I have been doing options trading in the index for almost 1 year now but my success rate is not improving.
I am using Open interest, PCR, candle patterns, and other indicators before taking trades, can anyone suggest any good technique, learning course, or anything else that can help to improve?
Any strategy has its pros and cons.
Calculate expectancy beforehand.
And if its positive, deploy it and give it time.
You’d be better off with selling options and keep risk limited.
1 year is a good time to collect data for your strategy.
Have you collected data like:
- entry
- exit
- pattern strength
- market condition at the time of trade.
and much more related stuff.
Take 1-2 months off from trading and analyze your trading data.
Analyze your winning trades and losing trades separately. Be honest with your analysis.
And make workable rules for your setup.
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What specific area are you trying to improve?
i am assuming you are into option buying , irresepective of what you do , there is 80% -90% chance that option buying will end up in losses becoz the inherent design of the system skewed towards option sellers .
what i would suggest is that just think practical if these indicators actually works everyone of us will become millionaire right , you need to come up with your own strategy which should have an edge .
i developed one myself where every day i just sell nifty index options on both CE and PE sides with 6% away from current price point and I am earning at 18-24% per annum last 3 years . Most of my trades depend on the inherent premium decay as i cant sit infront of system so i restricted myself to lesser returns say 2% monthly .
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I am with you that there are no indicators that can give the right trades and that option sellers have a better success ratio. However, given the risk involved in options trading, I think 24% p.a. is not worth it.
In the last one year, I experimented with both equity delivery and options trading with 90:10 capital allocation (90 in equity). While the annual return on equity is more than 30%, in option trading, it’s hardly going above 10%. due to the obvious reason of a higher holding period in equity and no theta decay.
The primary reason for unsuccessful option trades is mostly indices going sideways after taking the trade, or fall or rally before the target.
It’s a mixed bag, I think I need a set of rules that I need to test and follow with strict discipline.
So thought to discuss if anyone can give some insights
- OI
- PCR
- Candlestick patterns
These 3 are separate verticals, each requiring high levels of proficiency. Where exactly is your pain point?
I am not very sure but could be candle stick, as my failed trades are mostly due to sideways trends or non-achievement of target
Unlike equity trading, options trading has in-built feature to handle non-directional markets as well. Iron Condor, Iron Fly are few to name - you can also google it for more info.
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Option buying is easy when you understand option selling.