“I’m a carpenter but I don’t know how to use any of my tools.” … Said no one, ever.
If you work in any field, knowing how to use the tools of your trade is, legit, one of the most important things you can put your efforts toward. It goes the same for trading.
Options Trading Platforms
Options trading platforms can be complicated. Some are not entirely intuitive. Some require work-a-rounds to get the info you need. Some have an overwhelming number of bells and whistles. And some don’t have enough tools and need to be used in conjunction with other trading platforms.
Getting to know your option trading platform can feel like a daunting task. Especially when first moving over to a new one. But that’s where all the power is. That’s where you find the stuff you need to get the job done.
A good approach is to first consider the components of a trading platform that you’ll be using, make sure your platform has them (or consider switching options brokers) and then drill down and learn how to use them.
Stock Charts
Stock charts are at the core of most traders’ analysis. That’s where at least half your forecast is formed. If you know how to do one thing, it should be to use your stock charting software for technical analysis.
Some technical analysts will stick with a simple 6-month, daily candle chart. (That’s my go-to for starting out my analysis.) But some use different time frames altogether. For day trading 5-minute candles might be best. For long-term investing weekly candles over a 5-year period might be the ticket. And many traders will switch to a different time frame for better context (which I do on occasion).
And maybe you don’t like candles. Some traders prefer OHLC (open, high, low, close) bars. Some like line charts. Some market profile or point and figure. To each his, or her, own. It’s what you are comfortable with. It’s what clicks for you.
Then there are the indicators and studies. Are you a plain ol’ support and resistance kinda fella / gal? Or do your charts have more lines than Austin Powers in a throwback ’70s discotheque? Find out if your platform (or the one you’re considering using) has the stuff you need. Then practice! Learn to find the indicators quickly, how to add the studies to your chart and how to change the parameters on them. Get comfortable with it.
Option Chains
If you don’t already have your option chains laid out as such, I’d be inclined to twist your arm and give you nuggies until you set your columns to: delta, theta, vega, implied volatility, volume, open interest, size and, of course, the bid and ask. Don’t know how to change your columns? Figure it out! You’ll be glad you did.
Trading Information
You need news. Your platform probably has it. Is it laid out on your screen and a click away? How about stock watchlists? Yeah. Add ’em. Where is your P&L located? Easy to find? Customized to remove the unnecessary stuff that clutters your screen? Earnings reports? Company fundamental data? Risk graphs? Know where they are? Play with ’em till you’re comfortable with them and use them to their maximum ability.
I find myself learning new things about the Think or Swim platform about once a week. (Try the Think or Swim platform HERE.) In fact, while writing this, I clicked for the first time the Economic Data tab under the Analyze tab and came to realize there’s a trove of useful information there. Who knew?
Chances are you already have way more power than you know you have. Plus, probably lots of time-saving shortcuts to make your job as a trader easier. The power is in your hands. What will you do with it?
Dan Passarelli
Founder and President
Market Taker Mentoring, Inc.
