Maybe you have or friends and family ever attended an options seminar, learned how "simple" it is to create a high income from options trading yet somehow whenever you achieved it for real, you failed to produce hardly any money consistently? Indeed, from my observation in this industry within the last decade, I have noticed that the chances of success for beginner options traders are really slim. In options trading, as in anything else in life, only a very small percentage of men and women generate income 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 in actuality make some really good make money from options trading many will not. What went wrong?
I explored the causes for failure at options trading and narrowed it right down to two significant reasons; 1. Insufficient a proven and systematic approach which novices to finance and economics can follow and trade with. 2, Insufficient a strong trading mentality.options market
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 why things happen the way they do in the stock market or the economy. For such beginners, learning to choose stocks and analyze trades can be a disastrous attempt for their insufficient complete knowledge. This is where plenty of beginners fail. Actually, trading discretionarily by picking stocks predicated on a bunch of theories that'll not interact in the first place or pure gut feel is really a disaster even for professionals. For beginners to become consistent in options trading, a strong, complete and objective trading system and framework that has every angle covered must be introduced such that all they need to do is follow rules and make limited subjective decisions nor analysis. This type of framework must include an objective way of identifying potential trading opportunities, objective way of identifying the proper options to trade with to be able to optimize the risk/reward of the trade, an objective way of determining if an entry should be made in addition to 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 kind 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 use of a trading system once the trader is incompetent at following rules? Indeed, there are numerous options trading beginners who has made such losses previously 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 entry when a stock breaks out, a speech within 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.implied volatility
There's a particular psychological profile needed of successful options traders and which includes the capacity to tune in to and follow the rules of these chosen trading system and methodology no matter how their emotions are firing up. In addition they need the capacity to detach themselves from the amount of money they're trading, as being a doctor's detachment to the cries of these patients. A powerful trading mentality comes not by nature. It is something which can be trained. Great options traders takes care of the way they run their life in generally and centers around stress reduction and proper rest in the manner their daily routine are run. Conversely, there are also traders who have undergone so much pain in the stock market they are generally unable to manage their emotions and trade in a disciplined manner anymore. Yes, sadly, you can find those who should just avoid options trading.