Avoid Options Trading Mistakes – Path to Success
We usually see new traders commit mistakes while trading in options. Many people trade in options without a certain level of expertise needed unlike trading in other markets. People who fail to make money in their previously traded options no longer prefer to trade again as they have committed mistakes not being aware of risks involved.
It is extremely profitable trading in options, however, one should see that mistakes are avoided while trading. Proper entry and exit strategies determine the success of every trade in options trading.
I am going to insist on a few such mistakes traders commonly do while trading:
Buy sufficient time: Options that expire in a few days look very cheap and people tend buy keeping cost into consideration. There will be hardly much time for the stock to move in your favor before it gets expired.
Avoid buying OTM options: Premium of far OTM options will be cheaper compared to ATM options. Unless there is a extreme price movement either upward or downward will give chance to gain profit.
Avoid trading without a proper trading plan: A driver is likely to meet accident if he or she drives a vehicle blindfolded. Similarly, options trader will end up losing money if the trader doesn’t stick to plan and keep emotions aside.
Avoid entering spread trade at different times: Many traders often seen losing their money for not entering a trade, especially the spread trades, all at one. If there is a plan to buy 2 call options, people tend to buy one and wait for a better price for the second.
Avoid taking one side the spread: A trader can avoid trading a spread and problems involved in legging in and legging out of a position.
Have your exit plan: Emotions of panic and greed influence a trader in taking a decision. A well-conceived exit plan keeps a trader away from pressure and free from emotions.
Avoid excessive investments after losing trades: In order to get back the lost money, people tend to invest more money in trades. One should realize that risk of losing money always exists in trading.
Avoid forgetting risk involved in this business: People tend invest their money looking at the advertisements saying “100% returns”. Remember that this kind of advertisement is highly impossible to achieve 100% wins.
Avoid assuming that only a professional can succeed with options: One should focus more on the strategy, how strong the strategy is, rather than focusing much on the individual’s performance.
Avoid putting all eggs in a single basket: It is always advisable to diversify the investment portfolio by putting your money in different sectors.
I did extensive research and tested many options trading strategies and now I want to educate and bring what I learned in options trading business. You would understand how my trades have a minimum success rate of over 90% for the last 6 years.
All subscribers to our services can download my book, “Stock Options – Work ½ Hour A Day” for free (valued at $19.95) from the website www.DrSinghOptions.com to have a better understanding of options trading. This book is an essence of my 35 years of research and experience of trading 28 strategies of options.
Once you enroll as my student, I will E mail you my monthly picks and the login password of my account so you can learn in minutes what I learnt after trading millions of dollars for years.
About the author:
Dr. Harsimran Singh was awarded a Ph.D. by a California University for his research work in options trading strategies and he authored 12 books. He traded stock options for 35 years. At times, he traded over a $100 million in a month in his personal account. His research work in options trading has been filed for patent with The US Patent Office under Application # 61/999,957.