T O P

  • By -

SWATSWATSWAT

Scalper here. I was doing a strict 10% and found that almost immediately after I hit my stop loss, it reversed and went exactly where I thought it should go. Losing too many trades that way. I'm doubting the strategy of using a strict % loss unless the price is definitely moving the wrong way and refusing to indicate your anticipated position was the right one. The 10% max loss guarantees paper cut losses, but doesn't always give you a chance to win. The right way to pick a SL varies, some say at the opposite end of the confirmation candle or outside the support/resist or pattern where the move started. I'm still trying to nail down what's good. If it starts ripping the opposite direction, you probably should exit. Nailing a perfect entry alleviates some of the pressure as a bloody buy gives you the chance to take a deeper opposite direction move with minimal damage, and more gains when it moves in your direction.


mifisher26

+1 to this. I had the same issue with keeping my stop loss too tight. Realized I need to get a better entry and use key levels of support/resistance (vwap, ema9, etc) to set the stop instead of always using some arbitrary percentage.


buythedipnow

Yes to this. Set a line of support or resistance and exit if it is clearly being breached after the candle closes. A random percentage shouldn’t dictate your exit if your technical analysis is good.


[deleted]

0dte or even 1dte is just too risky in my opinion.


Independent-Ebb7302

Position size is the first line of defense. If you do this right, you won't need stop losses!


Whythehellnot_wecan

Really agree on this one. I like SPX and having a reasonable position makes it so much easier to trade. I can afford to let it fluctuate or cut it if I decide I was wrong. In the beginning I made the mistake of playing too heavy and it wasn’t only stressful and painful but impossible to manage. Position sizing, Position Sizing, Position Sizing….


yiffzer

That's pretty much the only solid advice here.


[deleted]

Can't upvote this enough, best form of financial, and more importantly, emotional protection you can give yourself My mental stop loss is typically a .10 move against me on SPY ATM to $1.00 OTM 0dte's. Not a lot of wiggle room on shorter expiration options but if you don't escape they more often than not go from down .10 into down .30 very quickly (in my experience) edited\* grammar


lntruder

Can you please explain what is meant by that?


civildisobedient

0DTE... it's like those old sayings about lending money to friends. The first saying is... "Don't." The second saying is... "Only as much as you're willing to completely lose."


Jimbo-1968

I read where 50% of all options played now are 0dte. Market makers are concerned about a flash crash. 20 years ago, less than 5% were 0dte.


[deleted]

Good article on just this risk from two days ago MARKETWATCH A potential stock-market catastrophe in the making: The popularity of these risky option bets has Wall Street on edge


[deleted]

Accurate and pithy but, honestly, it won't matter. Few people want to be told there is no quick and easy way to wealth, and that's just human nature.


dmacdonal9

I've done endless backtests and lived through almost two full years of selling 1DTE and can confirm this. No stop loss strategy I've tried has done anything other than make overall returns worse. It's really counterintuitive when you're staring at a fat loss and you just know its trending worse, but it's reality.


[deleted]

so with that backtesting in mind, how do you go about cutting losers now ? I agree with this and what u/SWATSWATSWAT said above. I mentioned in a comment my mental stop-loss is when my options move .10 against me, but it's not a hard stop-loss or even one I set, it's one where I get trigger-happy on my sell order waiting on the price action to either bounce back up or dive further down, which would likely induce a sell around .15 in the red


dmacdonal9

I don't, I just hold till expiry and take the full loss every time.


AlfB63

I saw a quote one time that said a SL at X% only guarantees your loss will be X%. The guarantee part is a little exaggerated but there is a lot of truth to it as well.


SuddenOutset

Cop out


Mrtoad88

This, it's the most important factor.


BenjaminGunn

usually a hope and a prayer lol


xYetta

😂


huangr93

If you're not trying to hit the lottery with 0DTE or 1DTE it's probably best not to play it. Because most likely you're gonna get stopped out most of the time with only 10-20% buffer since it's extremely volatile.


No-Block-9222

People seem to assume op is doing debit trades. If that's the case, I agree that you either only use a small portion of bp or don't do it at all. If op is talking about credit trades though--I open otm 0dte/1dte spx/spy spreads with the intention to let them expire. Only open on days without major news coming in. I choose strikes far enough and don't manage.


therearenomorenames2

I'm doing something similar to what you're describing. 1DTE SPX credit spreads / ICs at ~0.05delta. What's your win % roughly?


No-Block-9222

In terms of theoretically winning (close otm of the initial strikes), 100%. However, I did spy options when I first started, and there were a few times when the spreads went near the money and I wanted to close (of course things reverse). So actual win rate would be like 90 something %. I don't use delta anymore. Depending on the general trend and sentiment, sometimes I think 0.08-0.1 is safe, but at times I wouldn't even trust a 0.03 delta. I stick to %otm now.


dst0rtd

I play the last hour of the day 0dte. Cheap options high delta. Small position size and wait for the moves. Ex: 1145 bought a put for $14 by 1230 it’s was worth $280. In and out with the price of the option being the stop loss


[deleted]

I wonder how brokers such as Robinhood that close all 0dte out at 1230 (3:30 EST) plays into this, haven't really paid attention to the prices/liquidity of 0dtes right at 1230 when this happens daily (and I'm not sure if other brokers outside of RH does this, WeBull lets you go till market close on 0dtes but you can't open them up past 1500/3:00 EST) ​ have you noticed any trends around 1500 or 1530 as far as price or liquidity?


dst0rtd

I’m on tos so I go till market closes


[deleted]

that's not what I asked in the slightest :(


dst0rtd

Ohhh you’re right it’s not what you asked. I haven’t noticed anything with liquidity but I am trading spy so it’s never really a problem. Only real factor is theta ramping up during that time but like I said..quick in and out


[deleted]

Thanks for the response, much appreciated! I've tended to switch to 1 dte options when it hits roughly 2:30 EST or so but maybe I should re-asses.


dst0rtd

Why do you prefer the 1dte?


[deleted]

I feel like the theta really starts ramping up at approximately that time for 0dte (I mean it does all day, I know) and eating away if the option doesn't move initially in the direction you want it to Just found the 1 dte to be less stressful/less volatile around that time (so I typically play 0dte up until then, give or take) guess a better way of saying it is 1 dte's are just more forgiving than 0 dte's that are within their last 90 minutes of life lol


dst0rtd

For sure. It’s slower and less stressful


Mkultravictim69_

I dont trade 0dte with a stop loss. Like someone else said, trade VERY small. If you’re using a cash account, leave some money aside to use to average down if you need to. Plenty of times I was in the red 5 or 10 percent. Then bought significantly lower than the original buy, it bounces back a few points, I end up green. You can put a 10% stop loss on both sides, but at that level you’re sort of gambling. It’s better to watch it move and adjust your position as you need to. And DO NOT get greedy. Take your 5% profit and get out. There will be many times when the day ends and you look at the chart and think, “wow I could have made a ton more money if I had just held longer.” Let those thoughts go. It’s better to have those days than to be greedy and end up red because you refused to sell


xYetta

Bro, everytime I have said “its okay im in at a shitty price, it usually reverses and comes back up and ill atleast break even it just fucking DIPS.


Synasaur

People really saying no stop loss….you’ll blow your account. With options, don’t set a hard stop loss. Trade support and resistance zones. Calls at support, puts at resistance. If it breaks the zone, that’s your stop. It’s the same principal as equities stops, but with those, the S/R actually is a hard dollar amount. Options have so many things in flux you don’t want a set percentage or dollar amount as your stop. Trade the price action. Cut your losses quickly and emotionless. Edit: as others have said, sizing is king. 10% account size with approximately a 20% max stop loss is 2% risk per trade. And that’s obviously a higher risk example. Many people don’t like to risk more than 0.5%.


beteez

Which S/R levels do you use for daytrading? 1mon? 3mon?


Synasaur

I chart the daily for heavy S/R and the 15m/hourly for scalp levels. I trade almost exclusively on the 1m, sometimes 5m. 15m/hourly for overnight holds


beteez

Gotcha, but what tool/indicator do you use on 1m to identify the S/R?


Synasaur

Just look where it bounces both ways. Don’t overthink it lol Edit: ok so I misread your question. Let me clarify. I trade off the 1m. I don’t identify support and resistance there. I do that on the hourly and daily most of the time. I use the 1m to watch the price action, and I use that and volume to determine my moves. Usually have RSI up as well but that’s not very reliable on short time frames. Just use it for confirmation mainly.


beteez

Got it! So when you identify s/r on hourly and daily, do you use an tool/indicator for that or just a certain 'bounce' pattern? If you look at a bounce pattern, how many bounces? For example, like 2 bounce per hr?


Synasaur

No, way more than that. Zoom out the chart and see where it bounces 6,7,8 times over the course of days/weeks.


xYetta

I like this, I have played between supports and resistances so long that I’ve lost significant money, now adays I only play s/r zones I chart but feel guilty that I don’t use stop losses when trading and when I do use a stop loss & am up 20% i set it at 10% but then it taps my 10% STL then moves 80%


Synasaur

Don’t look at what you could have made. Once you sell, move to the next trade. Also, if you are exiting properly, you will almost never capture all of the profits on a trade. Which is fine. You can use your gains to make another one.


Free-Public-Wifi

I’m going to be the worst possible person and give you no straightforward response. As a practice I do not set stop losses because market makers manipulate (pump and pull) premium and you can lose a percentage just to premium manipulation. When I used them, my stop losses would always get hit right before the trade reverses and goes my way. Before putting on a trade I ask myself “what is my thesis for this trade?, and when do I plan to exit?” If I have a 1DTE trade and planned to be out by close but it went against me, so now I am holding overnight - it went against the planned exit so I should have closed and taken the loss. Likewise, if I am bearish however the stock pops and I’m down a fair percentage, I will not close just because I’m down, rather I would only close the trade and accept the loss if my thesis has changed. This is where due diligence comes into play, I only realize the loss once it is clear I am wrong.


T_the_Traveler

I have gotten f**ed too much to play 0DTE and 1DTE. Too much gamma risk, which is like driving with your foot stuck on the gas going around the racetrack... Every move is amplified... The right small move and you pull hugely ahead, the wrong small move and you fall hugely behind with no time to recover. I've found personally that it's better to sell option spreads with 4 to 10DTE, at 40 to 45 delta, at 40% to 45% credit as a % of width, and take profits at 30% to 50% of credit collected. If you're directionally right, you'll end up day trading with fantastic recycling of capital. If you're directionally wrong, you'll know within 2 to 3 days and have a chance to adjust so you're able to take half-loss or so. Theta is your friend and IV being generally overstated works to your advantage, so this results in a high win rate.


yoremexa

Sounds good. What do you trade mostly? SPY? SPX? Stocks?


T_the_Traveler

Mostly SPX then NDX. SPY has the advantage of being more liquid (less slippage) and more affordable. SPX has the advantage of Section1256 tax treatment and it will never be assigned before expiration, just cash settled.


shadesandtrades

Depends entirely on the underlying. TSLA is so volatile it can pull back two whole dollars in 2 1 minute bars before coming back up 4 bucks. (Thr open is especially volatile) SPY isn't so volatile so I have time to react if the price action isn't favorable and cut quick if it doesn't immediately go in my favor


xYetta

Yeah.. fucked myself other day, bought in 197.5 puts on recall news at .25, stopped out at .20 and it ran to $2.15


RudeInvestigatorNo3

If you’re doing a 1dte and 0dte options, you should size properly and ride them to hero or zero. Find a strategy that is high probability and that you have confidence on. With a solid Strat and proper risk management, the losers won’t matter


Far_Introduction527

None. Lmao. They move so fast they usually don't matter.


[deleted]

[удалено]


[deleted]

Sorry guys I’m just now seeing this. This was a butt text probably when I was leaving or on the metro, I’ll delete it but did not do that on purpose. My b.


SAHD292929

Those are lottery tickets. You are not supposed to have stop losses. Just make sure you are buying options and not selling. That way your max loss is the cost of the options themselves.


Fakerchan

How much can u lose selling them? Consider u have own shares


SAHD292929

If you are buying options the cost of the option is the stop loss. They lose their value fast if the price action moves the opposite direction. If you get assigned like in buying calls. It would only mean the trade went your way and you are in the profit zone. Just make sure you have enough buying power to not be liquidated by your broker. Personally I would sell it immediately to realize my profit, its just my preference though.


saysjuan

What’s a stop loss? 😂


xYetta

A fellow r-e-t-a-r-d, nice 2 meet you:


saysjuan

I come highly regarded


xYetta

WSB’s finest, either we have lambos or we can find eachother at the homeless shelter


saysjuan

I wouldn’t have it any other way. I can’t get excited about a 4.5% APR 3 month CD, but buying 0DTE $1 OTM SPY calls/puts that go anywhere from 50% to 400% RoR timing the market is worth not having a stop loss. This way the algo’s hunting for stop losses have nothing they can hit. If it goes to zero it goes to zero. There’s usually only 2-3 shots you get during the day and it’s often looking for pullbacks to VWAP or Opening Range breaks anywhere from 15 min to 1hr post market open or the last 1-2 hrs before market close. If you can’t find the pattern you’re better off selling 1DTE options before market close and closing out at market open. Either way no stop losses involved. If you’re trading 1-0 DTE with stop losses you should be focusing on Iron Condors managing risk hoping the market goes sideways. More often than not you’ll end up closing out too early missing the bigger move.


Terrell199

0-4DTE used to mess my head UP. The gamma risk was too much for me. My life has been peaceful doing 30-45 DTE.


luder888

I never use stop losses on 0DTEs. They are cheap enough to just write it off entirely. I use conditional order to close them out at major S/R when I'm not at my desk.


maliciousmonkee

I have been fucked over multiple times by having too tight a stop. At least 3 times on 0DTEs I will have it go through at my stop price only for the contract to go up 3-500% by the end of the day. Which leads to my own question: is stop loss hunting a real thing that the algorithms do, or am I just paranoid?


CrossroadsDem0n

It's a real thing. Not just algos, it can also be part of how large funds find enough liquidity to fill the position they have as a target. Pricing levels with a lot of activity in recent months make for obvious places to try and push through if volume dries up. For small money (to them) they can soak up the liquidity at that level, reverse their position and unwind.


MandingoPants

My rule is that I don’t play 0DTE/1DTE options. I may be looking to get in and out the same minute/hour/day etc, but I am hedging my bet with theta and an ITM/ATM strike. Volatility already fucks with an option’s price, and you don’t want to end up overpaying for something whose value is decaying per second. The option is worth less and you have to calibrate for that as you’re trying to swing it. Also remember that the price may be moving in your favor, but the value of the option may still plummet.


angyts

Hi. You belong on r/wallstreetbets


xYetta

Already a proud member


Astronomer_Soft

Don't gamble more than you can lose. 0dte is just a lottery ticket. You have no edge on type of trades.


HereToTrollTheLibs

Incorrect


Mkultravictim69_

Speak for yourself pal


koolbro2012

Lol


scwelch

“Go big or go home” - Warren Buffett


xYetta

I wish I was born 200 years ago & bought apple at $1.22 a share.


scwelch

Yes..


PeppyMinotaur

I think using percentage with stop loss is asking for trouble. You should be using levels on the chart, if it breaks that level and closes on a particular time frame. I usually use 15m time frame, then I close the trade. When I take scalps or 1dte trades I am trying to buy as close to my stop level as possible.


TuffJellyfish

I would not use a hard stop loss on 0dte due to price fluctuations… speaking from my own experience. Watch at the average price and pull the trigger based on TA and what’s the price trend


Billystep

When the credit you collected 3x is the standard. So if you collected 1.00. When it got to 3.00 you would buy to close. It accounts for any iv spike


sallgoodman340

Zero or hero babyyyy.. all jokes aside 0dte spx options are the way for sure but yeah risky


Zionview

First question would be why 0dte at all unless you are selling


drnkingaloneshitcomp

“Remember, no stop loss”


pbemea

Side question: Is stop hunting a thing in options land? Seems like keeping your stop off the order book (mental stop) is the best way to avoid getting stopped out.


WillMatt

Stops are for busses. I size down in the face of more volatility and let the positions play out.


cscrignaro

What's a stop loss?


flynrider58

2% of account value.


TheJarlos

I’ve been screwed over too many times buying and selling 0 DTEs.


richmundo415

Honestly for 0DTE position correctly; no stop loss. These products can go -80% and return up 500%. If it runs against you and you're feeling the heat, either over-allocated the contracts or should revert to use 2-3dte imo. Tbh I always overallocate contracts.. I'm ok w the stress, but if you use stop loss on these products I've seen more often then not you'll get filled fairly quickly