The greatest obstacle to learning how to trade options successfully is the inability to find an easy to follow option trading system that can help you make money consistently.
There are dozens of option trading systems out there and each author behind them claims that their system can make you profit consistently but how many of them really live up to what they promise?
The bottom line is profit! What you should really consider when learning how to trade options with a trading system is to really look at; their past performances, how many trades the results are based on, whether it can survive during up and down market, what the drawdown is, etc.
I’m sure you get the picture and I’m quite certain that there are a lot more other factors that you would take into consideration when you are looking to buy a trading system that fits your trading style.
But here is what an easy to follow proven system should have, it should have a set of pre-defined rules to govern your trading, such rules should alert you when to enter a trade, a pre-defined stop loss if the trade turns out wrong and when to take profits.
As you can see, these are very simple but many people don’t seem to make money in the long run no matter how many different systems or how hard they try.
Why? This simply boils down to one factor – Discipline. People give up too soon. Any robust trading system would have its own period of drawdown. The key is to understand yourself first and find a system that fits your trading style.
If you are swing trader, meaning you would keep a position open for 2 to 5 days then look for a system that does that.
If you absolutely cant carry positions overnight because you don’t want surprises the next morning, then find a day trading system.
We all know learning how to trade options is much harder than learning how to trade stock in general because option is often regarded as a high risk instrument. So that’s why having a proven trading system is crucial to your success.
Once you found a system, learn to stick to the trading rules. The easiest way to make yourself to adhere to those rules is automate it. Nowadays many of the large brokers would allow you to set pre-defined stop losses or profit taking trailing stop to automate your trading.
If your system tells you to sell when you reach 20% profit, then you can set up the trade at the beginning and forget it, so when it reaches 20% profit it will automatically execute the trade for you.
This can really take the emotions out of trading and helping you to become a more disciplined trader.
Finding a system that fits you is only half the story, knowing whether it will be profitable over the long run is also very important. After all if the system has never been profitable, no matter how disciplined you are, you will end up losing your shirt.
That’s why services such as http://www.pro-trading-profits.com is very useful when deciding whether you should give a system/newsletter a try or not. It monitors many different system/newsletter so you can use it to gauge how profitable the system really is.
