- explicit expectation of a direction in the market
- probability enhancer; longs superior success rate in bullish DB, shorts superior success rate in bearish DB
- helps improve target selection & trade management (confluent with DB)
Directional Bias Explained - Thread
- explicit expectation of a direction in the market
- probability enhancer; longs superior success rate in bullish DB, shorts superior success rate in bearish DB
- helps improve target selection & trade management (confluent with DB)
Constant DB = trading system virtually always offers a
directional preference (deriving price from moving average)
Situational DB = ts only offers a directional bias under specific circumstances (price decisively closes below a daily support)
- long when DB bullish; short when DB bearish
- disallow all trades against DB unless there are extremely unusual circumstances (sig. news, tremendous R:R)
- helps silence intraday noise
- adjust TP when DB is strong
A. Target should be derived from high time frame charts (not intraday)
B. Intraday trouble areas (ITA) still useful for trade management (adjusting stop loss etc.)
C. ITA anticipated to fail as DB unfolds
D. broken ITA provides excellent compounding opp.
- moving average crossover
- price relative to moving average/ trend tools
--> all work best in trending conditions, otherwise might provide false signals
--> no perfect tool
--> clear understanding of price action and market structure vital to success
HTF shifts in market structure often cause trending environments & set clear DB bias
- formation of higher high (HH) --> bullish DB (buy dips)
- formation of lower low (LL) --> bearish DB (sell rallies)
- price breaking sig. resistance or support offers clear DB
--> price closing below HTF support/ above HTF resistance
- bias forms ONCE structure is broken
- price under no obligation to retest
- Clear Break: momentum > retracement entry
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A THREAD ON @SarangSood
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
I am quite different from your style. I follow the market's volatility very closely. I have mock positions in 7-8 different strategies which allows me to stay connected. Whichever gives best profit is usually the one i trade in.
— Sarang Sood (@SarangSood) August 13, 2019
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
Anilji most of the time these days Theta only falls when market moves. So the Theta actually falls where market has moved to, not where our position was in the first place. By shifting we can come close to capturing the Theta fall but not always.
— Sarang Sood (@SarangSood) June 24, 2019
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
This week has been great so far. The main aim is to be in the right side of the volatility, rest the market will reward.
— Sarang Sood (@SarangSood) July 3, 2019
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
There is a difference between theta decay & fall in vega. Decay is certain but there is no guaranteed profit as delta moves can increase cost. Fall in vega on the other hand is backed by a powerful force that sells options and gives handsome returns. Our job is to identify them.
— Sarang Sood (@SarangSood) February 12, 2020