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Gumball

New to Options

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Hello everyone,

First forum and new options trader for about 6 months or so.

I have a question for the long term option traders. How do control your emotion and not exit a trade when it goes against you, but you know the direction you chose is the right one? I have had some winners and loser, but it seems like when I make progress forward take several sets back. I have exited trades to minimize my loses only to wait to get back into it later Any advice would be appreciated.

 

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I have heard some traders who swing trade say they never get out of their trade as long as the premise of the trade is still intact. It is not that you think you have the right direction, but does the price action still support the trade. You set your stop where the price does not support the trade anymore and your risk/reward is met.

Most suggest place your stop with the broker after getting filled on the trade. If your broker allows, you can even place both a stop and a target. Then, if you choose, you can just let the trade run its course.

Remember, you can make money with a 50% win rate if you have a risk/reward somewhere near 1:2.

Edited by PAOptions

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  On 8/20/2018 at 9:59 PM, PAOptions said:

I have heard some traders who swing trade say they never get out of their trade as long as the premise of the trade is still intact. It is not that you think you have the right direction, but does the price action still support the trade. You set your stop where the price does not support the trade anymore and your risk/reward is met.

Most suggest place your stop with the broker after getting filled on the trade. If your broker allows, you can even place both a stop and a target. Then, if you choose, you can just let the trade run its course.

Remember, you can make money with a 50% win rate if you have a risk/reward somewhere near 1:2.

Its crazy because most of the resources that I have read and learned from never mention the use of stop losses or how to use them to protect your trade. Its the same premise as using support and resistance I assume? I think that is something that I will really dig into more. Are there any resources you could point me to help expand my knowledge?

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I trade price action strategies using options only for leverage. I do not trade complex option strategies like iron condors. If that is what you do, I wouldn't have a clue about stop losses.

Many traders who trade credit spreads use risk/reward stops, since you can lose a lot more than you earn.

What do you want to accomplish with options? Are you interested in the complex strategies like iron condors and butterflies?

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  On 8/21/2018 at 4:12 PM, PAOptions said:

I trade price action strategies using options only for leverage. I do not trade complex option strategies like iron condors. If that is what you do, I wouldn't have a clue about stop losses.

Many traders who trade credit spreads use risk/reward stops, since you can lose a lot more than you earn.

What do you want to accomplish with options? Are you interested in the complex strategies like iron condors and butterflies?

My plan is to trade simple call and put options until I build my account to enough to learn even more complex strategies. I don't see my self moving to the next level until I'm confident at the level I am currently at.

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