Know when to stop loss
Took a position with $Apple(AAPL.US$ with the long outlook that it will recover. But as I should always plan for a stop loss. For stocks I should set a 7% - 10% stop loss. For options that 7% -10% don’t really apply for me as the swings are much higher.
Posting my Sell Put option strategy as shown.
How do you guys set your stop loss?
Have you ever tried planing for a stop loss?
What is your stop loss % for stocks or options?
Part 2:
Realign my position through stop loss (buy puts) and new position (Sell Put Option). Cost changed from 7.9 to 8.25 (slight improvement from a negative market motion).
Comparing both analysis side by side. Top shows before. Bottom show the repositioning.
Conclusion: Although option went south. Was able to reposition at a slightly better rate.
“Wish for the Best. Plan for the Worst.” CasualInvestor. ![]()
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SpyderCall : I usually set my stop losses at specific price points based on the technical levels or support and resistance levels. I am a technical trader, though.
I believe that most traders set stop losses based on the ratio of potential profit to potential loss. Personally, I just follow the technical levels in my trading.
CasualInvestorOP SpyderCall: Would you mind sharing your price point for this if it was you. Hopefully not some industry secret
SpyderCall CasualInvestorOP: These are the nearest support levels that I would use as my exit point if I was trading short-dated contracts with not too much time until expiration. If the contracts were leaps, then I would likely have a wider stop loss as I would be planning on holding longer.
I mostly trade contracts that are only a few months out or less, so if a trade goes against me, then I won't hold it very long. My exit points are not very far from the price in most cases.
Sometimes, I will try to salvage some of the losses if a trade goes against me, and I will convert the trade from long to short or vise versa using spreads essentially.
CasualInvestorOP SpyderCall: I typically go for longer contracts when I short them as I can exit whenever I feel it’s time to take profits. And I can wait for a reversal if it goes against me. Though there’s a caveat where I must not hit margin calls as that was a painful experience.
SpyderCall CasualInvestorOP: if I am swing trading shares, then I am a lot more risk tolerant. My stop losses will usually be much wider.
CasualInvestorOP SpyderCall: Ya. Was much more risk tolerant and would have earned more if not for the forced liquidation.
I’ve added my trade for those that understands.
SpyderCall CasualInvestorOP: margin calls are never fun
CasualInvestorOP SpyderCall: Looking back. I could either have stopped loss earlier or topped up to not incurred a margin loss. At the end, waited for the reversal and happy with the profits.
rennymc SpyderCall: I wish I could get both of you together and pick your brains about options! I sooo badly want to understand them and have studied so much, but my brain doesn’t function properly due to an illness.
SpyderCall rennymc: Have you tried paper trading options?
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