There's a proper tool for every job that needs to be done. Sometimes it's necessary to change to a different tool to accomplish the task at hand.
I received an email from one of our subscribers yesterday inquiring about the SPX Weekly Iron Butterfly. The question was:
I am wondering why I haven't seen the Iron Butterfly lately. Have you decided to stop recommending it? If so, why?
First, I would like to thank the reader who took the time to email me with that question; your feedback and questions are very important in my goal to keep you fully informed on my trade recommendations and trade plan. For the benefit of all of you, I thought I would post my response for those of you who may have the same question.
In the article I posted on May 29, I mentioned that I didn't feel the market conditions were conducive to the ATM Iron Butterfly. Therefore, I stopped recommending it for the time being. There has just been too much intra-day volatility to trade this strategy right now. I felt there was too much risk to potentially have more losing trades than winners which is not in my trade plan.
I still feel the intra-day moves occur too often. There are such big swings, that I have removed the weekly SPX Iron Butterfly from my trade plan at the moment. I mention in the header for this article that there's a proper tool for every job that needs to be done. Sometimes it's necessary to change to a different tool to accomplish the task at hand. As someone who trades full time for income, the weekly Iron Butterfly is just not the right tool right now to accomplish my trade plan and income goals. I do not recommend it for a live trade at the present time.
I have not abandoned the trade forever; and will re-incorporate it into my trade plan when I feel the market conditions are more favorable for the strategy. I encourage any of you with a paper trading account to continue to place the trade every week, as per the trade guidelines. When I feel the market is in a "safe zone" for the trade, I will begin recommending trading it live again. Until then, it's just too much risk to put your and my hard earned cash into the strategy.
Stay keen on your risk management and trade carefully,