KEYS TO SUCCESS IN
OPTION CALL PUT TRADING
1) Don’t Average There is a reason for the expression that ” the trend is your
friend.” Don’t fight it and most of all Don’t assume that it will turn
itself around. Averaging down into a losing trade is a sure way to lose your
money.
2) Trade when the market goes up and when it goes down. Most traders know how to buy calls. They know
how an when to buy when they believe that the market will go up. But
there is an equal amount of money to be made when it goes down. You have to be
comfortable investing in both calls and puts. Again look at the trend and if it
reverses get out of the trade.
3) Trade logically. Fear based trading is a sure way to lose money. Fear creates
paralysis. It keeps you from pulling the trigger and getting out of a trade.
4)Trend:
The objective of successful options strategies is to create profit. It is
opposite of what many believe. You are not there to buy low and to sell high,
but to buy high and to sell higher, or to sell short low and to buy lower. Look
at the trend.
5)
Sell markets that show the greatest weakness; buy markets that show the
greatest strength. Again look at the trend. You are not here just to buy
into strong markets. You are here to make a profit either way.
6)
Trading is not compulsory:You do not have to be in a trade all
the time. There are times when the markets are flat or in a sideways
trend. This is not the time to enter a trade. Stay out of the market!
7)
No one can predict the market. Your options strategies should always
include entry and exit points. Have a stop loss point in mind for each trade
before you enter it. This is where most people get it wrong. You must be
willing to put exit points in and stop losses as well.
You
will win many trades but you will also lose some. No one is infallible. The
main thing to remember is that you must trade long enough and minimize your
losses enough to continue trading for those big winning trades.
