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! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Learning to trade options can feel intimidating for beginners. Here are few tips to reduce fear or intimidation, and encourage you to start trading options today! Understand the basic mechanics of options: Options are contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price (the strike price) on or before a specified date (the expiration date). There are two types of options: call options, which give the holder the right to buy the underlying asset, and put options, which give the holder the right to sell the underlying asset. Learn about the different option strategies: There are many different option strategies that traders can use, including buying and selling options, selling spreads, and using leverage. It is important for beginners to understand the different strategies and how they work in order to make informed trading decisions. Know the risks and potential rewards: Options trading involves significant risks, you can reduce risk through education, trading small and trading often. It is important for beginners to understand the potential rewards and risks of each trade. It is also important to consider the overall risk-reward profile of a trade and to ensure that the potential rewards justify the risks. Understand the importance of implied volatility: Implied volatility (IV) is a measure of the expected volatility of a security's price. It is an important factor to consider when trading options because it can affect the value of options contracts and the potential profitability of trades. Practice and educate yourself: As with any new skill, the best way to learn about option trading is to practice and educate yourself. This can include paper trading, which allows traders to practice without risking real money, and taking advantage of educational resources such as online courses, books, and webinars Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Options and stocks are both financial instruments that can be bought or sold. Stocks represent shares of ownership in individual companies, while options are contracts with other investors. Good Kids Trading (GKT) is a proponent of options trading, let's discuss some key differences to understand about options and shares of stock. Purpose: Options are financial contracts (similar to insurance contracts) that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a certain time frame. Stocks, on the other hand, represent ownership in a company and entitle the holder to a share of the company's profits and assets. Leverage: Options can be used to leverage a position in the underlying asset, as they an 1 option contract normally controls 100 shares of the asset for less capital than owning 100 shares. Stocks do not offer this leverage, as the price of the stock reflects the underlying value of the company. Risk and reward: Options involve a higher level of risk than stocks, as the value of an option is derived from the underlying asset and is subject to changes in the market. Some of the risk can be mitigated using advanced strategies. However, options also offer the potential for higher returns in a shorter period of time as they allow the holder to profit from price movements in the underlying asset. Expiration date: Options have a limited lifespan and expire on a specific date after which they become worthless if they expire out of the money (OTM), or they are converted to shares if the expire In the Money (ITM). Stocks do not have an expiration date and can be held indefinitely. Trading strategies: Options can be used in a variety of trading strategies, such as covered calls, spreads, and strangles, which allow traders to take advantage of different market conditions and profit from time decay, volatility, and price movements in the underlying asset. Stocks do not offer the same level of flexibility in terms of trading strategies. If you want to learn more about the differences in stock trading and options trading, and you would like interact with other Option's Traders, join our community! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Monitoring open risk is critical to successful and profitable trading. It's common for traders to put all their focus on finding trade setups, setting up every trade they find, and closely tracking the Profit Loss Statement (P&L) without considering how many trades they have open, and what happens if the market has a sudden move in one direction. Good Kids Trading (GKT) understands the importance of monitoring open risk, managing a positions risk, and trading small! Too much risk open, not managing your losses, and taking large risks can quickly erase profits. Earlier in my trading career I would risk 1% of my account on each trade I took. There would times where I would have 6- 8 trades (maybe more) open at once. In a trending market there were no issues. I was making money quickly and the communities I traded in never really discussed monitoring open risk, there was some discussion of moving stops and risk to reward, but the focus was more about reward and less about risk. I remember the first time the market had a sudden move and I was stopped out of all my bullish trades on a large drop down (a falling tide sinks all ships). Then a day or two later the market went the opposite direction, because of course the drop was an over-reaction, so then I was stopped out of bearish trades (I did move my stops so it wasn't a full loss on all trades). However, in one single week I erased a month of profits because I wasn't tracking open risk. It was a hard lesson, and I would like to say that one week caused me to re-evaluate monitoring my open risk, but it didn't. I wrote that event off as an anomaly, a one off that probably wouldn't happen again. I continued setting up almost every great trade I saw and had a similar experience where a quick move in the market took a chunk out of any progress I'd made. Sharing my experience with you, so you don't have to learn through pain. You do not want to work hard for a month to see your progress erased in a day! Every trading plan, every strategy you choose for your account should have a plan of managing your open risk. You need to have a set target for how much buying power you use. Know what conditions or market levels would cause you to ramp up or down your buying power. Understand how buying power changes as the underlying for your options positions moves. Remember to keep up with how many trades you have open at all times, track your positions delta, (are all your trades bullish or bearish?), have a plan for reducing position size, and for exiting positions to reduce your risk. Don't forget cash is also a position. In 2022 it's been more obvious than ever, cash is a position as the headlines say: "inflation is at 6% any cash you have is losing value"; if you had money in the market in 2022 (bonds and stocks) or in crypto you are well aware losing 2-6% on your cash might have been the best alternative. This discussion has been high level to remind you how open risk and managing risk is very important to your success as a profitable trader. If you'd like to get more in depth, if you would like to continue this discussion join our discord! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

What if you traded so small you didn't need a stop limit? Good Kids Trading (GKT) advocates trading small and trading often. With many of my risk defined trades I don't have a stop limit order because the amount I have at risk is negligible compared to the amount I would need to risk for a swing trade or day trade using stock shares. I can setup 10 small option trades that equal the amount I risk when I setup for 1 trade using shares (this is of course depending on your risk unit, but still applicable to some degree no matter how small your account.) Putting on smaller trades also allows me to have more diversification and I'm able to manage my accounts delta and theta more easily. For newer traders, you may not be familiar with stop limit orders, here is a quick explanation: when traders setup a day trade or a swing trade it's best practice to setup an One-Cancels-the-Other Order (OCO) where you have 2 orders: a profit target and a stop limit order to lock in your win or set a maximum loss for your trade. By setting a stop loss you can trade a larger quantity of stock because you sell the shares at market price if the stock hits a worst case level. But there are negatives with stop loss orders, if the stock drops quickly to your stop loss level, the order is executed at market price, so if your stop limit was $95 your order might execute at 94.85, this is referred to as slippage and while it might not seem like a lot when you are trading larger quantity of shares, pennies do matter and your loss is often more than your set amount. Your orders are also visible to the market, and many people set stop limits at similar places on the chart, or round numbers so it's common to get stopped out, only for the stock to bounce right after your order gets filled and you have taken your max loss. If you are a stock trader you are well aware of the scenario where your trade gets stopped out only for the stock to bounce and hit the target without you (or it keeps dropping, but let's not think about that). When you trade an option with no stop limit if the underlying recovers or bounces you can still profit if you have bought enough time! If the stock never bounces, you can still close your option trade while there is still some premium left, so it's not always an absolute zero or max loss. Trading option contracts gives you built in leverage (remember 1 call or 1 put controls 100 shares). This can be a positive or a negative if you aren't sizing your options trade correctly this can blow up an account, but if you use a good strategy and proper setup this leverage is powerful in the risk reward profile of a trade. Trading small and trading often is a different style of trading than many groups and communities do not discuss. If you setup defined risk trades with appropriate risk reward, you can afford to trade without stop limits. You should still manage losers before they get unmanageable, but you can afford to take some full losses when you are risking less than you win on a consistent basis. Trading without stop limits might sound like a dangerous idea to seasoned traders, but GKT's strategies make trading without a stops possible and profitable! Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join

Option trading with a small account size is absolutely possible. All the admins at GKT have at least one account that is small. When you trade with a small account it's important to realize some trading strategies, some possibilities will be unavailable until you grow your account, but these 'limitations' are not a reason to not trade options. It's important to start somewhere and there is no need to wait! If you live the US and your account is under $25,000 understand the rules for Pattern Day Trading (PDT). There are restrictions on the number of times you can open and close a position in the same day. Most of the strategies we discuss at GKT aren't day trades so this is not a major obstacle, but still important to understand. Margin accounts aren't available with most brokers until you have a balance of $2,000. You can still make trades if your balance is under $2,000 but focus on risk defined and small trades! Learn these rules and understand them, you do not want any surprises from your broker including Violations or Margin Calls! A scary sounding warning before we get into the details of trading with a small account: You should only trade with money you can afford to lose (don't borrow from credit cards, you should not use your last few dollars of savings to trade the stock market). If you have a solid trade plan, good knowledge and understanding it's unlikely you will lose all your money, but there are outside factors you cannot control that could make all statistics and probabilities not matter, and although it's a low chance it still is there! Below are some factors to consider when options trading. These actually works for all size accounts (as account size grows you do more trades). Look for high probability trades, and trade often: the biggest issue most of us face is not enough occurrences. We have been trained and conditioned to wait for the "perfect" time. The more frequent you put on trades the better the probabilities work in your favor when you are making trades with high Probability Of Profit (POP). It sounds like its more risky, but not trading with enough frequency is is a major factor to your trading success. Don't force trades: trading often is important, but don’t put on trades where there is not enough premium. If there isn't enough volatility you could have positions that don't match what you really want. We want to trade often, but we also don't want to put on bad trades and have to deal with managing positions we shouldn't have setup! Trade small: trade with consistent risk size. If a trade looks to good it probably is. Understand that incorrectly sized risk for a trade can erase all of your winning trades if you trade too big and it goes against you (which is normally does). Diversify trading strategies: We get caught up in the thought this worked for me last time it has to work again. GKT is a big proponent of using different strategies depending on market conditions. Do not stick to strategies just based on previous results, always look to diversify! Trading during binary events: Have a plan for trading around earnings or any binary event. Recognize that theta decay slows 2 weeks before earnings. You can't always plan for all news events, but FOMC decisions, CPI announcements (at least starting in 2022) are known events and market awareness is important! Choose the correct Days to Expiration (DTE): Option trading is often times duration over direction. Make sure you choose the right timeframe for your trades. Don't sell weekly options if there is little to no premium. Options don't always trade like shares of stock, if you are trying to get a direction give yourself more time! Exiting positions: A good trading plan has a defined exit strategy, exiting a trade is more important than entering the trade. Have a plan before you enter a trade. Actively taking profits and manage your losses before they become unmanageable is smart. Options need liquidity so you sell when others want to buy, take the money when you can, not when you have to! Remember, you do not have to sell at the very top or buy at the very bottom! If you get a move in your direction there is nothing wrong with taking profits as long as you also manage your losers. Do not allow a winner to turn into a loser. If an assumption changes, if your trade hypothesis changes, you should exit your position. Trading in a community of likeminded people is far more fun, educational, and profitable! Join our discord today: www.goodkidstrading.com/join