Have you or your friends ever attended an options seminar, learned how “simple” it’s to create a high income from options trading but yet once you achieved it for sure, you failed to create anything consistently? Indeed, from my observation in this industry over the past decade, I have seen that the chances of success for beginner options traders are really slim. In options trading, as in everything else in life, only a tiny percentage of men and women make money consistently from options trading. This really is true even amongst beginners who attended the same options courses. Yes, even with participants of the same options course, some will in actuality make some great profit from options trading some will not. What went wrong?
I explored the causes for failure at options trading and narrowed it down to two major causes; 1. Lack of an established and systematic approach which novices to finance and economics can follow and trade with. 2, Lack of a powerful trading mentality.stock options trading
Let’s admit it, most beginner options traders are no professionals. Actually, most of them don’t have even a background in finance nor economics and don’t realize why things happen the direction they do in the stock market or the economy. For such beginners, learning to choose stocks and analyze trades can be quite a disastrous attempt because of the not enough complete knowledge. This really is where plenty of beginners fail. Actually, trading discretionarily by picking stocks predicated on a lot of theories that could not work together in the initial place or pure gut feel is just a disaster even for professionals. In order for beginners to become consistent in options trading, a powerful, complete and objective trading system and framework which has every angle covered must be introduced such that all they have to do is follow rules and make limited subjective decisions nor analysis. Such a framework must include an objective method of identifying potential trading opportunities, objective method of identifying the correct options to trade with to be able to optimize the risk/reward of the trade, an objective method of determining if an access should be made as well as objective profit taking and stop loss policies. Without an objective and proven system and framework, no non-professional options trading beginners can hope to generate any consistent return.options market
Now, having that sort of “designed for newbies” trading system is just the building blocks of success in options trading. What really determines long haul success may be the trading mentality of the traders themselves. What’s the use of a trading system when the trader is incompetent at following rules? Indeed, there are lots of options trading beginners who has made such losses previously they are generally ruled by fear and emotion to the extend that they cannot follow rules at all. Once the methodology they are following requires them to create an access when an investment breaks out, a speech inside their heads will stop them from buying saying that the stock may indeed drop back down. Then they’ll watch the stock continue upwards until it’s too late to create an entry.
There’s a specific psychological profile needed of successful options traders and which includes the capability to tune in to and follow the guidelines of the chosen trading system and methodology regardless of how their emotions are firing up. Additionally they need the capability to detach themselves from the money they are trading, being a doctor’s detachment to the cries of the patients. A strong trading mentality comes not by nature. It’s something which can be trained. Great options traders protects the direction they run their life in generally and is targeted on stress reduction and proper rest in the way their daily routine are run. Conversely, there are also traders who’ve experienced so much pain in the stock market they are generally unable to manage their emotions and trade in a disciplined manner anymore. Yes, sadly, there are those who should just avoid options trading.