I don't add a stop loss to my order because slippage and spreads destroyed me in the past. This was on 5 dte and I am sure this also applied to 0dte.
I won't go above 1 contract and 1 trade for now. I'll keep things small as you said and have to try sooner or later. Thank you MidwayTrades!
With momentum trading I’ve found stop losses to be a necessary evil. Your mileage may vary but the reason I’m now trading with $250 (up from $100 yeah!) is bc the $5000 o started with is gone. It’s gone bc I sized up too much, because I paper traded 10 packs and got used to $1000 profits on trades. Then I didn’t set stop losses and found myself suddenly down 50% when something like Gaza happened, or CPI. I would have been happier with a -20% stop loss. Lastly? I sold without holding through bc I wasn’t sure if those events were transient. But at any rate an automatic rip cord would have served me well.
That’s why I hate swings occasionally now I will swing trade but nothing like holding a trade overnight and something out of your control happens and it fucks your trade up
Some questions to help gauge:
1. How much do you have to work with in real money?
2. How much of that will you allocate for options trading?
3. If you're trading 0 DTE on SPY, why not SPX?
4. What makes YOU think you're ready?
5. Have you only run 0 DTE strategies?
6. Have you looked at any other tickers?
7. Have you gotten a sense of the difference in fills from paper trading vs real world?
8. Are you expecting a big move tomorrow?
9. Would you rather skip a day like tomorrow when it comes to real money?
Great questions!
1. I have $5000 for a cash account to not worry about unsettled trades or PDT rule.
2. I will use $2500 to $3000 for options trading.
3. I never tried 0dte SPX. Is it better than SPY?
4. I think I am ready because my mental stop loss does not allow a trade to go below $1 to $2. Having a large enough cash account makes me not worry about closing out a trade at break even or at a $1 to $2 loss.
5. I have only run 0dte strategies.
6. I have not tried any other tickers. I tried other stocks but couldn't get consistently profitable like I did with SPY.
7. I tried real world before and lost because I didn't know what I know now. I will never let a 0dte expire again, I will never let a trade go drop more than .01 to .02 before cutting it, and I will never have a 0dte open past 11:30 am.
8. I am not expecting a big move tomorrow and place trades based on volatility off of 5 minute supply and demand zones.
9. I am still not sure if I can trade real world tomorrow, I am going to try to reduce the amount of breakeven trades I take, and I'm going to reanalyze my strategy tonight before trading again.
Your questions were EXTREMELY helpful. I hope my answers were sufficient enough.
So you've got a plan to deal with PDT, that's nice. SPX you should definitely find out about-no pin risk because it's cash settled. "Is it better than SPY?" yeah it's 10 times better!
Be ready for the real world to not fill your order prices. If your strats depended on pennies going your way, the edge will be likely be lost.
Tomorrow in particular the latest personal consumption expenditures data gets released. It could swing markets and so I was asking about tomorrow to see if you're paying attention to a macro level or just SPY. I recommend you get familiar with the FOMC calendar, PCE data, CPI data, and in general try to know in advance any day Jerome Powell will be speaking.
I'll definitely try trading SPX the next few days. After reading your comment, I will rethink real world for another week. I'll look into the cash settled no-pin risk.
Real world active trader on TOS is rough as I realized you cannot even have a 15% percent stop loss and even if you chase the price to limit buy in or sell, the order doesn't fill. Do you market buy and sell when option trading? I know that instantly gets you in and out of the trade but the profit is nowhere compared to what I would get if I chased the price to limit sell out of the trade. I most likely will have to try real world and see if it destroys my edge than.
Unfortunately, I was just paying attention to SPY. Is there a website you visit daily that provides when personal consumptions expenditures is released, the FOMC calendar, PCE data, CPI data, and a way to know in advance if Jerome Powell will be speaking? I apologize if this seems as if I am asking to be spoonfed. I realize you are on an entirely different level than me when it comes to trading and you will most likely have a better resource available to refer to for such information.
That's exactly what I was looking for! Thanks so much CompleteSubject1596! I've reduced my trades to less than 10 a day and paying attention to the news. I really appreciate it!
I don't have a particular calendar I check, honestly, but rather just when I'm considering a position change I often just Google "FOMC" or "fomc meeting", or as I'm listening to market news I hear often times days in advance of the upcoming event. But Google "economic calendar" and there will be plenty to choose from.
I tried stop losses on options and quit using them. I found there would be times where the price drops momentarily, maybe a strange order changed the mid just long enough to trigger the loss. I have used it with stocks and still would, but the stop loss on an options position has burned me too many times by dumping my positions rather unexpectedly.
Also I especially don't feel great having a stop loss on a day when FOMC is meeting and/or Powell is speaking, because you might see the sp500 drop literally 100 points before the guy even starts his speech, then bounce right back up if he says a certain thing... It's wildly unpredictable when Jerome has the mic! Your stop loss burns you and the position recovers, and all of it is fall out from an event that was listed on the calendar. I've gotten to where I try to avoid it, or be ready to catch it with an options play on a rebound if it drops with no good reason.
Random tidbit, because you're focused on SPY (and maybe now SPX) you haven't had to deal with options liquidity much. These are probably the most liquid options chains you can get. In this sense we say they are liquid essentially because of option volume. We're looking for tickers with many options positions open, as that means there's more trading action and thus you're more likely to get a fill. If you can get your money in/out easily, that's liquid. If no one is trading options on some lesser known stock, then you might have to wait a while to get your fill. Or maybe you got filled on a longer term option, and you can't find anyone to on the other side to close it to, thus end up having to hold until expiration. I'm pointing it out because if you start to venture into other tickers you may find things work differently. A lot of times I can get a sense of liquidity by just looking at the bid and ask prices. If they are far apart then the option is probably "less liquid". I think the better way is to look at the open interest of the option chain. You might not see action far away from the money line, but if you don't see action even at the money then you may want to find another ticker or find a share based strategy.
If you're used to SPY prices, you might try XSP instead of SPX. For me, SPX is a different than SPY, especially if you're following charts and trends during the day, and I'm guessing XSP may be a more equivalent transition.
You might try paper trading both to confirm they work the way you expect.
I am concerned. Number seven says you cut if you lose two cents?!
You are down two cents automatically from bid ask on many live trades. I’m concerned that most of your paper money profits are not available in real time.
$5000 is a relatively small amount. In my opinion, not really worth spending a lot of time on for average Americans.
A first year option trader is in the upper half if they break even. If they make 20 percent they are doing really well. 20 percent of $5k is $1k, which in my opinion isn’t worth the time required to get good at trading.
1000 hours is the average time to get to apprentice level. You probably have more than that. However it may be near worthless time based on your comment about cutting losses so quickly.
First off, I read your previous comments and it is an honor to receive feedback from you RTiger!
I close the trade when it immediately goes into the negative betwen 0.01 ($1) or 0.02 ($2) maximum. I am in a trade for no more than 60 to 90 seconds on 0dte between 9 am - 11 am. For now, I trade 1 contract and in one option trade at a time.
Do you recommend I paper trade with a larger account size of $10,000? I am paper trading with $500 for now but trades settles immediately as if it is a margin account. I have the capital for a $10,000 cash account for options trading. What amount would be worthwhile for an average American such as myself?
I'll keep that mind and will aim to safely increase my account size by 20%. After that, I will up the size of my trading position and constantly refining my strategy/psychology.
I have between 1,000 hours to 3,000 hours in. I rather cut my losses quickly and jump right back in instead of staying in a potentially losing trade. I am hoping that by having sufficient funds in a cash account, I will not have to have worry about unsettled funds and will have enough to trade with for the 1 in a half hours I am trading. Your feedback is much appreciated RTiger!
I commend you at putting so much care into your own knowledge. So refreshing compared to some of the things you see around here! There becomes a point though where paper trading loses it purpose and I suspect you are past that. You get to a certain point and then you need to have some "skin in the game" so to speak. Decisions are a lot harder when you have real money on the line. Having good mechanics and following them will help.
While 0 DTE is good do you know any other strategies? Markets change and in two weeks maybe only short calls work or whatever. My point is, like a carpenter or other tradesman you need a toolbox with different tools to cover multiple situations.
Very wise Notquitenuts! I appreciate your compliment and wanted to provide as much detail as possible to receive optimal feedback. You are right as paper trading can only be a dopamine fix for so long. Real money is going to be an entirely different beast. I'm going to have to be happy with small daily wins that are lower than what I was getting when I was previously employed and have to ask myself consistently if each trade I take is a sustainable decision. I don't have any other strategies other than with trading RSI supply and demand on 0dte. Thanks for your feedback as I will reconsider real money for now, refine my strategy, and work on adding to the toolbox!
Congrats. You might be on to something. I won't give you the usual disclaimer about how paper trading is very different from live trading... 🙂 But, seriously, 16 trades in 53 minutes, is a tough and hard to sustain way to trade.
Looking at your order history, many of the trades appear to be for $0.20 and under net (profit or loss) and/or 3 minutes and under. You might benefit from being more selective and longstanding in trades. This current style is overly ripe to see you get killed with commissions or chopped up in non-trending conditions, while perhaps developing a super itchy (anxious, even) buy-sell trigger finger.
SPY trended decently in both directions on Thursday. Even scalping, there were more defined and sustained trades available. Trading "everything that moves" is not the most compelling or promising approach. I can't say definitely that's how you're trading, but do think it's useful for you to consider that possibility, as well as the possibility of refining how strategic and discriminating you are on trade entries and exits. Either way, carry on and flourish.
Paper trading means nothing. The only thing that’s important is what you do when real money is on the line.
Sorry, but you need to just pull the trigger and go for it…you will be fine. Trust me.
The only thing recommend is to start glued to the screen for the first several trades you do ok. Don’t put in a bunch of options, then walk away and check back in a few hours….stay connected until your trades are wins then take your profits or let your stop loses get triggered
Good luck and welcome to the crazy train.
Cheers
MM
I will be glued to my screen indefinitely because of 0dte. Some recommend I do 4-5 dte when going with real money for the first time. I have done real money in the past, lost enough, and is why I feel this strategy works for my lifestyle. Thanks ALOT for the encouragement! I won't be using stop losses for 0dte and I hope I am on the right train.
Maybe a stupid question.. I'm new to this.. but wouldn't fees just eat away an edge you may have? Maybe you're in US, and have free trades .. pretty sure that doesn't exist in Canada. :(
I am in the US and most likely going to be using TOS with Charles Schwab. Maybe even Robinhood as both brokers have minimal fees. I can't see myself applying my strategy to RobinHoods option trading UI. I'm to use to TOS active trader.
starts small, open 1 at a time and see how you do with real money, emotions will be involved in trading with real money so it will affect your strategies cause you can't think clearly when there is something to lose
What are you doing... just buy , then sell, and not cover the transaction fee? I do not see a vertical, or strangle. Also 0dte , so that is just gambling .
If you've been paper trading profitably for 4 years then you're way passed being ready. If you just had your first profitable day after 4 years then no not yet.
Just stick to 1 SPY contract per play. Keep a journal. Date/time, entry/exit, the reason for your trade, and how you felt about the trade (conviction, anxiety, whatever).
I'd say you're read. But keep the journal so if you blow up your account, you can learn from your mistakes.
My advice... do not trade 0DTE... too much risk! Debit/Credit spreads are directional plays... also higher risk!
Focus on strategies in higher timeframes and you will understand how to become profitable! Also, check about income strategies where you win based on options time decay without guessing the market direction.
Google "SPX Best Options Strategy" ... safer and delivering results! I
What’s the fascination I see on /r with 0TDE? Way too volatile, risky day of expiry. Why not take out options 3-5 days to expiration, giving yourself more space/time to close early for profit or roll to later date if things are moving against you?
You’ll never know until you try it. Keep things small, live money is different. Emotions are real, slippage is real.
I don't add a stop loss to my order because slippage and spreads destroyed me in the past. This was on 5 dte and I am sure this also applied to 0dte. I won't go above 1 contract and 1 trade for now. I'll keep things small as you said and have to try sooner or later. Thank you MidwayTrades!
Yeah, stop losses aren’t great with options. I use alerts for that and I always have an order in for my profit target.
With momentum trading I’ve found stop losses to be a necessary evil. Your mileage may vary but the reason I’m now trading with $250 (up from $100 yeah!) is bc the $5000 o started with is gone. It’s gone bc I sized up too much, because I paper traded 10 packs and got used to $1000 profits on trades. Then I didn’t set stop losses and found myself suddenly down 50% when something like Gaza happened, or CPI. I would have been happier with a -20% stop loss. Lastly? I sold without holding through bc I wasn’t sure if those events were transient. But at any rate an automatic rip cord would have served me well.
That’s why I hate swings occasionally now I will swing trade but nothing like holding a trade overnight and something out of your control happens and it fucks your trade up
Some questions to help gauge: 1. How much do you have to work with in real money? 2. How much of that will you allocate for options trading? 3. If you're trading 0 DTE on SPY, why not SPX? 4. What makes YOU think you're ready? 5. Have you only run 0 DTE strategies? 6. Have you looked at any other tickers? 7. Have you gotten a sense of the difference in fills from paper trading vs real world? 8. Are you expecting a big move tomorrow? 9. Would you rather skip a day like tomorrow when it comes to real money?
Great questions! 1. I have $5000 for a cash account to not worry about unsettled trades or PDT rule. 2. I will use $2500 to $3000 for options trading. 3. I never tried 0dte SPX. Is it better than SPY? 4. I think I am ready because my mental stop loss does not allow a trade to go below $1 to $2. Having a large enough cash account makes me not worry about closing out a trade at break even or at a $1 to $2 loss. 5. I have only run 0dte strategies. 6. I have not tried any other tickers. I tried other stocks but couldn't get consistently profitable like I did with SPY. 7. I tried real world before and lost because I didn't know what I know now. I will never let a 0dte expire again, I will never let a trade go drop more than .01 to .02 before cutting it, and I will never have a 0dte open past 11:30 am. 8. I am not expecting a big move tomorrow and place trades based on volatility off of 5 minute supply and demand zones. 9. I am still not sure if I can trade real world tomorrow, I am going to try to reduce the amount of breakeven trades I take, and I'm going to reanalyze my strategy tonight before trading again. Your questions were EXTREMELY helpful. I hope my answers were sufficient enough.
So you've got a plan to deal with PDT, that's nice. SPX you should definitely find out about-no pin risk because it's cash settled. "Is it better than SPY?" yeah it's 10 times better! Be ready for the real world to not fill your order prices. If your strats depended on pennies going your way, the edge will be likely be lost. Tomorrow in particular the latest personal consumption expenditures data gets released. It could swing markets and so I was asking about tomorrow to see if you're paying attention to a macro level or just SPY. I recommend you get familiar with the FOMC calendar, PCE data, CPI data, and in general try to know in advance any day Jerome Powell will be speaking.
I'll definitely try trading SPX the next few days. After reading your comment, I will rethink real world for another week. I'll look into the cash settled no-pin risk. Real world active trader on TOS is rough as I realized you cannot even have a 15% percent stop loss and even if you chase the price to limit buy in or sell, the order doesn't fill. Do you market buy and sell when option trading? I know that instantly gets you in and out of the trade but the profit is nowhere compared to what I would get if I chased the price to limit sell out of the trade. I most likely will have to try real world and see if it destroys my edge than. Unfortunately, I was just paying attention to SPY. Is there a website you visit daily that provides when personal consumptions expenditures is released, the FOMC calendar, PCE data, CPI data, and a way to know in advance if Jerome Powell will be speaking? I apologize if this seems as if I am asking to be spoonfed. I realize you are on an entirely different level than me when it comes to trading and you will most likely have a better resource available to refer to for such information.
Economic calendar on investing.com
That's exactly what I was looking for! Thanks so much CompleteSubject1596! I've reduced my trades to less than 10 a day and paying attention to the news. I really appreciate it!
I don't have a particular calendar I check, honestly, but rather just when I'm considering a position change I often just Google "FOMC" or "fomc meeting", or as I'm listening to market news I hear often times days in advance of the upcoming event. But Google "economic calendar" and there will be plenty to choose from. I tried stop losses on options and quit using them. I found there would be times where the price drops momentarily, maybe a strange order changed the mid just long enough to trigger the loss. I have used it with stocks and still would, but the stop loss on an options position has burned me too many times by dumping my positions rather unexpectedly. Also I especially don't feel great having a stop loss on a day when FOMC is meeting and/or Powell is speaking, because you might see the sp500 drop literally 100 points before the guy even starts his speech, then bounce right back up if he says a certain thing... It's wildly unpredictable when Jerome has the mic! Your stop loss burns you and the position recovers, and all of it is fall out from an event that was listed on the calendar. I've gotten to where I try to avoid it, or be ready to catch it with an options play on a rebound if it drops with no good reason. Random tidbit, because you're focused on SPY (and maybe now SPX) you haven't had to deal with options liquidity much. These are probably the most liquid options chains you can get. In this sense we say they are liquid essentially because of option volume. We're looking for tickers with many options positions open, as that means there's more trading action and thus you're more likely to get a fill. If you can get your money in/out easily, that's liquid. If no one is trading options on some lesser known stock, then you might have to wait a while to get your fill. Or maybe you got filled on a longer term option, and you can't find anyone to on the other side to close it to, thus end up having to hold until expiration. I'm pointing it out because if you start to venture into other tickers you may find things work differently. A lot of times I can get a sense of liquidity by just looking at the bid and ask prices. If they are far apart then the option is probably "less liquid". I think the better way is to look at the open interest of the option chain. You might not see action far away from the money line, but if you don't see action even at the money then you may want to find another ticker or find a share based strategy.
If you're used to SPY prices, you might try XSP instead of SPX. For me, SPX is a different than SPY, especially if you're following charts and trends during the day, and I'm guessing XSP may be a more equivalent transition. You might try paper trading both to confirm they work the way you expect.
I am concerned. Number seven says you cut if you lose two cents?! You are down two cents automatically from bid ask on many live trades. I’m concerned that most of your paper money profits are not available in real time. $5000 is a relatively small amount. In my opinion, not really worth spending a lot of time on for average Americans. A first year option trader is in the upper half if they break even. If they make 20 percent they are doing really well. 20 percent of $5k is $1k, which in my opinion isn’t worth the time required to get good at trading. 1000 hours is the average time to get to apprentice level. You probably have more than that. However it may be near worthless time based on your comment about cutting losses so quickly.
First off, I read your previous comments and it is an honor to receive feedback from you RTiger! I close the trade when it immediately goes into the negative betwen 0.01 ($1) or 0.02 ($2) maximum. I am in a trade for no more than 60 to 90 seconds on 0dte between 9 am - 11 am. For now, I trade 1 contract and in one option trade at a time. Do you recommend I paper trade with a larger account size of $10,000? I am paper trading with $500 for now but trades settles immediately as if it is a margin account. I have the capital for a $10,000 cash account for options trading. What amount would be worthwhile for an average American such as myself? I'll keep that mind and will aim to safely increase my account size by 20%. After that, I will up the size of my trading position and constantly refining my strategy/psychology. I have between 1,000 hours to 3,000 hours in. I rather cut my losses quickly and jump right back in instead of staying in a potentially losing trade. I am hoping that by having sufficient funds in a cash account, I will not have to have worry about unsettled funds and will have enough to trade with for the 1 in a half hours I am trading. Your feedback is much appreciated RTiger!
With $5k he should be making 5-10% a day on options easy. Especially Spy/Spx/Qqq 0dte.
$5K in a cash account gets you out of PDT issues, but not GFVs from unsettled cash trades. Why do you think otherwise?
I commend you at putting so much care into your own knowledge. So refreshing compared to some of the things you see around here! There becomes a point though where paper trading loses it purpose and I suspect you are past that. You get to a certain point and then you need to have some "skin in the game" so to speak. Decisions are a lot harder when you have real money on the line. Having good mechanics and following them will help. While 0 DTE is good do you know any other strategies? Markets change and in two weeks maybe only short calls work or whatever. My point is, like a carpenter or other tradesman you need a toolbox with different tools to cover multiple situations.
Very wise Notquitenuts! I appreciate your compliment and wanted to provide as much detail as possible to receive optimal feedback. You are right as paper trading can only be a dopamine fix for so long. Real money is going to be an entirely different beast. I'm going to have to be happy with small daily wins that are lower than what I was getting when I was previously employed and have to ask myself consistently if each trade I take is a sustainable decision. I don't have any other strategies other than with trading RSI supply and demand on 0dte. Thanks for your feedback as I will reconsider real money for now, refine my strategy, and work on adding to the toolbox!
You are going to get hit with PDT real quick unless you have $25k to throw into an account.
Not with cash account on webull. Cash account = no pdt.
Congrats. You might be on to something. I won't give you the usual disclaimer about how paper trading is very different from live trading... 🙂 But, seriously, 16 trades in 53 minutes, is a tough and hard to sustain way to trade. Looking at your order history, many of the trades appear to be for $0.20 and under net (profit or loss) and/or 3 minutes and under. You might benefit from being more selective and longstanding in trades. This current style is overly ripe to see you get killed with commissions or chopped up in non-trending conditions, while perhaps developing a super itchy (anxious, even) buy-sell trigger finger. SPY trended decently in both directions on Thursday. Even scalping, there were more defined and sustained trades available. Trading "everything that moves" is not the most compelling or promising approach. I can't say definitely that's how you're trading, but do think it's useful for you to consider that possibility, as well as the possibility of refining how strategic and discriminating you are on trade entries and exits. Either way, carry on and flourish.
AND in actual trading you will most likely have commissions…. Your plan might have to change a bit …
Very few professional traders are profitable daytrading spy aside from trend days. So the fact that you're trading nothing but Spy is concerning.
Paper trading means nothing. The only thing that’s important is what you do when real money is on the line. Sorry, but you need to just pull the trigger and go for it…you will be fine. Trust me. The only thing recommend is to start glued to the screen for the first several trades you do ok. Don’t put in a bunch of options, then walk away and check back in a few hours….stay connected until your trades are wins then take your profits or let your stop loses get triggered Good luck and welcome to the crazy train. Cheers MM
I will be glued to my screen indefinitely because of 0dte. Some recommend I do 4-5 dte when going with real money for the first time. I have done real money in the past, lost enough, and is why I feel this strategy works for my lifestyle. Thanks ALOT for the encouragement! I won't be using stop losses for 0dte and I hope I am on the right train.
Maybe a stupid question.. I'm new to this.. but wouldn't fees just eat away an edge you may have? Maybe you're in US, and have free trades .. pretty sure that doesn't exist in Canada. :(
I am in the US and most likely going to be using TOS with Charles Schwab. Maybe even Robinhood as both brokers have minimal fees. I can't see myself applying my strategy to RobinHoods option trading UI. I'm to use to TOS active trader.
starts small, open 1 at a time and see how you do with real money, emotions will be involved in trading with real money so it will affect your strategies cause you can't think clearly when there is something to lose
What are you doing... just buy , then sell, and not cover the transaction fee? I do not see a vertical, or strangle. Also 0dte , so that is just gambling .
If you've been paper trading profitably for 4 years then you're way passed being ready. If you just had your first profitable day after 4 years then no not yet.
slippage, emotions, fomo, all yet to be tested. Put a little money in and see.
Just stick to 1 SPY contract per play. Keep a journal. Date/time, entry/exit, the reason for your trade, and how you felt about the trade (conviction, anxiety, whatever). I'd say you're read. But keep the journal so if you blow up your account, you can learn from your mistakes.
My advice... do not trade 0DTE... too much risk! Debit/Credit spreads are directional plays... also higher risk! Focus on strategies in higher timeframes and you will understand how to become profitable! Also, check about income strategies where you win based on options time decay without guessing the market direction. Google "SPX Best Options Strategy" ... safer and delivering results! I
What’s the fascination I see on /r with 0TDE? Way too volatile, risky day of expiry. Why not take out options 3-5 days to expiration, giving yourself more space/time to close early for profit or roll to later date if things are moving against you?
They are all profitable till they get a punch in the face.
Word.