The Stop Loss Myth - 10 Backtested Option Strategies Prove They Create More Losing Trades

Published: Oct. 24, 2016, 6 a.m.

Show notes: http://optionalpha.com/show67

In most investing or online trading circles, it's common place to hear people tout the need for "stop loss" orders to theoretically protect your portfolio. And while there is no doubt that stop loss orders help mitigate large drawdowns from time to time, the question I never see asked is, "What am I giving up by implementing a stop-loss order as part of my trading system?" You see, all too often traders and financial educators are quick to harp on the "need" or "requirement" for having continuous and always present stop loss orders in place. 

Still, we all accept this golden rule as an undeniable investing truth, because, well, it's always been something you're told to use. Today, I'll challenge this long-standing requirement for stop loss orders when trading option strangles. Until now, nobody has built a system to backtest this variable on the scale and scope that we have here at Option Alpha. Sure, you've likely seen one-off backtesting research segments elsewhere, but nothing as specific and targetted as what we've created.

In today's show, you'll discover how one simple tweak to the way you trade options generates average annual returns that are 87% higher, win rates that are 2X higher, all while making fewer trades and spending less on commission costs. Sounds pretty far-fetched, doesn't it? Well, it's not, it's just a small sample of the backtesting results we've been compiling over the last year that can help you make smarter, more profitable trades starting today.