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27 Mar 2016

Perhaps you have or your friends ever attended an options seminar, learned how "simple" it is to create a high income from options trading and yet when you achieved it for sure, you failed to create anything consistently? Indeed, from my observation in this industry in the last decade, I have noticed that the chances of success for beginner options traders are extremely slim. In options trading, as in anything else in life, only a very small percentage of individuals generate income consistently from options trading. This really is true even amongst beginners who attended the exact same options courses. Yes, despite participants of the exact same options course, some will in truth make some great profit from options trading many will not. What went wrong?

I explored the causes for failure at options trading and narrowed it down to two significant reasons; 1. Insufficient an established and systematic approach which novices to finance and economics can follow and trade with. 2, Insufficient an effective trading mentality.implied volatility

Let's admit it, most beginner options traders are no professionals. Actually, a lot of them don't even have a background in finance nor economics and don't understand just why things happen how they do in the stock market or the economy. For such beginners, learning to select stocks and analyze trades could be a disastrous attempt because of their lack of complete knowledge. This really is where lots of beginners fail. Actually, trading discretionarily by picking stocks based on a lot of theories which could not come together in the first place or pure gut feel is really a disaster even for professionals. In order for beginners to become consistent in options trading, an effective, complete and objective trading system and framework that has every angle covered must be introduced in a way that all they need to do is follow rules and make limited subjective decisions nor analysis. This kind of framework must include an objective method of identifying potential trading opportunities, objective method of identifying the right options to trade with in order to optimize the risk/reward of the trade, an objective method of determining if an entry should be made as well as objective profit taking and stop loss policies. Lacking any objective and proven system and framework, no non-professional options trading beginners can desire to generate any consistent return.iron condor

Now, having that sort of "designed for novices" trading system is merely the inspiration of success in options trading. What really determines long term success may be the trading mentality of the traders themselves. What's the usage of a trading system when the trader is incapable of following rules? Indeed, there are many options trading beginners who has made such losses in the past that they are generally ruled by fear and emotion to the extend which they are unable to follow rules at all. Once the methodology they are following requires them to create an entry when a share breaks out, a speech in their heads will stop them from buying saying that the stock could drop back down. Then they will watch the stock continue upwards until it's too late to create an entry.

There is a certain psychological profile needed of successful options traders and which includes the ability to listen to and follow the guidelines of their chosen trading system and methodology irrespective of how their emotions are firing up. They also need the ability to detach themselves from the amount of money they are trading, being a doctor's detachment to the cries of their patients. A powerful trading mentality comes not by nature. It is something that may be trained. Great options traders manages how they run their life in generally and centers around stress reduction and proper rest in the way their daily routine are run. Conversely, additionally, there are traders who have been through so much pain in the stock market that they are generally unable to regulate their emotions and trade in a disciplined manner anymore. Yes, sadly, there are people who should just avoid options trading.


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