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Most people are lured to the idea of trading stock options, typically buying and selling calls and puts. The bait is the unlimited returns risking up to the amount of the principle used to purchase the option. That is not to say that they are for the faint of heart. . .
These animals called options can be fast moving. That profit you realized and even the principle can be gone in a relatively short period of time if you are not careful.
锘縁ive Friendly Tips For Stock Option Trading
2) Understand and assume your risk! Before putting your money in to trade stock options, you must understand the kind of risk you are taking. There is a pamphlet called the Characteristics and Risks of Standardized Options. You can get it from a variety of sources including online brokerage services. The pamphlet covers everything from options nomenclature, various options in the market, and the principle risks of options positions.
4) Read books about discipline. In the market discipline is key and you have got to learn how to become disciplined if your are not already. There are several aspects of discipline, management discipline, emotional discipline, and work-ethic. Learn from others who have mastered discipline in their own lives and in their trading.
3) Practice, practice, practice. Oh yes, practice. Several auto-biographies about successful traders reveal that practice is an integral part of their lives. There are several practice systems available to us through our online broker. Test out your plan and strategies on the virtual trader.
It is precisely for this reason that the following easy to follow tips are recommended for the beginner in the advanced world of trading stock options.
These five tips will help you to improve your ability to trade stock options. You want to be able to continue trading. . . trade to trade another day.
5) Continue your education daily. Never stop educating yourself on the trade. You can be either a fundamentalist or a technical analyist and there is plenty to learn to enhance you ability to trade stock options. The best people in any area never quit learning. Make it a point to learn one new thing a day and write it down in your trading journal.
1) Get a coach. You must admit learning from someone who has been there and done it and done it well has something to teach you. If you want to trade stock options do not just jump into it based upon your hunch or some tip from television . . . learn something first. Get a plan and some training. A good coach can help you with the development of a plan and build your confidence in the trading plan before you expose yourself to the wild world of trading stock options.
As with anything, one thing always makes a tremendous difference . . . Practice.