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Does Trade Apgar Work? – 2016 Directional Option Trade Data

Ever since I came across to Trade Apgar in early 2017, I wanted to know if this method would actually work for the type of option trades that I do.

Fortunately, I already had some directional trades done in 2016 (Double Diagonal / Diagonal trades) so I used the “Ondemand” feature in Thinkorswim to analyse what I did.



I used the following 5 indicators to examine each trade. Just to clarify, all these 2016 trades were placed WITHOUT the knowledge of Trade Apgar so some of the trades were carried out with even zero Trade Apgar points!

  1. 50 days and 100 days moving average
  2. MACD
  3. Money Flow Index
  4. TTM Squeeze
  5. Directional Movement Indicator (DMI)

Trade Apgar scores for 2016 Directional Option Trades (Diagonal / Double Diagonal)

Trade Apgar analysis 2016

Take Away

  • Directional trades with Trade Apgar score below 4 points had no edge – about 50% winning rate which is the same as flipping a coin.
  • The Profit and Loss (PNL) for these trades with Trade Apgar score below 4 points had negative PNLs.
  • The three wins with Apgar score zero points are likely outliers. I really go lucky on those ones.
  • The winning number was almost twice as much as losing (29 wins vs 16 loss), yet the PNL was negative.
  • Do not trade blindly! Despite the small sample size, it is clear that directional trade when done blindly without using any indicators was a bad idea.

 

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  1. […] I mentioned previously, Trade Apgar test really opened my eyes about how to set up low volatility trades, which were […]

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