<div class="bbWrapper">Hi,<br />
I am a beginner trading in options and one of the issues I seem to run into a lot is trade going in the right direction but I have no clue when or how to take profits. Often times I overstay my gains and end up losing money on what should be a profitable trade. I am not a full time trader so I cannot keep track of my portfolio regularly, so I have tried doing trailing stops and stop losses but I would like some guidance on the same.<br />
I am open to taking a course or joining a trading group if it helps me get the discipline and keeps me honest.<br />
Thanks<br />
Bhaskar</div>
Managing trades
- Thread starter Bhaskar
- Start date
<div class="bbWrapper">If you follow some of the strategies that Tom does with the spreadsheet you see that he has some profit targets so you need to set profit targets not just stop losses or trailing stops otherwise eventually you will loose unless the trade expires with a profit<br />
The thing with the 0 DTE trades is that you have to be more active trader so you may have to do longer term trades<br />
You can try <a href="https://www.sjgtrades.com/" target="_blank" class="link link--external" rel="nofollow ugc noopener">https://aeromir.com/sjg</a> if you want longer term trades<br />
Another issue is your brokerage need to be able to do OCO orders on spreads which may be difficult to find other than TOS</div>
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DaveN
Member
<div class="bbWrapper"><a href="https://forums.aeromir.com/members/3997/" class="username" data-xf-init="member-tooltip" data-user-id="3997" data-username="@Bhaskar">@Bhaskar</a>, a concept for consideration as your options trading grows is to consider the underlying. This will come in time as experience grows, but it's something to start getting a sense of.<br />
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Options, of course, are derivative instruments, and option combos, even more removed from the underlying. But in the end, keep in mind the market underneath your options trade. What movement, or lack thereof, will offer you more profits, or put your trade in distress. Look at support and resistance levels in the timeframes you are trading and see how your option combination fits over that.<br />
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I've found a lot of help in doing this. That perspective of the market has also been helpful for me in my trade entries as well.<br />
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When the market does "x" I have this sense that I should stay in my trade, or when it starts showing weakness, or strength depending on what I have on, I understand that it's time to take profits, or know that I can ride it out.</div>
<div class="bbWrapper"><a href="https://forums.aeromir.com/members/3997/" class="username" data-xf-init="member-tooltip" data-user-id="3997" data-username="@Bhaskar">@Bhaskar</a> - I am newbie too, having started to seriously study trading options for income about 6 weeks ago. I've just been selling cash secured puts as beginning of a wheel strategy, and I do it with small positions in puts on a number of underlying stocks for diversification. So far I'm pleased with the results, although the rising market has helped a lot. Average annualized gain realized in June is 51%! Many of the posts on Reddit advise taking profit when a trade reaches 50% of its max profit potential. That sometimes actually comes fairly quickly. I think the logic is that you never know when the market will turn against you, so when you have an actual profit, "take the money and run"! Although this sounds like you are giving up the other half of potential profit, that is not really the case because your margin (collateral) is now released to back another trade. In effect you are recycling your collateral. In practice I've been taking profit at ~70% of max, but in a less robust market I could back off to 50%. Still learning the ropes! It makes some sense to have a goal to recycle your capital as often as possible, although this does take a lot of effort.<br />
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An easy way to do this is to right away place a GTC order to buy back the puts at the price that represents your desired % profit. That makes harvesting the profit automatic. This might not work with a complex trade, though.<br />
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Very important to document each trade and its outcome so you can see what works for you & what doesn't.</div>