M3 - The best strategy?

Discussion in 'General Discussion' started by Neri, Mar 19, 2018.

  1. Neri

    Neri Member

    Lately I have seen many videos of Capital Discussions. From what I understood, it seems the best strategy is M3/ Bearish Butterfly.

    This is like the only strategy you need...

    Is true? If so, what is the best way to learn it?

  2. Marcas

    Marcas Well-Known Member

    No, it is not.

    Do your homework or buy the course.
    ethanscott likes this.
  3. Neri

    Neri Member

    Well, I have been doing the Iron Condor in High Volatility and in low Volatility I have done calendars.
    what have you been doing?
  4. Marcas

    Marcas Well-Known Member

    I'm still in learning mode, doing mostly theoretical stuff. On practical side, on days like today, I practice new method of managing my positions- more active to keep p/l on same level.
    Wonder, where did you learn to trade IC's and Calendars from?
  5. Neri

    Neri Member

    I learned it from Dan Sheridan.
    About the M3, have you seen the video about the returns in 2017?
    It seems like a great method.
  6. Marcas

    Marcas Well-Known Member

    I suspected that. Most of folks here started like that. Do not trade big, please.

    I'm not sure, but I'd say I have not seen it. I know about good results announced there, I also know about some claims people made that trades were taking more risk than usual to get those results. I don't trade M3, but some people here do, maybe you hear from them.
    I encourage you not to take any claims at face value especially from people who want to sell you something. I'm not talking in particular about M3. You have to learn yourself. If you want to follow somebody's else for long time just find good money manager and enjoy your free time.
    Murphy Tan likes this.
  7. Neri

    Neri Member

    Well, I hope a M3 trader would pick this discussion. I want to hear from someone else about this trade, not just from videos.

    By the way... It is iinteresting what you said about Dan, why many people started there and they didn't continue with him? I wonder...
    Sunil likes this.
  8. Marcas

    Marcas Well-Known Member

    There are many ways to trade and Dan doesn't cover everything. Many of us find that other type of trading suits better one's personal needs.
    Dig in into past posts - you will find more on this subject.
  9. AKJ

    AKJ Well-Known Member

  10. Neri

    Neri Member

    Do I have to buy the bearish butterfly before that?

    Or I can start the M3. I have some trading experience.
  11. comintel

    comintel Member

  12. slyfoxhd

    slyfoxhd New Member

    I have started trading the M3 last year with mixed results so far. I have to say that I am far from being an expert trading this strategy, but I have been backtesting it for a while and then decided to go live with it last year.
    Unfortunately, just today I had to close my M3, because it hit max loss. The Vol spike caused my t+0 to sink quite a lot and since expiration was just two weeks away I decided to bail out.
    Like with all short Vega trades, the biggest draw down occurs when vol spikes even though you are directionally right.
    So I am curious how other traders handle this volatility environment?
    Also, what I would be interested in knowing is how other traders choose their entries for an M3. Is it based on volatility, market expectation etc? And finally, do you always manage mechanically, for instance when delta is exceeding your theta, although your bias on market direction tells you not to adjust?
    I also want to express my appreciation to this forum and all of those traders who contribute. I have been a silent follower so far and learned a lot.
    Thank you!
  13. status1

    status1 Well-Known Member

    Just out of curiosity what was your original DTE and how much was your profit on margin after 1 month ?
  14. slyfoxhd

    slyfoxhd New Member

    DTE was 46 days, I opened M3 when the market was down in February. I was hoping for volatility to come down which never happened in that extend. Also, the intermediate market rally didn’t help and I was hesitant to roll structure up immediately because I was fearing the market would be backlashing on me. After four weeks I was up a few hundred $ on approx. 30k margin (14 RUT lots) but never near my profit target which is around 5%. Butterfly prices were low compared to last years low volatility environment.
  15. Neri

    Neri Member

    Wow, this is a very interesting discussion. The market isn't stable right now. Those are harder times of natural delta traders. I wonder which is the best method for me to employ... John doesn't like the Iron Condors, but isn't it how you manage them? which deltas do you choose? About a course for M3, it is 1,500$ I have to convince my wife why I need the take out that amount of cash. If it would be cheaper it would be easier for me to take it.
    I heard about the JEEP trade, is it better than IC?
  16. Scott Slivnik

    Scott Slivnik Well-Known Member

    The trade setups mentioned in this tread are all good and each has their own pros/cons. John Locke intends for the M3 to teach one how to trade and encourages traders to modify the M3 to fit their personality after gaining experience. The M3 website trades are often taken into expiration week which involves too much risk for many so do not expect the returns posted on the website unless you plan to take trades into expiration week as well.

    The M3 requires frequent adjustments and may not be suitable for those with a busy lifestyle. I recommend the Road Trip and/or weirdor (jeep) trades to those that prefer a more laid back trade with fewer adjustments.
    comintel likes this.
  17. slyfoxhd

    slyfoxhd New Member

    I agree, if you can’t watch the market all the time (like me) it is too risky to hold M3 into expiration week. Lesson learned for me is to now close it between 14-21 DTE although you leave a big portion of theta decay on the table. In general I like the M3 because it keeps you engaged, develops your trading skills and challenges your creativity on how to make adjustments that suit your personal risk tolerance.
    The RTT Is also a good trade imo, I just need to put it on live now, just backtested it so far.
  18. G...

    G... Member

    Hi guys, did you watch the John Locke's recent video? His M1 trade is almost exactly same as RTT , then he developed M2, and then M3. I think M3 is better in his opinion.
  19. status1

    status1 Well-Known Member

    Sounds like you placed the trade in the middle of the storm
    The volatility did come down but maybe not from your trade reference point
    I think that is a difficult time to manage the trade
    One thing about the M3 I did not like was buying the call so that's why I have not even tried it

    I was just going to suggest what I learned from last year was to lower your profit expectations
    I looked over my trades and they were all profitable after 30 days but as I held on to them longer some of the profits got evaporated and even turned into losses and as most trades were only making around 2% a month I decided to use that as my exit instead of 14 or 21 DTE or whatever the rule calls for
    This way you always get out with a profit and can move on to the next trade and don't have to worry about making adjustments to keep it profitable
    Think about it, if you can make 2% per month that's 24% annualized that beats the s&p most of the time
    So I either get out after 30 days or 2% whichever looks more profitable at the time
    Even better if you could do 2% per week that's 104% a year Of course you are not going to be able to do that all the time but it can be done sparingly

    I recently watched the Amy Meissener presentation and even she is working with this magical 2% figure
    although she is using it with 14 days but it's a similar concept
    I think this is a good way to manage the trade by locking in profits early
    It's working well for me so far I have not had a loosing trade since then (about the middle of last year)
  20. Neri

    Neri Member

    I appreciate all the answers :).

    What about Ron Bertino and his Space Trip Trade?

    In his site I didn't see any reference for returns throughout the years... Does anybody here knows about him?

    Thank you all again for replying.
    Last edited: Mar 21, 2018

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