" OPTION SPREADS "

[Newly2b]

Every trader has a different theory as to where to set stop losses. It is all in what one is comfortable with. Some prefer to set the stop depending on just how much of a loss they are willing to take on that trade. Others prefer to set the stop at whatever point on the chart indicates that the trade has definitely gone bad regardless of the dollar amount of the loss involved (enter at support, sell at resistance).

I personally almost never set a hard stop (except when I'm going to be away from the computer) but prefer to set a mental stop for both loss and gain on every trade I enter and then set an alert on my trading platform and when it hits that point reevaluate the chart and my position (if any). I use this strategy to enter trades as well, and prior to entering I look at the daily chart to see how much that issue generally moves in a day and exactly where Support and Resistance are. This helps me determine what strike to play and also where to set my entry and stop.

Newly