Updated: Dec 25, 2022
Good Kids Trading (GKT) is a proponent of setting up Good Till Cancelled (GTC) orders as soon as a trade is filled. Get in the habit of entering a GTC profit target after every order fills. You can do this at the end of each day or before the market opens each morning so you do not have to watch your account constantly. This habit will give you the freedom of not having to monitor your positions throughout the trading day. There is comfort in knowing if the trade works you will profit without any further action.
If you have day traded or swing traded it's likely that you entered an One Cancels the Other (OCO) order so your stop and target are set as soon as the trade is established. When trading options OCO orders are less likely, often they aren't needed or desirable. I've seen some options traders who do not setup a GTC orders until their position is almost to the target or they wait for the target and exit manually. While I understand the appeal of making 500% on a trade, having a realistic defined profit target is important when you are looking to be a consistent and profitable trader.
Most trading strategies have general targets or guidelines. Math based trading strategies have profit targets based off of best practices calculated from previous results and Probability of Profits (POP). For example, it's common to look for 50% of the credit received when trading a strangle. You might target 75% of the credit received for a put you sold.
Setting up the GTC order for your desired profit lets your positions work while you aren't watching the screen the entire trading day. As you start trading with more frequency the number of your open positions will grow. We are trading smaller and trading more and while it's important to monitor your trades on a regular basis. It would be difficult to track all your positions constantly throughout the day without devoting a lot of time to watching your screen.
GTC orders allow you the freedom to work on other things knowing if a trade hits its target your order will fill no matter what you are doing. We discussed previously the concept of trading without stop losses, and while this is true for many of my trades I always set a GTC with a profit target for all my positions.
There is a very rewarding feeling when you get a notification, or you check your account and see a position hit the profit target and all you did was let probability, math, and time do the work!
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