Maybe you have or your friends ever attended an options seminar, learned how "simple" it is to make 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 over the past decade, I have noticed that the likelihood of success for beginner options traders are really slim. In options trading, as in the rest in life, only a really small percentage of people generate income consistently from options trading. That is true even amongst beginners who attended the exact same options courses. Yes, even with participants of the exact same options course, some will in truth make some excellent profit from options trading some will not. What went wrong?
I explored the reasons for failure at options trading and narrowed it down to two major causes; 1. Not enough a proven and systematic approach which novices to finance and economics can follow and trade with. 2, Not enough an effective trading mentality.iron condor
Let's admit it, most beginner options traders are no professionals. In fact, many of them don't have a background in finance nor economics and don't understand just why things happen the way they do in the stock market or the economy. For such beginners, learning to select stocks and analyze trades could be a disastrous attempt due to their lack of complete knowledge. That is where plenty of beginners fail. In fact, trading discretionarily by picking stocks predicated on a bunch of theories that may 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, an effective, complete and objective trading system and framework which includes every angle covered must be introduced such that all they have to do is follow rules and make very limited subjective decisions nor analysis. This type of framework must include an objective way of identifying potential trading opportunities, objective way of identifying the right options to trade with in order to optimize the risk/reward of the trade, an objective way of determining if an access should be produced as well as objective profit taking and stop loss policies. With no objective and proven system and framework, no non-professional options trading beginners can desire to generate any consistent return.calendar spread
Now, having that kind of "designed for beginners" trading system is merely the foundation 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 many options trading beginners who has made such losses previously that they are generally ruled by fear and emotion to the extend that they are unable to follow rules at all. When the methodology they're following requires them to produce an access when a stock breaks out, a voice in their heads will stop them from buying saying that the stock may indeed drop back down. Then they will watch the stock continue upwards until it's too late to produce an entry.
There's a specific psychological profile needed of successful options traders and that features the capability to tune in to and follow the guidelines of the chosen trading system and methodology no matter how their emotions are firing up. In addition they need the capability to detach themselves from the money they're trading, just like a doctor's detachment to the cries of the patients. A solid trading mentality comes not by nature. It is something that can be trained. Great options traders protects the way they run their life in generally and centers around stress reduction and proper rest in how their daily routine are run. Conversely, there's also traders who have been through so much pain in the stock market that they are generally unable to control their emotions and trade in a disciplined manner anymore. Yes, sadly, you will find individuals who should just steer clear of options trading.