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JM investor
wrote a post12/04/2022 01:29

Option trading- My 3 cents on how to be a profitable trader

Option trading is not easy. Instead, to me, option is one of the most complicated tools in trading.
Stock- we just buy and sell, or short sell then short covered.
Future- Buy and sell
Option- It is not as easy as buy or sell. By contrast, one strategy can have buys and sells for either one direction or no direction. Butterfly, iron condor, spread, blar blar blar
Option trading- My 3 cents on how to be a profitable trader
And yes, by using right strategy and be discipline enough, option is one of the best ways to earn money. But the opposite is true as well, option can be one of the best ways to LOSE money.
Option trading- My 3 cents on how to be a profitable trader
Here, I will provide 3 advices on whoever wants to start option trading:
i) Take a course and study it seriously
There are many useful course availble. You can either go to MooMoo learn to explore the basics of options, or look for Youtube for the free content. Or, if the budget allows, you may also sign up some paid courses from Udemy or even some gurus. I am not affiliated to any guru or courses. My key point is, learn it seriously before putting real money in option. Without a proper education on it, it is like driving a car without license, or even without a brake.
Option trading- My 3 cents on how to be a profitable trader
ii) Trade with paper money, or if using real money, start small!
Different from investing, where I think using real money is more important to get a feel on market, option, to me is best to start with paper money or with a very very small amount of real money. Option price does not only depend on underlying price, it also depends on Greeks, such as delta, theta etc. Don't be surprise you are still losing money if the market moves in your favoured direction. Trading with paper account could definately help us to sharpen the skill and enhance our knowledge.
Option trading- My 3 cents on how to be a profitable trader
iii) Be discipline- control emotion
This is the toughest part. With the best strategy but without a proper trading plan, most of the time a trader is still losing money. Be discipline! Never FOMO, panic sell.
Buy when hits your entry price, and profit take when hits your target. Cut loss if hit stop loss.
Seems easy, but it is extremly difficult. And this makes the different between top 10% of the trader.
Option trading- My 3 cents on how to be a profitable trader
That is all for my sharing.
Hopefully you gain some insights here. Thank you and see you in the next post.
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