More stellar results published; a couple of possible resolutions to the automation challenge

Navigation Trading published November results ... profitable again (*yawn*) 😃It's not as useful as it could be, as they're vague about the size of account that's required to take full advantage of their trading plan (minimum, of course; one could scale this as high as desired if one wanted to do that).

So Navigation Trading for November:

+ $2581 

Their blog gives details on the "closing only" strategy, so please take a look at that.

Their Iron Duck strategy paid off this past week, as the market went mostly straight up:

As for my "short oil" strategy, I have a more traditional report of results:

+25.2%

Note that this is on a small account: $5400 to start, and the trade I put in took about 60% of the buying power available. On a larger account I wouldn't have risked quite so much on this single strategy, but you can see its potential.

But also: I

• sold the 59 call
• sold the 49.5 put

This is a neutral trade, not a short one ... what I will do when I have more money in the account:

• sell 2 calls
• sell 1 put

This is still neutralish, but with short bias ... and would have made even more money than the trade I put on.

As for the automation strategy: I had lunch yesterday with an old friend who's been down the same track I've been working lately of trying to get the Interactive Brokers API to work.

One piece of data he had: he said that they found that the live back end behaved differently than the paper trading account for the API .. some trades worked on the live API that didn't work on the paper API. Sheesh ... this defeats the whole purpose of trying this with the paper API!

As for Vela Trading, I finally talked to them and they're hugely too expensive: $20K per year per market ... whatever that means. (I am fuzzy on CBOE vs CBOT vs the 1800 futures markets) ...

So it's going to be Interactive Brokers or maybe TastyWorks ... I applied for the beta test program for their API.

More details next week ...

Weekly update: some real results this time (+16.09% this month!); continued automation challenges

I have set up a small account starting around October 1 where I have been doing:

• short oil trades (selling calls in /CL)
• some of Navigation Trading's trades, especially the "Iron Duck:"

No, not like that. Like this:

Maximum risk on the upside is $5 (i.e. $500) since the strikes are 3015 and 3010 ... but since this trade returns $6 (i.e $600) credit, your "max loss" on the upside is a gain of $100.

These have been working great, for earnings trades and otherwise ... my intuitive sense of these said they should win 95% or so of the time, and the Navigation guy said as much in his video update ... some user of his who's been doing this a lot has won 40 of 42, he said.

Anyway, my real results since October 1:

+16.09%

Interested? You can subscribe! (But: past performance is no guarantee of future results, as we've discussed before.)

Update on the automation project: nothing new ... waiting on T.D. Ameritrade to tell me about their FIX deal, but no response yet. Also waiting on Vela Trading to tell me the price of their Execution Gateway or whatever else they have that will work for us ... 

Getting impatient on this, but trading my small account until then ... More next week!

Your $150,000 account: theoretical results since 2017

As regular readers know, I've been working on a project to automate Navigation Trading's trades.

It's not clear to me how large an account it would take to take full advantage of results like this, but I think it's around $50000. So with your $150,000 account we could put you in:

• 3x the trade size for all of Navigation Trading
• Short oil and natural gas trades (selling 2 calls vs 1 put in /CL and /NG)

Let's look at both kinds of  results you could have achieved in the recent past:

Date	Nav Results	Your Navigation Results	Your oil/gas results
2017 (Jun-Dec)	$9397.01	$28191.03	$15000
2018	$39682.39	$119047.17	$25000
2019	$25000 (projected)	$75000 (projected)	$25000

At this point, if you're living off the proceeds (plus whatever Social Security or whatever other income you have available), well, wahoo! If you've still been working and have just been letting this money accumulate, then you have the option to scale up and make more money in 2020:

• Go to 4x the trade size for Navigation
• Go to 3 calls / 2 puts for /CL and /NG

... and so on from there.

Caveats:

• PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Navigation Trading has done very well the last 3 years, but anything could happen to disrupt their results going forward.
• The oil/gas "results" are speculative but based on current options prices and the fact that oil and gas have been more expensive than solar electricity since at least 2016.
• Options and futures trades like this involve extra risk that you should understand before investing. 

With all that being said, if interested, please subscribe!

Short oil reestablished; the challenge in automated trading

This past week:

• Oil went nowhere, and I just let the existing trade expire worthless and reestablished it Thursday
• Equities rallied a little bit on the "not yet papered" trade deal and then cooled off by the end of the week

And as I've mentioned here, I've been working on automating the trades from Navigation Trading.

This is supposed to be doable with relatively high-level software from Interactive Brokers:

https://interactivebrokers.github.io/tws-api/spread_contracts.html#bag_opt

The image of trade automation is like this:

The reality of Interactive Brokers' software is more like this:

That's right: it doesn't work! It's even supposed to be available in Python, but even the C++ doesn't work for what I need to do: option "spreads" on equity and futures.

There are a couple of open source providers who provide "fixed" versions of the C++ implementation, and one of those works well enough that I was all set to use it. I got a couple of useful suggestions from someone watching the Github site for this one, and it looked like I was off to the races.

But then I got to trying futures options spreads, and the version (9.71) of the Interactive Brokers' API that this "good" one was supporting doesn't support that.

The other one does, it says .. but I could only get it to work on its example S&P 500 futures  (/ES) and not on anything else I tried.

My client said that 75% or 80% automated isn't good enough, so I went back to the drawing board ...

There are a ton of trading technology firms around Chicago and New York, and I talked to several, including:

• CTS Futures
• Onixs.biz
• CQG
• Trading Technologies
• Vela Trading

A couple of these haven't responded yet, but none of CTS, Onixs.biz, nor Trading Technologies support anything but futures! Meaning: no NFLX, no IBM, no TSLA ... 

I even called Vela but hadn't heard back from the right person by the end of day today. 

I was hoping to find a working higher-level software implementation, and TT seemed to fit the bill with a REST API sort of setup. So I was especially disappointed to get the 'no equities' message from them.

Finally I got to looking around, first for FIX protocol training ... then thought to look for Interactive Brokers FIX support ... and of course I found it!

So I'm back to low-level C++ ... or maybe Go ... more next week!

Short oil trade wins, as expected; new ad on Navigation Trading just released

The price of oil doesn't seem to go up no matter what happens ... this past week an Iranian oil tanker was supposedly attacked ... the price of oil's response?

Specifically, the price spiked very briefly to $55 or so then oozed back down ... currently $53 and change:

I scraped together enough to fund an account with enough to do this trade ... So my short 58 call and the short 49.5 put I added late last week look to be expiring worthless on Thursday as expected ...

And just to reiterate: I am soliciting clients who'd like to take advantage of this profitable trader but who don't feel interested or capable of doing the trades themselves. My new Craigslist ad on the subject just went up this evening. Let's talk soon if interested!

Thanks ....

No risk to the upside ... a condor I hadn't seen before

Hi All ... sorry I'm late with this post as I was busy with the trade automation project I'm working on (more about this below) much of this past weekend.

But the Navigation Trading guy put through a trade this past week that got my attention. SPX was around 2885 last Thursday the 2nd, having been sharply down during the day. So the trade came through like this:

SELL -1 IRON CONDOR SPX 100 (Weeklys) 9 OCT 19 2895/2900/2830/2800 CALL/PUT @6.60 LMT 

I saw this go buy and just thought, "hm, kind of close on the upside ..." then it hit me a few minutes later:

• Max loss on the upside $5 ($2900 - $2895)
• BUT $6.60 credit received
• SO: max loss on the upside ... is a $1.60 (i.e. $160) profit!!

This is just what the doctor ordered:

... as SPX rocketed back up around 2950 the next day!

This trade only works this well with a little volatility in play (like now -- VIX closed 17.86 today) ... but a backtest since 2009 should show this Fabulously Profitable. You almost always either win small or win big ... probably only 5% of these trades should be losers ...

And once again: Navigation Trading available as a to-be-automated service and I can push these trades through for you 'by hand' in the interim. Details here.

Thanks!

Oil market calms down; ready to automate Navigation Trading ...

The oil market calmed down quickly after last week's spike:

And otherwise the market stayed pretty calm except for a down move late Friday ... Chinese officials cancelled a visit to U.S. farm country:

A trade update on the small account I'm trading: It's now up 15% or so since its trough about a month ago ... still much too far down overall, but moving in the right direction.

But the big news is on Navigation Trading and the new service I'm rolling out to automate these trades. I made a breakthrough earlier today on a key piece of the automation software and I should have this ready within a month or six weeks.

But don't wait! I can set you up with an account matched to my master account at Interactive Brokers and do the trades for you "by hand" until the automation piece is fully tested and ready.

Details here ... more next week!

A challenge for the "short oil" strategy; more on Navigation Trading

There was a Yemeni strike on the Saudi oil infrastructure this past week:

You might expect this to cause a spike in the price of oil, and in fact you'd be right:

But it looks like it peaked very briefly at $64 or so but is back down as I write this (Sunday 8:27 pm PDT) to $59.61. The Saudi oil industry isn't the key to the global supply it once was, and though this strike hit a key piece of infrastructure ... there's still plenty of oil washing around in the world supply.

Amory Lovins said that his vision of the long-term price of oil would be that it would be "low and irrelevant." I think he's still right on this point ...

More on Navigation Trading: "keeping the dream alive"

Once again, I'm working on automating access to this guy's trades ..  As you can see, he hasn't posted a losing month since he started keeping records in June 2017. 

How does he do it? For one thing, he doesn't count a trade as a loss until he's given up on "adjusting/rolling" it. For example, He closed out an Intel (INTC) trade last month (August 2019) that he started in late July or early August and "adjusted/rolled" several times before squeaking through to show a $26 profit.

Intel's challenge to neutral trading strategies this summer

This is OK as long as you understand that you won't be able to look at your account at the end of every month and see exactly the performance he's posting. If you have 2 or 3 of these trades going that he's in the middle of adjusting/rolling then you will be down possibly a few thousand dollars from what he posts ... but you should make up those by the end of the next month.

For further exploration of this idea, watch Tastytrade ... they call it "keeping the dream alive" ... There's also a book by an advocate of this approach:

Questions?