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When trading options people forget at the end of the day you are trading the underlying stock. An options trade is simply another way of expressing a trade. So starting with some simple price action techniques makes sense before you even pop up an options chain. Check out this video guide to my options methodology.
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Buying single options is the most simple and basic of concepts. Buy a call when you’re bullish, a put when you’re bearish. It’s what most retail traders do.
While seemingly “simple”, buying single puts and calls effectively is not “easy.” It’s arguably the most difficult way to consistently make money. Everything needs to go right. Does This Sound familiar? “I bought a call; ABC went up/I bought a put; ABC fell. Why’s my trade in the red?” Its ok I get this question a lot. So here is what I am going to show during this webinar you so you can fix this: 1. A simple way to know when it’s advantageous to buy single options and when it isn’t 2. How the Greeks affect your strategy. You don’t need to be a math wiz for this. It’s more about the relationships, less about calculations. 3. The correct way to help select the right strikes/expiration dates 4. A quick change that significantly increases your probability of success 5. A simple method that lowers the trade’s cost and makes the trade more forgiving And Much more...... Naturally, there are trade-offs, but when you use my techniques they are generally a reliable approach to a bullish or bearish view on a stock or ETF. So click play and watch the presentation. If you want to learn how to find trades just like this one go to our homepage put in your info and we will send you our free report.
If you want to learn how to find trades just like this one ...Click the home button enter your info and we will send you our free report.
Good traders have stop-out points for trades, the point where you’re “wrong.” The aim is to experience a paper-cut. i.e., a minor loss, as opposed to getting your arm chopped off having a trading catastrophe. A good methodology suggests a clear-cut point where your trade thesis has broken down, you admit you’re wrong and it’s time to move on. Having said that, the market has a certain amount of randomness and “natural vibration.” Some of us at PTL give our trades a little extra “wiggle-room” to account for this. Over time we’ve found this keeps us in trades where we would have normally gotten stopped out, thereby avoiding a loss in exchange for a win where we typically get 2:1 or better on a trade. Of course, trading records need to prove this is worthwhile so that the periodic extra wins pay for the tradeoff in building in extra room in the trade, and then some. Naturally, there’s no “free lunch.” The tradeoff in doing this takes one of two forms:
To arrive at the wiggle-room amount we start with 10% of the standard daily ATR (dATR). Once we have our basic stop-out point based on the core principle/trading strategies we use, we then add on 10% of the dATR or an adjusted fraction of that. Our rule-of-thumb is that the additional cushion should be no greater than 20-25% of the initial stop-out amount. So if you’ve got a “basic stop” of $0.50 and 10% of the dATR is $0.20, we add on $0.10-0.12 to the trade beyond our core stop, since those amounts are 20-25% of $0.50. We’ve found this methodology works very well for us and enhances our P&L. To evaluate its potential for what you do, over the course of a month or two, be mindful of the instances when you’re stopped out and determine:
Give it some thought!  Some beginning and intermediate traders have learned chart patterns, gained an understanding of trend, and can create trade setups based on a “reasonable” methodology. But success eludes them because they can’t “put it all together.” A core market principle, a strategy and tactics is only step one. Next is process and execution. You can have all the theory down, but you then need to put it into practice.  The founders of Precision Trading Labs had a common trading teacher & mentor. Something he said to us on various occasions has always stuck with us, and made us better traders: “Learn to love your losses.”
“WTF?!” you say? Here’s the 411: His comment was a shorthand way of saying to have a solid risk management plan, and following it would make us better and calmer traders for it because we’ll know in advance that all of our losses will be small, manageable and already planned for:
A conversation between two of our traders about common mistakes beginner traders often make. Do any of these problems sound familiar to you? |
AuthorFull time traders and teachers.. Archives
April 2019
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