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Interpreting Indicators

Changes in indicators means a change in pricing. Order flow buys and sells different parts of the options volatility surface, pricing the vast range of outcomes. 

By using indicators to see where and how relationships have moved alongside historical comparisons, traders can craft a strategy that matches the opportunity the market place offers. 

Below you'll find possible ways to interpret changes in pricing and example trade structures to use. As always, consult with a professional financial advisor if you have any questions. 


    • Position sizing is as important as pricing. Your size should represent not only your confidence in the trade, but your ability to withstand a loss or drawdown. 

    • Preserving capital to trade another day is an absolute priority, and bad sizing is the fastest way to lose this.

    • Metrics like the Kelly (or half Kelly) criterion are useful to frame the question, but also recognized as simply an estimate. The real world is path dependent.


    • Your trading strategy should reflect your goals. Beware of taking too much risk with money you need in the short term. Conversely, taking too little risk on long term investments may create a shortfall.

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