Placing options trades using OCO in Think or Swim...

Hi everyone,

I wanted to hop on and share something I learned today. If this has been covered here before then I admit to being a total DOPE since I never gave it another look.... until today. And boy am I glad I did.

So GW always says we should only use "Mental" stops, but there are times when I can't check on my trades and using a stop gives me a better feeling when I know I'm gonna be to busy with work to check on things. MANY MANY times I've been in trades and the trade is going my way and in between the times I'm supposed to check on it my positions rises to a nice profit then falls leaving me with a small loss. That really sucks for me, so I've started using some stops to at least minimize my losses.

A couple or 3 years ago I asked ToS about being able to have a stop loss in place on my options and at the same time have a sell order waiting for an expected profit. At the time it wasn't really available so I put my head back in the sand. Now however, it is and has been a thing for about 3 years now.

So now there is this thing called OCO (One Cancels the Other)

There are a few videos on youtube explaining how it works, but I used it today and was successful on all 3 of my trades. I will be using OCO from now on.

I've tried for years to bake GW's cake and to follow HIS recipe exactly which explains the head in the sand. It just hasn't really worked well for me, and my results have been mixed. So I'm doing my own thing now.
I don't hope to start a fight with this, but I will say. Every successful trader that was nice enough to share with me basically says the same things. Once they were GW students and they tried to follow his recipe and ended up with mediocre results. Eventually they developed something that worked more consistently. In most cases they were/are still using "much" of GW's recipe but with some modifications that suite them much better. There are quite a few real world examples of traders on this forum that have taken what they learned from GW's and made it their own by modifying what was needed to make it work for them.

Anyway, if OCO is old news to you then I truly am a slow DOPE with my head in the sand, but if OCO is something you've not heard of before it might be worth a look see.


I hope everyone has a great "rest of your day".
R



Edited 3 time(s). Last edit at 12/01/2021 09:59PM by RichieRick.

So glad to hear of your success. I have found what works for me using the basics of 1-5. I work best that way because I AM AN IMPATIENT PERSON! I wish you much success.

Yeah the basics of 1-5 were pretty good. Especially the intraday stuff and how it can help new students get a lot of reps in a short time. GW has completely moved away from ANYTHING intraday. Which I think is a real shame.

Sadly I think GW may have forgotten what it's like to be a new trader/investor and being forced to start with a very small account. His focus now seems to be on the big money stocks and super big movers that people with small accounts simply can't afford to trade. If you only have 2 or 3 grand for trading and the options prices are 50 bucks, you're just on the side lines. Sure you can practice trade it, but why not practice with the same stocks and options that you can afford to trade right now? It'll make the transition smoother.

GW himself used MANY of the intraday things he taught in 1-5 to move himself from a factory tire builder to achieving "Choice" of not having to work anymore if he didn't want to. Now in his "Survivor Weekend" series he essentially forbids students from doing anything intraday, and instead focuses on big charts only with nothing smaller than the 233.

The one thing that has caused me the most trouble and money is his statements about staying in trades "until the trade is over". The idea is to look for a specific amount of indications (exit criteria) to line up and give you the signal that you now need to exit the trade.

SOOOOOooooooo many times I've been in profitable trades with no indications (exit criteria) of needing to leave the trade. Then suddenly I get more indications than I need only to discover that my profit is completely erased. Sometimes it's even a small loss.

So no more of that "stay in the trade until the trade is over" business for me.
From now on I enter a trade with a target profit and a target loss in mind. If the trade hits EITHER ONE of those I'm out quickly. That seems to work much better for me than "stay in the trade until the trade is over" thinking. It probably works well for someone else, just not me.

At first I went back to "Up a buck and out", and I've since increased that only slightly, but I'm not wasting time counting (exit criteria) anymore to determine when is the right time to leave a trade. When the trade hits my target I'm out, and I'm "happy in Seattle" as GW used to say. No matter how far it continues in my direction, I'm still "happy in Seattle". lol

Sorry for ranting on... and I don't mean to sound as if I'm hating on GW. I respect and appreciate him and what he's taught me. I'm certain I wouldn't know as much about trading/ investing and the markets if it weren't for him.

R



Edited 1 time(s). Last edit at 12/03/2021 09:44AM by RichieRick.

Man, this resonates so so much.
As a former 1-5 student AND a current S1-s3 and upcoming RTP - I too wish that GW didn’t move away from the intraday work.
He adamantly mentions that we need to THROW OUT the old material, and work with nothing but the new.

The exit criteria bits have also wrecked me a bit on a couple of occasions and it certainly makes it tough to trust it through and through.
Especially the past few days - these whipsaws up and down. Happy I wasn’t in a trade and I’m sure it’s hurt some folks but GW would mention that if you aren’t micromanaging and only looking the 2 times per day you should, you wouldn’t be concerned with the up and downs and only look to play by the rules, entering and exiting as such.

Want to discuss this more, but on mobile now - May pop back in on computer later.

Cheers

I figured it would resonate with some. I'm sure though that the ones that are making it work perfectly are probably thinking I'm being silly, and a bit of a crybaby. But honestly I'm not whining or complaining. I realize that I had to got there first before I could get here. It's all part of the journey I suppose.

I two was only looking twice a day. But when you look and you suddenly have ALL of the exit criteria you need it's time to exit the trade. GW always says if you want my results then do it my way and follow my rules. After all we are all trying to learn to back GW Cake using HIS recipe.

I certainly agreed with that, but with one BIG caveat. If you want us to follow your rules them make them CLEAR and IN ORDER just like a REAL RECIPE to bake a Cake. Don't mix in hours and hours of silly time wasting stories about some stupid TFT training or one of his new SEAL buddies that spend "37 hours a day" on a gun range to master the art of something that has nothing to do with nothing. Insert "Face Palm" here. OMG stay on topic man!!! lol.

The staying in till the trade is over was killing me. I can recall more than one REAL MONEY trade I've done where I'd buy 10 contracts and the position was up 10k with no exit criteria. Then at 1:23 I'd suddenly have ALL the exit criteria I needed to exit that wasn't there the night before. I exited the trade and was down by 400 bucks. They only reason I know I was up 10k is because I went back and replayed the trade in Think or Swim looking for something I might have missed. It went from NO exit criteria to 6 pieces of exit criteria within 1 candle, and all the profit was gone. That happened to me many times.

Another thing that was also killing me was when he talks about a good trade lasting anywhere from 3 days to about 2 weeks. I'm now beginning to think that a profitable trade that lasts for 2 full weeks is really a short term investment and not really a "TRADE" at all.

Only 3 times out of the literal 100's of trades I've done has my trade gone for a full 2 weeks, and each of them was only a small gain once the "exit criteria" finally showed up. A few times I was up 4 to 5k or so, only to exit the trade with a $300 profit. Yes, $300 is still a profit and I should never complain about a profit. However, I could have gotten the $300 dollars on the 2nd day and been gone. But no I had to stay until exit criteria showed up. lol, what a waste of time.

And NO I'm not watching the money, I know about how much I was up and down based on being able to replay the trade in Think or Swim using the "On Demand" feature they provide. This allows me to go back after the trade is over and replay the trade to look at all the options prices and changes. Mostly I would do this to see if there were some signs that I might have missed that could have counted as "exit criteria". In the beginning I did find some missed signs and tried to learn from them. And remember GW says the signs can't "accumulate" slowly one by one, they all to be present "RIGHT NOW".


R

I never minded the stories he told because during those times I would go over my notes rather than listening. In 1-5 I heard loud and clear that GW started with a 401 K (if I recall it was $50,000?) which makes a big, huge, massive difference than starting with $2,00 or $5,000 cash that you have managed to wrangle together by forgoing other things. S/O and I were self-employed no 401K to use. S/O had found his nitch and it never worked for me. He loved the Q's and I hated them as much as I hate APPL! I purposely keep my trading basket small because I know I would be tempted to dump more into the basket and could very likely get foolish. This way when I buy my options, I really look hard at moving averages using the charts to the point where I could place a trade. I grab my .50 and at the end of the month I put it away in a non-touchable account. I have NEVER read all his books. Never bought any of those "mind" books. GW showed me the basics but my actual knowledge and what helped me came from 3 places, The Market Makers Edge, Technical Analysis for Dummies and Investopedia.com. I knew I was going to do simple calls and puts, peaks and slams. Peaks and slams are nothing more than calls and puts. While using Investopedia I learned about gaps and that's when it hit me about moving averages and the Bollinger bands. That set off my ability to trade by learning what to look for. I learned in 1-5 that GW was applying these trades by using margin. You should never ever do that unless you have enough money in case you are called out. Also trading on margin only allows you to trade a few times each week and I trade more than that. I have never, ever liked buy and hold. If I was going to do that I would invest in stocks, and I don't want to invest in stocks. Finally, I learned I didn't need everything GW had us sign up for in Qcharts. I was able to cut my cost almost in half. Yes I still use Qcharts. I think everyone needs to find what works for them. We are not all alike and each of us has that little bit of know-how that when lit, leads to success. Figure out what clicks in your head and use that to trade. Example, because of moving averages, I was ready at the open to do a Put on NVDA even though the market opened up. I knew the market was going down. How? Take a second and look at an 8 chart of the DOW with the 200 moving average at the open. Then look at the chart 8 minutes later. Do the same with NVDA and the 50 moving average. POW! I love this market!. I too am grateful to GW for what he taught me in 1-5. That was enough to get me going. I still hear him saying at the very first class in 1-5..."This is all you will need to be successful."



Edited 1 time(s). Last edit at 12/03/2021 03:20PM by Darcy3.

Thanks for posting Darcy.
The problem with reviewing the notes while GW rambles on about something not related to the topic is he'll start adding topic related things in and I would sometimes miss them. Long ago he used to sell a CD set of 1-5 classes. I picked up a set from him during the short time they were available. I quickly noticed this after listening to him over and over again. At one point I put all of the CD's on my PC and used an audio editor to cull through and remove all those silly stories and rants so I'd be left with ONLY the information without the distractions of his ramblings. It reduced the length of the complete audio recordings by almost 2/3rds. Almost 2/3rds is a lot of time wasted not following an agenda and topic list.

Just for the record I hate APPL too!

I also remember the Story of GW taking his 401K plan to 870K and then quitting/ retiring. He quit/ retired and closed his 401K plan and moved the funds (after taxes and penalties) to his own account so he could trade stocks and options. He doesn't recommend that approach though.
From that point, since he had his days free he dove deep into doing more and more intraday trades, and trades where he'd be in today and out tomorrow sort of things. I think that's where his learning and financial growth really took off.
That's basically what I'm doing now; is in today out tomorrow sort of stuff, but sometimes it fills quickly and I'm in and out on the same day. Which is fine since I have a cash only account the PDT rule doesn't apply to me. Like you I never trade on Margin. To me it's a recipe for disaster, not to mention that greed to take hold and ruin you.

Lastly, those two books you mentioned were awesome reads. I think I'm gonna go back and read them again this year.



Edited 2 time(s). Last edit at 12/03/2021 03:49PM by RichieRick.