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Trade Mechanics for Entry & Management

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When entering a trade there are four things that we consider:

Liquidity:
  • Liquidity is important because if we can't get filled, we can't paid.
  • Liquid: Bid-ask spread between .$0.01-$0.05
  • Semi-liquid: Bid-ask spread between $0.06-$0.50
  • Illiquid: Bid-ask spread> $0.50
Implied Volatility:
  • We use IVR to measure if IV is high or low
  • IV helps to determine strategy
Price:
  • BPR is effected by price, BPR also has influence on strategy chosen
  • We can use price to determine if we want to make a directional trade
Strategy:
  • We can choose our strategy based on many things, some include:
    • IV level
    • Directional bias
    • BPR

Tune in as Tom and Tony discuss this checklist in depth!

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