200 shares at $115, but you don’t have the money. So what happens? Well, now your broker is buying them for you and you get a so-called ‘margin call’. What does it mean? A margin call basically means the broker asks you to wire the remaining $19,000 that you need for this into the account, and he wants to have this pretty much that day. What happens if you don’t have the money? If you don’t do this, the broker will sell the shares the next day at whatever price he can get. So this means that you lose all control over this trade. Your broker is now in control and that’s not good. You see, when trading the Wheel strategy you want to remain in control. After we get assigned the shares, we want to sell calls against it and collect even more premium. Summary I highly recommend that you trade cash-secured puts so that you have enough money in the account in case you get assigned. This way, you have full control over your shares and you can actually make money with them. Now you know the difference between cash-secured puts vs naked puts and you know when to use what.
NYSE:IBMEducation
by rockwelltrading
2
What Is The Wheel Option Strategy?The Wheel is an options trading strategy where first we are selling puts to collect premium. In the instances where we get assigned the stock, we’re then selling calls to collect even more premium. As you know, I’ve been actively trading “The Wheel” since the middle of the year (2020) and at the time of writing this, have yet to realize a loss. In this article, (based on a video from August 21st, 2020), I want to talk about a specific “Wheel” trade on UBER where we ended up getting assigned shares. Wheel Option Strategy Example: UBER Within The Wheel, there are three trades that can take place. The first is that we are selling puts. The idea here is to collect premium and to get assigned stocks at a discount, to buy stocks at a lower price than they are trading right now. Then once we have the shares, we are selling calls. So let me walk you through step by step of exactly how it works. Step 1: Selling Puts So let’s talk about the first trade that we did here. For the first trade, we were selling puts, and I want to take a look at the very specific example here. We sold 7 August 14th expiration, 30 puts at $0.25. So this is $25 per option. 7 of these, times 25 so we collected $175 in a little bit less than one week. The idea here was that I believe UBER would stay above $30 by this expiration, resulting in me just collecting the premium for the puts I sold. So let’s review all the trades I’ve taken in UBER through this period: I have eleven winning trades. Here is what happened with Uber. The price dipped below the magic 30. And here’s what happens. If it would have stayed above 30 we would just collect the premium, be happy, and sell more puts again. But on the day of expiration, UBER had a sharp sell off dipping below the put strikes I sold. Step 2: Buying Shares So we had to buy the shares and this is actually the second part of the trade. This is what the broker did for us automatically. We bought Uber at 30. Here’s the deal, for every one put that you’re selling you have to buy 100 shares. Now, something odd happened here. So I should have received 700 shares of Uber in my account because when you’re selling puts, it means this means you have to buy at the strike price that you’re selling it. So since I sold 7 puts, I should have received 700 shares. But for one reason or another, I only received 400 shares. Kind of a bummer, but it’s okay. Now, this premium, since we sold it, we are going to keep it. Whenever we sell an option and collect premium, we are going to keep it (the premium) no matter what happens. So now that I’m the proud owner of 400 shares of UBER at this stage, here’s where the next part of the trade comes in: Step 3: Selling Calls This is where now we start the “Wheel” rolling. This is the really fascinating part of the strategy and when it clicks, you’re going to see why I absolutely love it! With 400 shares of UBER, this means I can now sell 4 calls against my shares, creating what’s called a “Covered Call.” So we sold four calls at a strike price of 31 expiring August 28th. Again, this article was written based off a video I recorded on August 21st, 2020. And we sold those for $0.52. This means $52 per one option. 52 times 4 means that we received another $208. So this is the premium that we received and nobody can take this away from us. We’re not planning to close this trade and buy back this call, we would just leave it open. So to this point we have received $383. 3 Scenarios That Could Happen With Uber Now I want to look at three possible scenarios of what happens if Uber closed below $30 on August 28th. So in a week from now, we want to see what happens if Uber is below $30, if it is between $30 and $31, and if it’s trading at $31. First of all, the premium that we received for the puts we can keep. I mean, $175 is already ours nobody can take this way. This is in all scenarios here. We also receive the premium for the calls that we have sold here and that is $208 and nobody can take this away from us. Scenario 1: Uber is trading below $30 So let’s say Uber drops all the way down to $29. In this case, on our shares, we would have an unrealized P&L. This is important, unrealized, 400 times $1, would be -$400. Now the important thing, it’s unrealized because we kind of don’t care at this point, right? Because we’re not planning to sell Uber we are planning to hold it. At this point, the whole premium collected is $175, plus $208 so it’s $383. This is how much we have realized to this point, but remember in this scenario we would be underwater on our shares (or an unrealized loss). Now, what we would do here is sell more calls. But we’ll talk about this here in just a moment. Scenario 2: Uber is trading between $30 and $31 If Uber is between $30 and $31, let’s just say Uber is at $30.50. We bought Uber shares at $30, and in this scenario, it’s trading at $30.50, so we make 400 x $0.50. So we’re making $200 on our shares, plus we’re making $383 on the calls and puts that we collected. So this would bring our total to $583. Not bad at all. Scenario 3: Uber is trading above $31 If Uber is above $31, it doesn’t really matter because we sold 4 calls at a strike price of $31. So this means that we have to sell Uber again at $31. Yes, if it goes to $33, $35 we cannot participate, and that’s okay. It’s very likely that Uber stays between $29 and $31, maybe $32, right? If it rallies to $34 good for Uber. Again we’re talking about the next week that’s what our outlook is here. If this would happen, we would make $1. Because we bought 400 shares at $30, and if we have to sell it again at $31, we make 400 times $1. So this means that we are making $400. This is how much we are making on the stocks, plus the $383 that we received in premium we are going to keep. This here is our best-case scenario. So if Uber is below $30 we would sell calls again, and the Wheel would continue. If it is between $30 and $31, we sell calls, and if it is above $31 we are being called away, so we are getting rid of the shares. And this means that right now we would start selling puts again. Wheel Option Strategy Summary I wanted to show you this, and also very specifically, where we are right now with our Uber position. If you look at Uber right now, you’ll see that we are making money on our shares and we are losing a little bit of money on our calls that we sold, but right now, we are up $292. Now we hope that by next week we’re up either $583 or $783, and this would be the win of only two weeks. This is how the Wheel works, this is how the Wheel ‘turns’. The trades we are in right now are working quite well. Thus far we have a really great track record. If you found this article on the Wheel option strategy helpful, feel free to leave a comment below and share it with others who will benefit from reading it.
NYSE:UBER
by rockwelltrading
1
$MARA #MARA take off to $3.50Bitcoin has risen more than 7% over the last week. Smashing $10,400 Monday. As many expect stimulus package will arrive August and as D.C treats bitcoin as "money" Many crypto traders in the United States say their next $1,200 stimulus payment will go ‘straight into Bitcoin.’ We'll see a clear breakout of $MARA as it has broken $1.39 resistance. Its still startlingly clear that things with no debt - gold and Bitcoin (and most tech), trade incredibly well and anything private-sector debt-related such as banks or BBB equities trade like dogshit....fascinating market.
NASDAQ:MARALong
by BreakoutSecurities