Why being a flow trader will change the way you trade options
It has been almost 10 months since I discovered flow trading. I did not even know it existed until I found Blackboxstocks . Flow trading has been life changing for me and for everyone who has been using other flow based platforms. First of all, I’m going to say that it does not guarantee results but increases your chances of finding winning options trade.
What is a flow trader?
The simple answer is , following what the big whales play. If someone is buying an option call with a specific strike and expiration and adding millions of dollars with urgency, then you would follow right? Meaning they are buying ….above the ask, tons of money, and FAST.
Let me explain in dummy terms. You follow the big smart money.
The scanner will find in real-time that someone with a lot of money buys a call or put option and paying over the market price in a very quick move.
Someone wants IN at a certain stock price AS SOON AS POSSIBLE and does NOT care what the price he/she is paying for.
Here is the example from Black Box Stocks:
Figure “A” – They stared to make a position at 8:30:08 – 8:30:12. So in 4 seconds they placed an order to buy the PENN 6/18/21 $130 CALL.
Figure “B” – They spent $1.1M in that 4 seconds and they paid above the ask. We also know it’s a sweep, which is when your broker fills your order in multiple exchanges regardless of price. It’s basically a market order. On top of that, 5 minutes later they added another $1M. So someone out there wanted to get in this position quick and put in about $2M.
They did not wait for a pull back they don’t care what the chart looks like, they just bought in. Smart money already did all the hard work for you and just wanted in. They chose that certain strike/expiration for a reason. Someone already did the research for you and they showed you the way.
Wait….I still don’t get it?
Here’s my brokerage Fidelity when i’m logged into the account.
This is the bid ask spread. When someone sells, they are getting the BID and when you want to BUY you are getting the ASK. The mid point is the middle. So when the big boys with their big money does a SWEEP and pays Ask or Above the ask, they are paying the 18.40 and higher. And since the order is so big, it may need to get broken into different exchanges to fill the order.
——–> This was just a quick lesson but do you get it now? I will go over all this in a future post but for now , just know this for the sake of this post. There’s more to it but in simple terms, play along.
Someone wants something and doesn’t care about the price and wants it NOW
But why do they want in so fast? We don’t care why, all we know is, someone just wants in.
A few theories can be as the following:
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They know something <– Happened before
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The chart shows a break-out is imminent
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News/New product/Mergers etc
But whatever is it, we do NOT care.
Now that we know we are following big money now what?
Wait, you just wait and see what happens to the stock. It will be up to you when you want to exit or when you want to cut a losing option call. These plays can take same day to up to months for it to work and it may also go down 60% and you may feel like you want out of the trade. Again someone putting millions of dollars in, I’ll trust them and follow them. But you need to find the RIGHT flow. Trust the flow and you’ll do very well.
You do not have to hold until the big guys leave. They may have a longer term plan while we “us” retail guys will scalp for a decent gain (20-1000% etc).
Board the bus while it’s leaving and jump off before the unknown destination
->>Read : How do you know when to exit a winning trade
Why isn’t everyone rich then?
You still need to manage your trade. These trades and plays have about a +80% win rate and you should never put your whole account in. One bad trade and you put your whole portfolio in, you can lose it all. This works very well if you’re only scalping the options quick because you’d go in and you’d get out. Don’t wait for the options to hit 100%.
So I just follow flow and I can easily make money?
Technically, if you followed all the plays and managed your account properly you’d make money on blackbox. Yes you get it? You are a flow trader and this is what you do. Follow the flow.
Why do you keep saying managed risks?
Let me show you the chart that we have provided by Trade Talk Media
MAX price % a lot of these were well over 100%. So if you were not greedy and waited for most stocks to get to +50% gains you’d be golden. However look at the BABA, CZR, SNAP, NFLX. , these were winners, but if you held them longer then you’d be bag holding it right now because they never had explosive gains. If you put your whole account you’d be dead in the water and lose all your gains and your account.
THIS IS THE REASON TO NOT GO ALL OUT.
If the market decides to turn bearish or if we get political issues or war and the market tanks, those options will be worthless as big investors will take the loss just to save their capital. So it’s never 100% guarantee these plays work.
How about the losses in Blackbox? Why are you keeping those hidden?
If you only follow these 20Tradesflow or Top-flow, and DO NOT PLAY anything else, these will only be your trades. This is the outcome. I can’t emphasize it enough. The losses others may be talking about are ones that the mods play but aren’t these flow. They still do a very good job but again manage manage manage risk! You can be a trial and stalk the rooms in discord. It clearly shows all the plays in real-time. If you want to stalk even more, cross reference the stock when it was called out and look at the strike price and spot price.
Are you guys catching on yet?
You wait for the right flow to come in since they are trash and you play it. You exit when you are happy with your gains. Literally this is all you have to do but you have to wait for the right flow. Stop overthinking this because I just gave you the bottom line. You will notice that blackbox is not the only platform that does this, you can judge for yourself. Most platforms will see the same things blackbox will but BBS does have a few advantages. I won’t go over it as you can take the trial.
Let the flow come to you, play it, and exit before the big boys exit.
