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u/Sad_Perspective_9506
1 day ago
$5-Wide Spreads?
I trade on moomoo and I do not try to outsmart the market, I really don’t believe that is possible. I simply trade what is in front of me with lots of small winners (85%) and a few small losers. Over time those wins have added up.
One of the ways I do this is by keeping trading simple with a consistent $5 spread width. This drastically cuts down the number of decisions I need to make. I'm trading 12 underlyings each week with a full time job so I have to be extremely time efficient (like 15 minutes trading per week). My process makes the important decisions before emotion enters the picture. Like most of you, I'm using pre-defined set up rules.
I wanted to get your take on spread width. My standard starting point is a $5-wide Put Credit Spread, typically for underlyings between $50 to $500. Obviously, I scale up if needed in larger underlyings. Spread width has a big impact on your maximum risk, buying power reduction, premium collected, position sizing, trade management, and ultimately your psychology as a trader. By standardizing the width of the spread, I take another variable out of the trading process, which makes my whole trading plan easier to understand and execute.
What about you, are you using a standard spread width, or are you varying trade by trade? Do you go narrower or wider?