Set daily max stop loss 10% of my account or gained 10%?

[jbaylis5]

I would love it if there was a way to set a daily max loss of 10% but also a max daily gain of 10% as well. I have struggled with being green on the day and after continuing to trade, ending up red on the day. I have a small account so for now, making 10% in a day isn't crazy.

 

[lucky]

Call your Brokeage house. It’s best for them to explain it to you.

 

[BigBlacksBBQ]

Howdy,
New member here. Great place you've got. I'm looking for a TOS script that either doesn't exist or isn't even possible.

I'd like some type of risk management strategy that will close open trades and restrict any further trades if a daily max loss is hit. I know this is a lot to ask and I'm pretty sure it's not possible, but I just want to make sure.

I'm a great trader 95% of the time. I need some help battling my toughest opponent ever "myself" for that other 5% which proceeds to erase and more the 95% great trading.

Thank you!
BBBBQ

 

[jdouglas2002]

Team,

How are you setting up your stops when trading options?

I am playing around with different ideas.

Idea 1: Trailing Stop Loss as a dollar increment.
Example: BTO +5 PINS Calls for $2.00/ea Trigger Trailing Stop Loss at $0.20
Execution: Max Loss is $100 ($0.20 x 5 x 100)
Pro: protects capital, stop loss moves up as option price moves up.
Con: Doesn't give much room to run

Idea 2: Percent of Cost
Example: BRO +5 PINS Calls for $2.00/ea Trigger 10% Stop Loss
Execution: Max Loss is $100 ($0.20 x 5 x 100)
Pro: protects capital
Con: Doesn't give much room to run, stop loss does not move up as option price moves up

I'd like to hear from seasoned option traders how they manage this risk.

 

[rad14733]

@jdouglas2002 For scalping and day trading options I use either value or percentage TrailingStopLoss, or value based Limit and StopLoss... I have these set as Order Templates in my Active Trader panel... Although I usually monitor every trade I could just as easily go the "set it and forget it" route because I have already decided my acceptable Risk:Reward... My main reason for watching is just in case the price runs which then allows me to move my Limit up higher for increased profit, or to exit at a profit should there be an unexpected trend reversal... Any method you use needs to be tailored to the underlying you are trading because some are far more volatile than others...

 

[codydog]

imo, it depends on how you see trading. If you're a gambler, rolling the dice, why set limits? If you see it as a business, then decide your entry/exits by how much you want to make/lose. I think the Waltons(Walmart) used to set a profit limit of 12-15% / item and became the wealthiest family in the country. I see trading the same way, I only need singles/doubles to make a solid living and survive - in this business most fail, some breakeven and a tiny percent actually make a living. Win/loss is great but breakeven is key. I'd rather exit at flat and re-enter then have a bigger loss and hope the market comes back.

Obviously, IV, plays a part, transaction size and if I'm up or down for the day is a part. Its different for everyone as risk is a question of perception.

But to answer directly, usually when any part of the transaction is up/down in $50-100 range I start scaling out to reduce my exposure. Sure, i pay more in commissions, but thats a limited loss unlike folks who hold on and hope the market goes their way but end up with big losses.

I also only trade less than five names and a few futures where I know how its works. I think folks who scan thousands of names and have a watch list of a few hundred names forget that major banks/dealers have teams of folks watching small groups of companies, so I'm not sure how one person can be familiar with a few hundred names and trade them successfully when major companies don't even try to do that. This isnt a swipe at anyone just a comment about my lack of understanding of that practice.

Anyways, good luck trading and its always curious how risk management threads just die out unlike MA threads which get hundreds and hundreds of comments resulting in massive threads. Maybe that shows that folks are more interested in rolling the dice than managing risk. i dunno.

 

[jdouglas2002]

@jdouglas2002 For scalping and day trading options I use either value or percentage TrailingStopLoss, or value based Limit and StopLoss... I have these set as Order Templates in my Active Trader panel... Although I usually monitor every trade I could just as easily go the "set it and forget it" route because I have already decided my acceptable Risk:Reward... My main reason for watching is just in case the price runs which then allows me to move my Limit up higher for increased profit, or to exit at a profit should there be an unexpected trend reversal... Any method you use needs to be tailored to the underlying you are trading because some are far more volatile than others...

Thank you for the reply.

What percentage do you use?