5 Reasons Why Most Options Traders Lose Money
There's many reasons why 90% of options traders lose. Let's list a few of them!
We've been there. We're winning in our options trade, it feels great! Next thing you know, you're up an insane amount. What do you do? I'll hold longer you say, and you do, at least 90% of you do actually. Next day what happens? Bam! The option suddenly becomes worthless overnight. What happened here? 1 answer, it is greed. You did not take profits when you were in profits by a huge amount when you could and the trade went against you. This happens to the majority of options traders, including me.
I know the lot of you want to get rich fast and it is possible with options trading, don't get me wrong, it is possible in options trading, but not in weeklies! What are weeklies? Weeklies are option contracts that expire within 7 days. its not recommended you play them.
The stock market has been going up for 100 plus years. That is 100 years of uptrend. On average, the market goes up 9% every year! Stocks go up 85% of the time and go down 15% of the time. If you try to play the 15% and not the 85%, you will find yourself losing in more of your options trades! Seriously!
Although the stock market goes up 85% of the time, it is still hard to predict the short term day to day prices. Even if you are confident in a trade, you can still lose. Trades you are confident in are super dangerous. Confidence causes traders to put more of their money on the line! It happens to all losing traders.
You may see a price of a stock going up! Woohoo! Time to get in you think. Sure thing, you get in! Bam! the options value crashes but the price is still the same. $Invesco QQQ Trust(QQQ.US$ $Nasdaq Composite Index(.IXIC.US$ $SPDR S&P 500 ETF(SPY.US$ $Tesla(TSLA.US$ $Apple(AAPL.US$ $NVIDIA(NVDA.US$
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Always Growing : Would you explain a bit more for #5. Such as how to gauge the volatility and price to avoid pitfalls? Will be most helpful to newbies like me, thanks!
Disguised Hunter : That was great.
500万 : how long to expiry do you recommend? 2 weeks? 3 weeks? how about the rest of you?
popYOUNGOP 500万: You bought at the top of the premium or you bought too early of an expiry date. Even if price moves, if you buy at the top of a relative top or too soon of an expiry, your option can devalue quick still!
popYOUNGOP Disguised Hunter: thx
popYOUNGOP 500万: Make sure your contracts have at least 30 days before they expire. This gives you time to hold through any price volatility you might face in the short term.
500万 popYOUNGOP: ok thanks...