Auto Trading is now available for all our strategies. Please note that due to the fast moving options market, slippage can at times be quite severe for SPX Daily Outlook and SPX Aggressive Trader. For more information please see this page.

Due to regulations that prohibit the use of SMS text messages for stock alerts, we are unable to send out text alerts to US and Canada residents. We can only send text alerts to members living in other countries.

The best and most reliable method of viewing our daily information is always directly on our website. You can access our information via your desktop or mobile device. Each member can view all postings in real time and receive audio alerts when a new posting is made.

If you wish to receive an alert when any new posting is made on our site even when your web browser is not open, simply enable push notifications for our site on your device. This works on both desktop and mobile devices. Simply click the blue bell in lower left hand corner of your screen and Subscribe to Push Notifications. You will receive a notification every time a new posting is made on our site.

If you wish to also receive emails with the same information as is provided live on our website, you need to request to be added to our mailing lists. However, please be aware that receipt of information via email will always be slower than viewing the information directly on our website.

Our process of forecasting direction and levels is based on a series of proprietary algorithms that we’ve developed over our years of trading.  The tools we’ve developed analyze trend and price movement over the past in relationship to the opening price. All that goes into making these forecasts is the secret sauce of our trading, and so we don’t share all that goes into it. Overall trend, volume, levels of support and resistance, as well as market sentiment are all involved in the forecasts.

Having the right computer setup is essential to being able to trade effectively and profitably. This may be basic information to some, but it is something that every trader needs to be aware of. Here is our checklist for what we believe every Trader must have.

• A relatively new and powerful computer. If your computer is more than 3 years old, it is time to upgrade. You need to be able to trade without worry that your computer is going to suddenly freeze, or crash or do something strange. You need to have plenty of memory and fast processors. Specs are always changing, so buy a near top of the line computer every 3 years and you will ensure you always have a fast and reliable trading machine.
• Have a backup trading machine. When you upgrade your primary computer, keep your old one as a backup. If anything goes wrong during the trading day, you can switch to your backup quickly. Always have your backup turned on and ready to switch during the trading day.
• Have fast and reliable internet, and have a backup internet provider. Spend the extra dollars and have 2 different internet providers both high speed. Get both cable and DSL or whatever is available in your area. You may never use your backup provider, but consider it insurance. If you have your primary internet go down during just one big trade, you will see the benefit of having a backup service.
• Put all computers, modems, etc on battery backups. Have a large enough battery backup to power your system for at least 30 minutes. This way you can ensure, even if the power goes off, you can exit your trades in a timely manner.
• Use multiple monitor setups. 27” monitors are relatively inexpensive, get several of them or larger and use them. This will allow you to spread your charts and quote screens so that you can view everything at once. If you have never used multi-monitors, I can assure you once you try it you will never trade without it. Whatever you choose to do with monitors, make sure you can view everything you want at the same time.
• Get a comfortable office chair. Setup your desk in an ergonomic fashion, and ensure your chair is comfortable. As a Day Trader you will spend a lot of time in front of your computer, so it is a worthwhile investment.

Those are just some basic suggestions for every trader to consider. Remember this is a business, and approach it as such. Get the best tools you can and have backups of everything. That will ensure that you can focus all of your attention on making the best possible trades. With the right equipment and our SPX Daily Outlook you are ready to tackle the markets!

One of the most important questions every trader must answer is this, what dollar amount should I be trading? This is a question we are asked quite often, and the answer we give is always the same….it depends. There is no hard and fast answer to the question of how much should I be investing in my daily trading, but we wanted to share a few guidelines that we’ve developed in our own trading throughout the years.

1. We never risk more than 5% of our Risk capital in a single trade. Now some may want a smaller % or a larger % based on an individual’s situation. You must determine what % will work for you in your situation and then stick to that rule. The goal is to be able to sustain many down days without concern. So be sure your lot size is set accordingly.
2. We trade a consistent dollar value in our trades. Each day we adjust the number of contracts we are trading to try and keep as consistent a dollar investment as possible.
3. When seeking to increase lot size, we normally only do it once per quarter. This helps keep us from going up to quickly. We’ve found it helpful to set a dollar goal that we want to make before increasing our lot size. We wait until that goal is hit, and then consider increasing our lot size if we’ve been at our current level for at least 3 months.
4. We never trade more than we can afford to lose without worry. If you take a full loss on a trade and it causes you great concern or worry, you are trading over your limit. If you can’t sleep at night because of a loss you took the previous day, you are trading too much. Trading involves taking losses, and if the dollar amount you are trading is causing you great concern, lower your investment. A trader must be able to take a hit, and keep going without worry. This is one of the most common mistakes we see traders make, trading too big of lot size. You cannot trade with scared money.
5. Never increase your lot size for emotional reasons. When we increase our lot size, it is because we are willing to risk more and can afford to do so, and have been making money. We don’t increase our lot size trying to make money quickly, or make up for some down trades. We never increase our lot size unless we’ve made our profit target over the previous weeks. This ensures we aren’t increasing our lot size during a down period in our trading.

These are our personal guidelines for money management. We encourage each trader to develop their own, and then stick to them. Hopefully you’ve found our rules helpful to you.

We are often asked, should I trade SPX or SPY weekly options? Each trader should fully research the pros and cons of trading each of these weekly options. The following discussion is simply meant to introduce you to the differences. There is no single answer to which is the best to trade, it depends upon your unique situation.

Settlement

SPX weekly options are cash-settled while SPY weekly options are not. This means if you end up with in-the-money SPX call options at expiration you will end up with cash in your account. As opposed to being long SPY stock if you held in-the-money SPY options. We always exit before the close of trading, so not normally an issue. But some brokerages will automatically exit a SPY weekly option that is in-the-money on expiration day before the close. Please consult your broker for details, as this can be a key difference of which to trade on expiration day.

Liquidity & spread

SPX weekly options offer good liquidity but the spreads are often quite large. SPY options generally have much greater liquidity and have smaller spreads than SPX options. This often provides the opportunity to have more favorable fills on orders in the SPY options.

Price

SPX options are generally much more expensive than SPY options. The SPY options are 1/10 the size of the SPX options. This lower price may be attractive to traders wishing to invest less dollars per trade. However, this means one needs to purchase more contracts of the SPY options to equal the same value of the SPX options. This means higher commission costs for most traders. So it will normally cost more in commission to trade the same dollar amount in the SPY vs the SPX.

Tax Differences

Please consult a tax professional for specific tax advice. But currently the IRS treats SPX index options differently than SPY options. SPX options get special section 1256 treatment, which allows investors to have 60% of the profits made in trading treated at a long term tax rate and 40% at the short term. This also means no wash sale rule for SPX options. So for many the SPX options can offer a tax advantage.

Summary

Which is better SPY or SPX options? It all depends upon your situation. SPY options are cheaper, more liquid, smaller spreads and get taxed at short term tax rate. SPX options are more expensive, still liquid, larger spreads, often lower commissions and better tax consequences for most. So each trader must choose which is best for their unique situation.

At SPX Option Trader we provide information for both. Our SPX Daily Outlook provides information for both SPX and SPY weekly options.