Being new to Steady Options- lessons learned

[daviddream 23]

I joined Steady Options in January. I have learned so much in the short period of time I have been here; I still have many lessons to learn. I am in it for the long haul! When Kim suggests trading virtually for the first month I thought I was the one exception to that rule. After all, I had taken thousands of dollars in options education courses over many years. I believe greed plays into that psychology. Yet in January I lost as much as the SO portfolio gained during the month due to mostly sloppy entries and mistakes with complicated spread entries. I also couldn't get rid of my training in directional trading, so I kept making bets on certain stock options and stocks to go up or down.

 

By February I didn't make many more entry mistakes. I finally jettisoned my directional trading for good over the last four months. Knowledge of technical indicators can help you sometimes with SO trades, but mostly we are trading volatility. The last 3 months have been real successful with a small loss last month, but August is looking promising.

 

A second suggestion for newbies is what you hear all of the time here about not chasing. Yes, you may miss out on some great trades. Missing TSLA recently was painful, but sometimes you end up missing a loser, or at least what would have been a loser had you chased.

 

Don't expect to come close to Kim's fills, particularly as a newby, but some folks who have been here awhile are doing great. They have learned the system and are making money on some of our high flyer spreads several times entering and exiting not by following Kim's official entries, but by knowing the behavior of certain spreads and knowing they will likely get a range entering and exiting that will repeat itself. They also sometimes will post other non-official trades that are profitable. They also will regularly anticipate Kim's fills on jump in early with better fills or wait and come in later with lower prices often scaling into trades. 

 

Experience is the only thing that will get you to the kind of returns Kim is getting! Even if you averaged over ten years half of what Kim gets your growth curve would be remarkable. If you could average 50% a year on a an eventual 100K (the maximum size Kim wants trading this system) you would be bringing in an extra 50K per year. 

 

Experienced traders- please add your wisdom! I am still learning so much!

[Kim 7,512]

Thank you David for your kind words!

 

It is important to remember that we are dealing with short term options trading, so prices change all the time. Getting good fills takes a lot of experience and practice - if it was easy, everyone would do it. Trading is a business, and like with any business, prices are involved. However, as you mentioned, many members become very familiar with our strategies and know in advance a good range for most trades we do. This is the best way to use the service.

 

And yes, starting with paper trading and then start small and increase the allocation gradually is the best advice I can give.

[Chuck451 129]

Excellent post!

 

To add to this, here are some of the stuff I've learned over my time here.

 

For the pre-earnings trades, Kim almost always starts the DISCUSSION topic before entering and lets you know what the good price is to enter.  I then would look at the stock price and calendars and place a limit order on the low side of Kim's range.  More often then not, I will enter either at or 1-2 cents better than Kim's price, if I can get a fill before he does.  Now, I do not have IB as my broker, so I know I'm not going to get as good fills as those who do, so I plan my entrance and exit accordingly. 

 

I NEVER chase a trade (anymore).  This bit me hard with GOOG last cycle, and I learned my lesson (finally).  Sometimes if the price moves, I'm able to get in at different strikes that are then ATM for the same price or better than the official trade.  This actually worked out for me in the last TSLA trade, where my strikes were closer to ATM than the official because I entered a few days after the official trade

 

I ALWAYS get ATM straddles and calendars, regardless of the official trade, when entering

 

I set my profit target and I stick to it, which is usually about 3-5% less than the official target.  Firstly, because of my broker (TOS) I know that I'm going to have some slippage, and second that the official profit target does not take into account commissions, while mine does.

 

Lastly, I always try and make sure I know what the potential exit price to be, instead of blindly following the profit target percentage.  For example, if the official trade is entered at 1.00 and the stated profit target is 25%.  Then I know that the target exit price is 1.25.  If I entered at 1.05, I still set the target exit price to be 1.25, which makes the percentage 19% before commissions.

 

Again David, thanks for the post!