Steve Moses is an OTA instructor and an avid options trader. He got his start trading when his wife dragged him to a financial seminar in 2004 and was quickly hooked. He joined OTA 2 ½ years ago, first as an educational coach and more recently teaching the options curriculum. He prides himself on a common sense approach to teaching his students—“if I can do this, so can you.”
I wake up about 6 am East Coast time so the European and Asian markets are still open. I check them and the U.S. futures to see if there are any big moves. In particular I want to see if there are any events that are going to blow us past a supply or demand level. Then I’ll go to the “office”—that’s Starbucks—and monitor positions on my iPhone.
What kind of trades are you making?
Options spreads, which gives me some flexibility unlike stock trades where you have to be right on the money right away. And unlike day traders who will risk a dime to pick up 50 cents and make $500 in a day. I’ve gotten in and out of trades in a day but only because my target was hit.
With options spread trading you can be somewhat wrong directionally and still make money. With out-of-the-money spreads you enter the trade where you just need the stock or ETF to stay over or under a level it’s already over or under. So unlike swing traders or day traders who are trying to catch the wave, my stocks are trending stocks. Like an EKG, I might watch them bounce off highs and lows for sometimes six months or even a year.
What do you do when the market opens?
By 8:45 or 9 am I know (basically) how the market will open and I look at the trades I’m already in and decide what I’m going to do if anything. Of course, counter intuitive is the OTA secret. If we’re looking at a gap down that can be good for us. I may get into a bullish trade even if the market opens down. If it hits my predetermined demand level, I’ll exit quickly and limit my loss.
I try to make it a rule not to trade the first half hour unless my limit order gets filled. Yes, I always use limit orders, not market orders—it’s worth the extra trouble to be sure you don’t get a surprise. Then I’ll just monitor through my iPhone the rest of the day.
How do you manage your trades throughout the day?
I’ll try to do it as much as possible on my iPhone. If there are important events scheduled I’ll check in at those times. I don’t want to check in at 2 pm and be surprised to discover the Dow is down 600 points. If there’s a major move, I’ll switch over to my laptop.
Do you have any procedures at the end of the day?
Actually I do. I keep a spreadsheet of all my trades and if any have opened or closed I’ll record that. I record the date entered, what was the position size, date exited and profit or loss. If I’ve closed a trade profitably I love putting the profit in the P&L column—cha-ching! I also have my own retirement goals so when I log in and see I’m contributing a percentage toward my retirement nut, I feel good. I even feel good limiting a losing trade to a small loss.
Any other tips for us?
I always ask myself four questions. Why am I getting into this trade, when am I getting into this trade, what is my profit target, and when will I know if I’m wrong. Those four simple questions are like a mini-trading plan.