Frequently Asked Questions
How to read the signals in #✅┃trade-signals
Example signal: buy AAPL Feb 21 350 calls @ 0.84
The above can be broken down like this:
AAPL (your stock name or ticker)
Feb 21 (your weekly or expiry. This is when the contract is considered worthless if it's not sold ITM)
350 (this is your strike price or the price we want or predict the share hitting)
calls (this signifies we think the price will go up. Puts are the opposite. We think puts are going down)
@0.84 (your premium. Were we make profit. This is multiplied by 100 to get your price ($84 for this one) and is what we want to see increase in order to profit. If the 0.84 went up to 1.68 then that would be 100% increase)
When do I enter the trades?
Unless you have experience to watch for a better entry, you should enter as SOON as you get the alert!
How do the options buying signals work?
When we find a good play that we think will profit, we will signal an initial entry. This will always start with 'entering' if we are entering and 'exiting' if we are closing. Reading the signals is simple, you can find instructions on how to do that above.
Can I enter a signal that was signaled earlier?
Did we close the trade? If we did, then NO you should NOT enter.
Is the trade still open? If it is, check the premium and see if we are trading above or below the OG signal.
If its trading below, go ahead and enter.
If its trading above, skip and move on.
When should I close my trade that's currently open?
ALWAYS wait for my signal to close, UNLESS you have experience! Doing otherwise could be detrimental to your portfolio!
As always use good risk management.
When do you start signaling alerts?
As soon as the market opens we are looking for good entries. Remember we have 8 hours in a day to trade, we don't need to rush into it the first 30 minutes of the day.
What do the percentages mean in some of the signals?
After each signal is called, we will include three decimals followed by a 15%, 20% and 40%. These are what we call our closing marks.
These are the levels at which we want the premiums to reach before we close the trade.
We start signaling a close at 15% and if the momentum continues we will also close at 20%, up until 40%.
We may encourage you to leave a runner, but we wont track or signal a close for runners.
If you see a '15% @here', '20% @here', '40% @here', or 'closing @here' then we are signaling an official close at that level.
What are runners? How do I know to leave one or not?
Runners are contract(s) that we leave open after the 40% closing mark. If you don't have the experience to know if you should leave a runner, then we don't advise that you do unless we say specifically to.
What do I do if a trade goes against me? Im losing money.
This is a tough question to answer in some ways, but in simple terms it all comes down to your risk tolerance. You can find a helpful guide on risk tolerance/management here and get a good idea for your unique situation. But as a general, and pretty safe rule of thumb, don't let yourself get down further than 20% of your initial entry.
If you do see a trade starting to go against you, take note of what I said above and consider exiting and implementing the re-entry strategy found here. This is your best chance of reversing and minimizing your losses.
If you're down hundreds of dollars, and its anywhere past a 20% stop loss, do yourself the favor and cut your losses, get out, and wait for the next trade. If you feel you can re-enter safely, by all means go for it, but sometimes its best to just cut it and forget it. There's always another trade.
What trading app should I use?
We recommend TDAmeritrades 'ThinkorSwim' Trading platform. This can be accessed on the web or mobile. There are other trading apps such as Robinhood or Webull, but they limit your ability to place more than 3 day trades a week (pattern day trading). With TDAmeritrades we can bypass this.
How do I set up a TD Ameritrade Account?
Watch this video.
How do I buy an option on Think or Swim?
What is a Day Trade (DT)?
A Day Trade is a trade at which is bought and sold in the same day.
Swing Trade is a trade held longer than one day.
Scalp Trade is a trade lasting a very short amount of time, sometimes minutes.
Is there a limit on Day Trades?
You only get 3x DTs a week.
Some trading platforms limit you only 3 day trades a week. Ex. RobinHood
You can get around this with a Tier 2 Covered Cash Account w/ TDAmeritrade. This allows you to day trade as much as you want.
What is pattern day trading? (PDT)
PDT is Pattern Day Trading. It is a label given to any trader that enters more than 3 day trades (trades you buy and sell in the same day) in a 5 day trading week/period. Only way to bypass this is to trade with more the 25k in equity on a margins account or with a Tier 2 cash account through TD Ameritrade. The Tier 2 cash account enables you to day trade as much as you want without having leverage or a minimum deposit amount.
What is scalping?
Scalping is similar to Day Trading in the sense that you still buy and sell within the same trading day, except that these trades tend to only last minutes, sometimes up to an hour. Point is, they are very fast moving trades and need to be watched very closely.
What is a swing trade?
A swing trade, or swinging a trade is when you hold the trade longer than a single trading day. This could be a trade that is opened before market close and held until the next day, all the way to trades that are set to be closed months out.
Why won't my order execute?
There are a couple reasons your buy or sell order didn't execute and you can usually narrow them down to: market volume, or volatility.
Some trades (especially those that are close to expiry) will have little to no volume associated with them. As you know, the market needs buyers and sellers (volume) to execute orders, and without them the orders wont execute.
The other reason is the direct opposite reason, which in essence is too many buyers and sellers. This can cause rapid movements (volatility) in the up or down directions within the market, making it extremely difficult for brokers to secure a ask or bid for an order.
Quickest way to get your order executed is by placing a Market (MKT) order.
Do I use a “limit” order? What is a “market” order?
We recommend using a limit order to insure you close the trade at your ideal level of profit. Limit orders work by submitting a buy or sell order for a specific price. This will make it so the order will only execute once the desired price is reached.
Market orders are orders place at the current market conditions. The orders can be place and executed quickly, but the profit might not be what you thought it would be. That's because your buying or selling at what's easiest and quickest for the market, not you.
What is a stop loss? How do I set a stop loss?
A stop loss is a form of risk management that lets you exit a losing trade before it gets out of hand. You can set a stop loss up by placing a 'STOP' sell order at the MARK or ASK price.
MARK price is the mid point between the bid and ask prices, while the ASK price is the lowest minimum price a seller will sell the asset for.
The ASK is normally what we recommend you set a STOP order at.
As far as percentages go, we recommend not setting a STOP order for more than a 20% loss.
What does “scaling out” mean?
Scaling out is a strategy used to help maximize your profits while minimizing the chances of losses.
Its used by incrementally selling out of positions (either with limit orders or manually) as profits increase.
This helps insure you are securing profit, without doing so to soon, all while making sure you don't see losses if the trade flips.
What is “position sizing”? What is “risk management”?
Position sizing is a form of risk management we encourage our clients to use in order to keep the amount of share or contracts they purchase in line with how much equity they have available to trade with.
Risk management is what we use to insure we keep our profits outweighing our losses when we see them, essentially.
Which indicators should I use on my charts?
The most common indicator we use, and recommend you use are Volume, MACD, RSI, Momentum, SMA's (50d, 100d, 200d), 8d EMA and occasionally V-WAP.
What’s included in (each package)?
We have 5 main packages, the rest are considered add-ons or trials. All packages are reoccurring unless stated otherwise.
Basic Role ($75/mo ) (Entry signals ONLY, no community access.)
Premium Role ($60/wk) (All access, no add ons)
Platinum Role ($200/mo) (All access, no add ons)
All Inclusive Role ($240/mo) (All access, including add ons)
Student Role ($4000 one time) (Life time all access, full training, including add ons)
Add-ons we currently offer
Crypto ($25/mo) (access to our crypto signals channel)
Investor ($10/mo) (access to our investor and dividends channel)
How long until I can trade with the money I just deposited in my account?
Generally its a 1-2 business day wait for your funds that you deposited to clear and become available to trade. On some occasions you can call your broker and have the settling time 'rushed' but it only seems to work once or twice.
How do I set up a trading account? What level of account should I open?
Setting up a trading account is different with each broker, but the process is usually straight forward enough. Generally you will need a few main pieces of information such as:
Legal Name
Social Security
Address
Occupation
Level of Experience
Be prepared to have to provide this. If you don't have an occupation I recommend saying you got money as a gift or something similar. Also, as a rule of thumb its best to put that you have an intermediate level of experience with stocks/options and that you have more than 1 year experience.
Account level can vary based on your needs, but for the most part we encourage our clients to use an individual brokerage cash account that has option trading privileges enabled.
Is the expiry when I can sell the option, or can I sell it whenever I want?
The expiry is just that: the expiration. Its the date the option contract you bought will expire worthless unless its exercised or sold for it's premium. Yes, you can sell it whenever you want and is generally recommended to not hold a trade up until expiry.
How much money do I need to start trading?
As the saying goes: it takes money to make money. But don't let that discourage you. We recommend a minimum of $500 to start trading with. We must warn, with that starting amount your progress in the market will be slow without taking unnecessary and potential dangerous risks. Ultimately, $2,000-$5,000 is a perfect starting amount.
What are margins? Do I want a margins account?
A margin account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products. The loan in the account is collateralized by the securities purchased and cash, and comes with a periodic interest rate. Usually these accounts are leveraged 2:1, meaning you can borrow up to double what you have available in your cash account.
Do I have to pay taxes on my profits?
YES, this is very important. Don't slip on this! Visit how taxes work for more info.
How do I signup for 870Trades?
How do I manage my subscription?
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