Options Trading is high risk and high reward business. One shouldn’t directly jump into it without having proper knowledge and also one must have trading experience.
Never underestimate the power of Risk Management if your trading in options.
Few more important tips to be taken seriously in trading.
- Don’t trust others opinions – It’s your money at stake, not theirs. Do your own analysis, regardless of the information source.
- Don’t break your rules – You made them for tough situations, just like the one you’re probably in right now.
- Don’t try to get even – Trading is never a game of catch-up. Every position must stand on its merits. Take your loss with composure, and take the next trade with absolute discipline.
- Don’t believe in a company – Trading is not investment. Remember the charts and forget the press releases.
- Don’t seek the Holy Grail – There is no secret trading formula, other than solid risk management. So stop looking for it.
- Don’t forget your discipline – Learning the basics is easy. Most traders fail due to a lack of discipline, not a lack of knowledge.
- Don’t trade over your head – Concentrate on playing the game well, and don’t worry about making money.
- Don’t chase the crowd – Listen to the beat of your own drummer. By the time the crowd acts, you’re probably too late…or too early.
- Don’t trade the obvious – The prettiest patterns set up the most painful losses. If it looks too good to be true, it probably is.
- Don’t ignore the warning signs – Big losses rarely come without warning. Don’t wait for a lifeboat to abandon a sinking ship.
- Don’t count your chickens – Proﬁts aren’t booked until the trade is closed. The market gives and the market takes away with great fury.
- Don’t forget the plan – Remember the reasons you took the trade in the ﬁrst place, and don’t get blinded by volatility.
- Don’t join a group – Trading is not a team sport. Avoid acting on messages, ﬂashes and ﬁnancial TV. Your judgment may be more correct than all of them put together
- Don’t have a paycheck mentality – You don’t deserve anything for all of your hard work. The market only pays off when you’re right, and when your timing is really, really good.
- Don’t ignore your intuition – Respect the little voice that tells you what to do, and what to avoid. That’s the voice of the winner trying to get into your thick head.
- Don’t hate losing – Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself.
- Don’t fall into the complexity trap – A well-trained eye is more effective than a stack of indicators. Some time Common sense is more valuable than a complex set of indications.
- Don’t confuse execution with opportunity – Overpriced software won’t help you trade like a pro. Pretty colors and ﬂashing lights make you a faster trader, not a better one.
- Don’t project your personal life – The outcome of your trade is deﬁnitely likely to get affected by the situation at your home. Get your own house in order before playing the markets.
- Don’t think its entertainment – Trading should be boring most of the time, just like the real job you have right now.
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