Options & SO Newbie - Guidance Please..

[praveen 3]

Hi,

 

I am a Newbie to both (the concept of) Options and the Steady Options site.  I do plan to do paper trading for 1-3 months until I have a better understanding of these concepts in case you are concerned   I have many questions however, which are as follows: 

 

1) If I have questions, do I simply post them here?  What is the best practice?

 

2) Which websites can help me learn about the concepts used by Kim for Options trading?

 

3) Is there a site that spells out how to enter the trade into the trading platform (ToS, IB)?

 

4) I currently have a TOS account.  I am thinking to PaperTrade in it and then when I am ready to trade, switch to IB since their fee structure is better.  Is that a bad idea?  Or should I begin Papertrading in a IB account (I will have to set it up though).

 

5) When I am ready to trade, and if I only have 10K in my Trading Account, and plan to follow the SO trades, how much should I allocate per trade?  The reason I ask is because I want to keep the same trade size during Paper Trading.

 

Any other tips or help would be greatly appreciated in my new journey. 

 

Thanks,

Praveen

[Kim 7,513]

Hello Praveen and welcome to SO! Please see my answers below.

 

1. It is the best to post on the relevant forum so everyone can learn. The main purpose of this site is education, and no question is too dumb. If you don't ask you don't learn.

2. I suggest to start with Useful Links. It has a lot of links to topics where we discuss our strategies, and also to list of recommended books.

3. Check out Placing a trade on Interactive Brokers.

4. I would suggest paper trading on IB if this is the platform you are planning to use.

5. We recommend 10% per trade. All trade alerts come with suggested number of contracts for 10k portfolio.

 

And always remember: like you said, this is a journey. It will take time, commitment and effort, but you have our whole community here to help.

 

Kim

[TDM 33]

I would like to echo Kim's comment re paper trading on IB. Their platform is not intuitive, and there's no reason to have learn a new platform when you start trading.

 

Also, one thing to keep in mind when paper trading--it is much easier to get an order filled on paper than it is in live trading. I think paper trading is great, but you do need to be aware that when you start live trading, you will likely have a lot more work to do to try to get your orders filled at favorable prices.

 

Good luck and welcome!

-T

[Kim 7,513]

Absolutely!

 

The main goal of paper trading is to learn the strategies and the platform, so any mistakes that you make while placing trades don't cost you money.

[praveen 3]

Hi Kim,

I have ordered the Getting Started in Options and The Rookies Guide to Options books from Amazon. Cannot wait to receive them and dig deeper into them.

I also setup my account at IB and I downloaded the Windows IB Trader Workstation Build 950.2g. However the instructions on your link do not seem to match the interface I have on my end. Could it be the software has changed significantly since that article was initially published in 2013? I am still waiting for my Paper Trading account to be activated which will happen next week.

For Interactive Brokers, is there a preferred layout for their Mosaic Interface of what all monitors and windows I should have open on my screen within their interface?

Thanks,

Praveen

Edited July 26, 2015 by praveen

[femape 10]

Hi Kim,

I have ordered the Getting Started in Options and The Rookies Guide to Options books from Amazon. Cannot wait to receive them and dig deeper into them.

I also setup my account at IB and I downloaded the Windows IB Trader Workstation Build 950.2g. However the instructions on your link do not seem to match the interface I have on my end. Could it be the software has changed significantly since that article was initially published in 2013? I am still waiting for my Paper Trading account to be activated which will happen next week.

For Interactive Brokers, is there a preferred layout for their Mosaic Interface of what all monitors and windows I should have open on my screen within their interface?

Thanks,

Praveen

 

Hello praveen,

I'm a newbie too (maybe even more than you) and I have interest on IB as Broker (I understood from SO forums that it's the best). I check to open a paper trading account and here comes my question: do I need at least 10k to open a basic account in IB? This is a big difference for starters in comparison to TOS, since they give you the free version for paper trading without using money. Am I correct?

 

 

Thanks in advance

[praveen 3]

Hi Fededito,

 

I really cannot believe I am providing an answer on this forum

 

Anyhow to respond to your question, there is no minimum balance needed at IB to have Paper Trading access.  However, if you deposit less than $2K, they will charge you $20/mo fee which can be offset by commissions.  If you deposit between $2K-$100K, they will charge you $10/mo fee which can be offset by commissions (ie. if you generate $2 in commissions, then their fee is $8).  If you deposit $100K+, then there are no monthly fees. 

 

Now to begin trading, you will need $10K or your trades will not execute but you can still enter them.  Unless you are younger than 25 years of age, then there is only a $3K requirement.  More details are on this URL:

http://www.interactivebrokers.com/en/index.php?f=4969&ns=T

 

Hope this helps.  And thank you for asking this question as I learned as well because I had to do research to find this answer. 

 

Thanks,

Praveen

[femape 10]

Hi Fededito,

 

I really cannot believe I am providing an answer on this forum

 

Anyhow to respond to your question, there is no minimum balance needed at IB to have Paper Trading access.  However, if you deposit less than $2K, they will charge you $20/mo fee which can be offset by commissions.  If you deposit between $2K-$100K, they will charge you $10/mo fee which can be offset by commissions (ie. if you generate $2 in commissions, then their fee is $8).  If you deposit $100K+, then there are no monthly fees. 

 

Now to begin trading, you will need $10K or your trades will not execute but you can still enter them.  Unless you are younger than 25 years of age, then there is only a $3K requirement.  More details are on this URL:

http://www.interactivebrokers.com/en/index.php?f=4969&ns=T

 

Hope this helps.  And thank you for asking this question as I learned as well because I had to do research to find this answer. 

 

Thanks,

Praveen

 

Hello Praveen and forum,

I took your comment and I'm trying to open an account in IB. Anyway it says now:

 

* To qualify to trade Options in a Cash account, your Liquid Net Worth must be USD 50,000 or greater

 

Is this a MUST? I don't have such and it will take me a lot of time to have this amount of liquid worth. What should I do? Why are this exigences?

Obviously I can lie, but I don't want to get in a mess. Does anyone has opinions/tips?

 

Thanks in advance

[Kim 7,513]

You need margin account, not cash account, and I believe the minimum is 10k

[femape 10]

You need margin account, not cash account, and I believe the minimum is 10k

Hello Kim,

thanks for your reply, the minimum required is indeed 10k, I went forward with the application form.

 

I will check the requirements from TOS as well.

[femape 10]

Hi all again,
after thinking about which broker should I choose and taking in consideration Kim's Brokers comparison advice, I finally open an account in IB. I thank you for your tips again!

 

Best wishes and good trading