Lesson Overview

Number of Trades You Need To Make

Do you know how many trades should you make each week/month/year in order to reach your goals?

Great question and we'll cover the specifics of how we look at the optimal number of trades in this video tutorial. In general the more trades you make the closer you'll get to your expected high probability target.

As a note: There's day trading and then there's high frequency trading with options. And yes there is a difference between the two. Day trading is getting in and out in the same day (or couple days). HFT with options is about building monthly positions many times throughout the week.

When it comes to trading options we do want to trade more frequently to get the number of trades up in our account over the whole year.

More Discussion

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  • Hey – 15-20 per day could be a lot (or a little) depending on your account size. I don’t know what they would say on the TT side but we suggest between 1-5% of risk per trade (yet I’m not doing 15+ trades a day). If you did that much it would depend on the strategy as to how much risk each trade would take up. A credit spread might only take up $70 of capital whereas a strangle might take up $1,500 so it’s a hard one to answer for sure. My bet would be that you would probably need to see something in the higher ranges of account size to accomplish this ($100k+)

    • Thanks Kirk. Don’t think I can go that high ($100k) YET. I only have around $8k right now to play with. I just want to trade as much as possible. Your website here at OptionAlpha and TastyTrade have turned me into a complete addict. Thanks for all you do mate! :)

      • Haha we’ll I would say our tagline is “addicts welcome” but that wouldn’t go over well.

  • BL Kmobile

    Kirk another interesting point and video. Admittedly it is counterintuitive to me, since I followed so far ( with mixed results ) a “patient” approach. Only trading when I saw a Real Compellingly Good opportunity and I did not see that many. Your approach appears to be more of a numbers game and perhaps more accepting that none of us can predict the future.
    My bias was / is that “my edge” vs institutional traders is that I do not HAVE TO trade, just making a living is fine. However you are pushing that bias out of the window. Nevertheless, when I look at your graphical picture, it does not show any impact of “managing/adjusting” the trades and cutting losses to attempt to cut off the left outliers. Did I miss something?
    Look forward to your comment.

    • Oh yeah I know it’s completely counterintuitive to what most people think but it’s how we should be thinking about trading. Now it’s not to say we force trades every day because we don’t. You still have to be patient and wait for good pricing, high IV rank, etc but the thought process is that you just have to make lots of trades over the course of your career to ensure success. If you manage trades early, either for profit or to cut losses, you’ll cut some of the tail risk off the chart for sure.

  • Dan Amedro

    One question I am struggling with is how many trades to make as it relates to allocation and position sizes. For example, if I have a 100k to invest then my max risk in total would be 40k (@40%) and max risk per trade would be 3000 (at 3% risk per trade). As long as the max risk of my portfolio is 40k or less it is then OK to continue entering new trades? Another question is should most trades be close to this max risk figure? If I’m looking at a trade that that has 1000 in risk would I buy 3 to bring the risk up to 3k. Hope my question makes sense……

    • Yes correct you can continue to enter trades up to 40-50% allocation overall. I think you should scale trades based on IV rank. I scale UP when IV rank is really high and DOWN when IV rank is low – make sense?

      • Dan Amedro

        Yes, thanks

      • Dan Amedro

        One more clarification, is IV Percentile on TOS same as IV Rank?

      • No – they have different calculations.

      • Dan Amedro

        In that case, I can’t seem to find IV rank on TOS.

      • They just use Percentile – you’d have to manually add it to the charts via custom code. It’s going to be slightly different each week or month but generally they both follow the same structure so either one is fine to use.

  • Lord Hades

    When I started, I made many trades, not always getting good results so. Then I went looking for a better opportunities, stopped with DT and my results are better today with less trades.
    Thanks for content
    Regards

  • It’s 4 contracts at one time but I consider it personally as just 1 trade or 1 position.

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