Perhaps you have or your friends ever attended an options seminar, learned how "simple" it's to produce a high income from options trading yet somehow whenever you achieved it for sure, you failed to produce hardly any money 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 individuals earn money consistently from options trading. This is true even amongst beginners who attended exactly the same options courses. Yes, even with participants of exactly the same options course, some will actually make some excellent make money from options trading while most will not. What went wrong?
I explored the causes for failure at options trading and narrowed it down to two significant reasons; 1. Lack of an established and systematic approach which novices to finance and economics can follow and trade with. 2, Lack of a strong trading mentality.calendar spread
Let's admit it, most beginner options traders are no professionals. Actually, most of them don't even have a background in finance nor economics and don't understand just why things happen the direction they do in the stock market or the economy. For such beginners, learning to select stocks and analyze trades can be quite a disastrous attempt because of the lack of complete knowledge. This is where plenty of beginners fail. Actually, trading discretionarily by picking stocks predicated on a number of theories that could not interact in the initial place or pure gut feel is a disaster even for professionals. For beginners to become consistent in options trading, a strong, 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. This type of framework must include an objective method of identifying potential trading opportunities, objective method of identifying the correct options to trade with in order 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. With no objective and proven system and framework, no non-professional options trading beginners can hope to generate any consistent return.
Now, having that sort of "designed for novices" trading system is only the inspiration of success in options trading. What really determines long term success could be the trading mentality of the traders themselves. What's the utilization of a trading system when the trader is not capable of following rules? Indeed, there are lots of options trading beginners who has made such losses before that they are generally ruled by fear and emotion to the extend they are unable to follow rules at all. Once the methodology they're following requires them to produce an access when a stock breaks out, a voice in their heads will stop them from buying saying that the stock might just drop back down. Then they will watch the stock continue upwards until it's too late to produce an entry.straddle option
There's a certain psychological profile needed of successful options traders and that includes the capacity to listen to and follow the principles of their chosen trading system and methodology no matter how their emotions are firing up. They also need the capacity to detach themselves from the amount of money they're trading, as being a doctor's detachment to the cries of their patients. A powerful trading mentality comes not by nature. It is something that may be trained. Great options traders protects the direction they run their life in generally and centers on stress reduction and proper rest in how their daily routine are run. Conversely, there are also traders who've undergone so much pain in the stock market that they are generally unable to regulate their emotions and trade in a disciplined manner anymore. Yes, sadly, there are people who should just stay away from options trading.