The Great Debate The Path to Riches Trade Delta By Ken Hodor

Common Comparison Delta Theta With scaling you only need to be close Make money With scaling you only need to be close Make money

Difference Comparison Delta Theta 0.30 * 1 per day or greater >5 times more bang for $ $85 margin Capable of using more capital more efficiently Make more money…quicker @30 delta only -0.045 per day $200 margin Make less money

Trading Delta Start trading Delta on stocks and options Excellent preparation for trading Forex 100 to 1 leverage Futures 20 to 1 or higher leverage

Turn $10,000 into $1 Million How I Made One Million Dollars Last Year Trading Commodities By Larry Williams Traded Delta

Jesse Livermore Trading Rules Enter trade in direction of the general market Only when market confirms direction Exit when trend has ended Never average down Never meet a margin call –get out of the trade Go long when new high…sell short when new low. http://www.jesse-livermore.com/trading-rules.html

Improve Odds Stochastic 80% RSI 80% Scale into position All at once is arrogant –no one knows the future Use 4 scales However exit if violates longer-term trend Use emergency exit

Stochastic trading From: http://xsprofits.com/Documents/Purple%20Crayon%20trading.pdf

GG 46 July ‘10 Call

GG Delta vs Theta Trading Results

Expectancy Trade Delta Trade Theta Greater than 1 Less than 1 Expectancy (Retail) = 1.38 Expectancy (IRA) = 2.36 Expectancy (Forex) = 10.2 Less than 1

The Expectancy Formula From our game example: Our Winning Percentage (W) = 33% Our Losing Percentage (L) = 67% Our Average Profit (P) = $250 Our Average Risk (R)--Loss = $100 W P (0.33) x 250 E = - L - E = 0.67 R 100 - E = 0.83 0.67 E = 0.16 From Rick Edwards Expectancy presentation on XSProfits.org

IRA Probability of Win 82% Average Win $ 378.00 Probability of Loss $ 378.00 Probability of Loss 18% Average Loss $ (122.00) Expectancy 2.36

Retail Trading SSO Probability of Win 73% Average Win $ 84.00 $ 84.00 Probability of Loss 27% Average Loss $ (37.00) Expectancy 1.38

Forex Probability of Win 83% Average Win $ 3,144.00 $ 3,144.00 Probability of Loss 17% Average Loss $ (250.00) Expectancy 10.21

Forex ROM(Return On Margin)

Emotional Characteristics Trade Delta Trade Theta Reward/Risk > 2 Patience waiting for entry and exit Trade any instrument on any market Trade any time frame Minutes, Hours, Days… Capable of full back-tested automation Reward/Risk <= 1 Patience waiting for small gain Trade only liquid optionable markets Trade weekly or monthly Cannot be back-tested

Delta Trading Summary Trade any instrument on any market Greatest leverage of time and money Like horse shoes…only better Just need to be close to direction Take profits while horseshoe in mid air You do not have to wait 5 times longer or end of month Use Optimal f or Kelly Bet to size position

Conclusion “Stand on the shoulders of Giants” The way to true wealth is learning to trade delta