Hi cit,
I'm an experienced technical trader who made and then lost tens of thousands of dollars trading options as a newbie.
I am new to the forums and just starting options trading. I have been paper trading on and off the past 2 years and just recently I started trading with real money.
Did you use your paper trading experience to develop a trading plan with rules for entries, risk management and profit-taking?
If not, you need to do that before trading live. Otherwise you can take the money you're risking by trading and obtain the same end result, but with more fun and excitement, at a casino.
If your paper trading experience helped you develop a trading plan, then you have entry setups and triggers, risk management rules (which as a buyer of options can be either a stop loss or your position size where the "stop loss" is your full premium paid). and one or more profit target zones.
Over the past month I have been buying and selling PUTs because the market has been bearish. I havn't won a trade yet, I think I need to work on my exist strategy because my trades often go in my predicted direction.
If you bought Puts over the past month, how is it you've not had a winning trade? Can you share some trades (entry, target and reason for the trade/target)?
Can someone recommend beginner options strategies?
IMHO, there are no "beginner strategies" in trading. There are positive expectancy strategies and there are positive money management strategies and you can put together a plan based on combinations of these (for example, 90% win rate with a negative reward:risk ratio; 50% win rate with 2:1 R:R ratio; 30% win rate with a 5:1 R:R ratio).
My roommate likes to sell nakid calls or puts near the money and if it gets exercised he turns around and sells a covered call or put near the money.
This can work 95% of the time for a long time and wipe you out badly the one time it doesn't. When selling puts, at least some of it will be cash-secured (meaning not all of the position will be "naked") and the underlying can only drop to $0. Selling naked calls exposes you to unlimited risk. Imagine selling calls and the stock gaps up $30/share on a buyout offer the next morning.
I first look at the SPY ETF to gauge how the overall market is doing. If the market is bearish then I will look for a bearish sector and find a bearish stock in that sector to trade.
I determine if a stock is bearish by the lower lows and lower highs, momentum, candle stick patterns and moving averages.
When I find a stock that I think has potential I look at the news really quick for anything alarming. I buy a PUT about 2-3 months out that is near to out of the money. Then set my stop and adjust my stop if the trade goes in my direction.
This appears to be a reasonable positive expectancy strategy. What's missing is the specific setup and trade entry trigger. It's possible you're entering during the pullback phase in a trend instead of waiting for the pullback move to react to the expected with-trend price resistance level (in a downtrend) or price support level (in an uptrend).
Since you're buying options 2-3 months out, I assume you're looking to take advantage of a significant directional price swing over a period of a month, possibly longer. Looking at a 6-month time window, the market broke into a downtrend about 3 weeks ago. Since you've only been trading live for a month, again I'm curious how you could have already closed out positions for a loss or without a profit target being reached.
IMPORTANT:
If price moves in your favor early in a trade, at what % favorable price move do you move your initial stop loss closer to your entry price?
If price moves against you early in a trade, at what % negative price move do you tighten your initial stop loss to reduce your potential loss?
i dont think that's a long term strategy to make money, but I did the exact same thing yesterday. It's not a loser until you get out