Spotlight: Afraid to Trade.com
Thanks to Trader Mike, I came across a relatively new blog: Afraid to Trade.com by Corey. I've read the blog, found it educational and I like it. Just in case you wonder how the interesting blog name came about, the answer is in here: "My goal is to create a community dedicated to reaching out to those who have been burned by the market or are anxious about risking their money to make money in the stock, options, or futures markets. Together, we can share and learn how to overcome those nagging fears that keep us from achieving our highest potential."
Some of my favorite posts are:
The four fears of trading. Excellent links for those interested in digging more info on this topic
The “Sweet Spot” in the Data: Trend Beginnings and Playing for Large Targets. Trading pullbacks in trending market.
The Four Core Types of Trades. Corey talks about trading Breakout/Breakdown, Retracements, Reversals and Rangebound Fades
The Four Guiding Principles of Market Behavior
How do my Emotions Affect Trade Targets?
Some of my favorite posts are:
The four fears of trading. Excellent links for those interested in digging more info on this topic
The “Sweet Spot” in the Data: Trend Beginnings and Playing for Large Targets. Trading pullbacks in trending market.
The Four Core Types of Trades. Corey talks about trading Breakout/Breakdown, Retracements, Reversals and Rangebound Fades
The Four Guiding Principles of Market Behavior
How do my Emotions Affect Trade Targets?
posted by Simply Options Trader at 10:24 AM PERMALINK
2 Comments:
Hi,
I'm new in options. How do you set stop loss for IC trade with IB (tws platform) ?
Should we set the 5 % risk rules, i.e . risking 5 % from our account ? Means if we got credit of 1.5 then we should close the position if the spread is 2.25.
Or other method like pegged stock stop loss (in TWS). Let's say if the short strike 760, then if the underlying reaching 750, we should close the position ?
Appreciated if you could explain in detail stop loss using IB platform for credit spread or IC trading.
Thanking you in advance.
Hi,
For credit spread or IC, you can either buy back sold leg or simply close the entire spread. You need to work out the risk and reward before entering. E.g bear call spread: sell 760, buy 770 and your credit is say 1.0. This means that you are risking $1000 (diff bet strikes) to make $100 and your max % profit is credit/(risk-credit) = 100/900 =11%. This is not a good risk/reward ratio and if you should decide trade this spread, you may want to set to buy back if stock is 10 pts away from sold leg. Again this is only a suggestion. You need to simulate the P&L and probability of it happening to see if you can stomach the loss even if you set it 10 pts away from sold leg.
As for creating stop loss in IB, once you are filled, you can click on ask price (to buy back)of the spread or sold leg, attach contingent market order, and set the stock price trigger at which the sold leg or spread can be bought back.
You may want to note from my earlier post that I have problems in IB buying back just my sold leg only and now am now waiting for their reply.
Hope this helps
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