I just joined Bruno’s new service for Rhino trades. He has a fresh interesting outlook on the Rhino trade that interests me. I highly suggest it for anyone that trades Rhinos. I think it’s $900 for the yearly membership today. The Baby rhino looks like a nice addition which I haven’t traded yet. I need to diversify a bit and I’d love some more short term trades as I am not traveling and basically at the computer all day. I’ve started to look at some simple rules based trades to add to my repertoire as well. Just something that’s low stress and management that has a very consistent track record. Specifically the super simple spreads which I just saw a 15 year back test that was fairly impressive. I want to add some tweaks of my own (specifically a STT like addition to it).
Coming towards the end of Aug, I felt like my trading and the methodology was “a solved thing” but as I started getting more time late August and I started watching fellow trader videos/presentations and reading group conversations, I found ideas and data that proved that wrong. I’ve been inspired recently I guess. I mean, the Rhino is a very low maintenance type trade that’s both resilient and very powerful. I didn’t really want to put any serious capital outside of it in other trades and I felt like I hadn’t really needed to explore much more on the Rhino trade in specific. Find something that works and is resilient and leave it alone type thinking. But I think there may be interesting things that we can take away from the new Road Trip Trades (RTT) while adding Space trip Trades (STT) in for downside crash protection. The Rhino has a serious problem with runaway markets to the upside and addressing that weakness would be nice while not over exposing the down side. I don’t know if the STT would help in that as it’s meant for Crash protection, but I want to explore it. I also am not loving the calendar adjustments on the upside and have been mostly using call BWBs.
I’ve had a mostly unemotional hands off approach to trading it since the summer. I follow the trade plan and mitigate risk as needed. I haven’t profited much since the meteoric rise from the February lows since it was a 33 % or so move. The way I trade the rhino doesn’t allow for profit in a runaway market like that. I mean, how could I expect to profit much when each cycle had a 5-7% up move. It’s just not possible for me to make money in my trade plan for the rhino if the market has 7% up moves in each cycle of the trade or if it rises 33% in 5 months 🙂 All that said, I am looking to add some strategies for my upside and I’ve started to add some mechanical strategies I used to do.
Here’s my September trade that’s basically closed down pending any significant down move before expiry, it’ll be closed at a loss. If I get a 5% down move ANY time before Sep 20, it’d be a profitable month 🙂 If I get lucky and have a 10% move, I’ll be up massive amounts.
Here’s my October trade
It’s up a tiny bit and I think it’s in a good position for the cycle. My upside risk is quite low and any decent down move will get it right in the tent (hopefully later in the cycle so the T+0 builds in the tent).
Finally my SPX October trade
This one is my biggest trade with the most potential. If we get any 4-5% move in the next 30 days, It stands to make several hundred k. The upside risk is low but I’ll have issues if it sits between 2170 and 2200 and will have to address that sag.
Interesting to know your thoughts about adding something like super simple spreads.
How has M3 performed this year compared to Rhino and what are your thoughts in general about these 2 trades. I back tested M3 for 2014 and 2015 yrs ( I know not enough still working on it) and really like the flexibility and ITM put we use for upside.
I think the M3 this year so far has been very modest (single percentage?). Someone can post what JLs result was. It wasn’t a lot. I think his entire weekly trading webinars are up 9 percent for the year (including rock, v condors, m3 and bearish butterfly).
I know Bruno was successful with the rhino through the summer. I wasn’t. He had some good entry timing (post Brexit for sept expiry) and he changed the rules a bit with utilizing road trip trade techniques. Those have pluses and minuses re downside. whereas I followed more traditional rhino technique. Had we ended up near 1200 or 1190 anytime after the huge rise, I’d have crushed. But 1230/1240 killed the trade. The move up was too big.
As for super simple spreads, I’m just liking the simplicity of it and it’s got solid back tested results. More of something to put unused cash to work. I also like the condor JL does and how he messes about with it until expiry.
To add above it is really commendable that you have reached a mechanical state in your trading keeping emotions out, given the fact you are trading some big size positions. How difficult it was/is to reach this stage.
Once again it is good to see you posting back it is really helpful. I personally think there is lot to learn from you here.
Thanks Raj. Honestly, the toughest thing about trading is dealing with yourself. I’ve been trading bigger and bigger positions since 2012 and my biggest battle was the emotional part. Making decisions that made sense and were risk appropriate yet ended up costing a car can wear on you. It was my biggest single stress–> decisions made vs the immediate consequence and the second guessing. That’s why it’s so important to have a plan, back test it a thousand times, and follow it without emotion. I think I’ve just arrived wrt to that. I used to be a successful professional gambler back in the old days and we’d always max out pos ev situations. When I approached trading the same way, I failed miserably because of my position sizing and letting what I properly calculated as pos ev, affect my decision making process with adjustments. It lead to slow adjustments and out sized losses. Over time, it’d work out, I have no doubts, but by that time, you would be ruined. Risk of ruin is important. So all in all, have a plan, trade it, and as you get bigger in size, be wary of yourself and your own bias.
Thanks for detailed reply. I agree trading big positions will be a emotional roller coaster for me. Based on your input, I will spend my time and energy first to master and back test Rhino trade. It looks like it can be a regular bread and butter trade once mastered. Create a trade plan and stick to it.
M3 to your point may not be as good as it is made out in general forums.
I did join Bruno’s Rhino service so it will be interesting. Though at high level not sure if there are clear instruction about his new guidelines and how he differs from original Rhino in one video or document.
One question about your SPX October trade . Are you not worried that t+0 line will sync with passage of time (sea of death).
Thanks!
The M3 is a great trade to learn how to trade and it’s resilient. I just prefer a BWB to using a call as a main idea for the trade. For big positions, I find the Rhino just easier to manage.
As for the sea of death, it’s something to keep an eye on and it could be a problem closer to expiration but it’ll always exist in this type of trade. I realize it’s a big big trade and that the sea of death alone could cause a hefty loss but I have to think of it the same as a 1 unit trade. My general thesis for this trade in particular is that we won’t be spending a lot of time in this area as the market is so historically compressed (BolLinger band width) and generally that is a prelude to a very large move (in either direction) and a return to volatility. The last time it’s been this compressed is 1995! So my belief is that we’ll experience a larger move soon probably as we get closer to the US election or perhaps to some unexpected news item. Also, JL believes that people are hedging at a fairly big amount re option vol skews, people are buying protection below ATM and it’s making SPX butterflies very cheap. In case that doesn’t give it away, I do believe the move will be to the downside but that’s all gut and I guess fairly obvious of a view given our 33% up move.
Bruno seems to be incorporating more of a RTT method to his version of the Rhino. I imagine he’ll release some proper guidelines soon. I am interested to know more about his baby rhino as well.
Michał, zwany spodkiem Posted on Skąd taki pomysł, że dym? Były jakieś konwjotersyrne treści? Chyba nie. Dobry poradnik jest dla newbsów. 2 thumbs up.
Interesting to know your thoughts about current market. Hopefully Bruno includes his guidelines soon. As far as M3 goes yes agree, I did learn quite a bit doing backtesting last 2 yrs. I guess my main question/concern is which one to put all time/ energy to master first and it looks like based on our experience in terms of Rhino being easy to manage makes me lean towards it more. One think I have learned in hard way it is really waste of time and money to jump from one system to another without mastering and focusing on one. Other thing to add is that for M3 min is 50k planned capital required which is on higher end for me to start when I got live (yes can work with lower with IWM but don’t want to complicate). With Rhino it is 25 K planned capital.
Looking forward to your posts about your thoughts on future Rhino positions without the upside hedge from futures and call hedges .