Common Pitfall - Daytrading to Take Quicker Profits

Recently I decided to step back and look around to see what other traders have been doing, and I have to say, I’m impressed. I see a lot of traders trying to figure it out for themselves, so first, mad props. But second, they're doing it wrong. 

It's simply not the time to day trade options. A lot of options traders want to switch to daytrading because they believe that the solution to their failed swing trades in this environment, is to go narrower in timeframe. They believe they can simply drill down to intraday timeframes to avoid the chop and take profits faster - get in and get out quick.

Well, that couldn't be further from the truth. And here’s why:

With implied volatility at elevated levels and the market constantly chopping around intraday, you are overpaying for premium, such that when the underlying moves in your favor, you're not making much, and when it moves against you, your contracts decay significantly, from delta, vega, and theta. All of this trains a trader to trade in a way that leads to negative expectancy. As an example, watch the video above to see how the recent chop has led many traders to cut winners early, at 20%, while riding their losers out to -40% or more.

Again, the solution isn't drilling down into the 5 minute chart or the 1 minute chart or the 1000-tick chart. The solution is to learn how options truly work so that you can construct the proper spread for optimal risk reward. If you know how to do that, then you can swing trade in this environment in a very relaxed fashion, like us, to create these results for yourself, as seen in the video above:

• $DOCU condors: $1.05 to $2.55, or +142% in one week.

• $BITO butterflies: $.24 to $.80, or +233% in two weeks, with more to peel off.

• $QQQ unbalanced butterflies, from $.16 to $.70, or +337% in one week.

• $SNAP RPGs, from $.04 to $.40, or +900% with more to harvest.

The biggest thing I tell traders is to respect yourself. Respect the fact that you deserve better. You do not deserve the garbage misinformation on options trading out there. You deserve higher quality content around trading, so take it from those who have walked the path for 10+ years. You deserve it, and you know it. So whenever you're reading to learn how to capture these moves with less effort, less friction, all the while, learning 100 new things about how options really work, you know where to find us. We will see you on the other side.