Market Measures - July 10, 2018 - The Tradeoff of Stopping Losses

published 1 week ago by tastytrade, Inc.

Stop losses are a popular strategy used by traders to achieve better performance by closing out of a losing trade. But do they work? tastytrade ran a study where we compared managing 16 delta strangles in SPY, 45 DTE at expiration and 1x-5x credit r...

Traders often use stop losses to reduce large losses at some multiple of the initial credit now what that means again if you're new to taste to trade we've talked about. How we don't use stop losses and how the best way to protect risk is to stay small and just you know have lots of positions on it's we use concept law of large numbers rather than to stop losses which we don't think are which we just don't see the map behind we never have done a lot of research on this but since we get so many questions we decided to tackle it one more time in today's market measure so one of things we looked at in the past was in an effort to reduce large losses potentially what happens if we said if we sell strangle let's say the dollar ...

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