4 Easy Steps To Become a Better Options Trader Today. Part 1
What You Will Learn
By the end of this 4 part series you will have a trading framework that you can use everyday that will make you a better more disciplined options trader.
Step 1. Set Trading Goals
All too often traders jump into trades without having an exit plan. This lack of planning has burned many traders including myself. You have a position that is profitable, but you get greedy in hopes that you can squeeze even more profit out of it. The problem with this approach is the risk of the trade going against you and you missing out on your potential gains. Even worse, you hold the position hoping to win more and end up losing money on it. This scenario can be avoided by simply having a stated goal of when you will take profits.
For example, if I buy a call on MSFT, I will sell it once the options value increases by 20%. Locking in this profit gives me a realized gain I didn’t have before and protects me if something should happen and the options start to lose value. No one can predict the market and in todays current climate a huge swing are becoming normalized. Take your profits and run!!
Profit is Profit.
MSFT could very well sky rocket to a 100% gain.
Guess what? Thats ok.
Part of being a better trader is to understand that these things happen and that it’s better to take profits to live another day versus risking a loss. This is your hard earned money at work. Protect it.
Remove the emotion
Tiblio sends users alerts when they should close their spread positions taking the guess work and emotion out of closing a trade. It can be so tempting to want to stay in trade… it’s just our nature. Having a system like Tiblio that sends you notifications when you should close, protects you against yourself and keeps you profitable. This disciplined approach to trading will have you on your way to becoming a better trader.
Have a stated goal of when you will take profits from a trade before you take the trade. Try your best to remove the emotion from closing trades at this goal. For options spreads, use a system like Tiblio as part of your trading strategy to alert you when you should close your spread positions.
In this next installment, we will discuss the value in journaling your trades and how this will allow you take make better decisions when trading options.
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. I assume no responsibilities for your trading and investment results. The list of option spreads, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for stock observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities or strategy mentioned herein. I am not a financial and advisor and I do not give financial advice.
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