Have you or your pals ever attended an options seminar, learned how "simple" it is to create a high income from options trading and yet whenever you achieved it for real, you failed to create anything consistently? Indeed, from my observation in this industry over the past decade, I have seen that the likelihood of success for beginner options traders are really slim. In options trading, as in everything else in life, only a tiny percentage of men and women generate income consistently from options trading. That is true even amongst beginners who attended the exact same options courses. Yes, despite participants of the exact same options course, some will in actuality make some really good profit from options trading some will not. What went wrong?
I explored the causes for failure at options trading and narrowed it right down to two major causes; 1. Insufficient an established and systematic approach which novices to finance and economics can follow and trade with. 2, Insufficient a robust trading mentality.
Let's admit it, most beginner options traders are no professionals. In reality, a lot of them don't have a background in finance nor economics and don't understand why things happen the direction they do in the stock market or the economy. For such beginners, learning to select stocks and analyze trades can be quite a disastrous attempt because of their lack of complete knowledge. That is where plenty of beginners fail. In reality, trading discretionarily by picking stocks predicated on a number of theories that will not come together in the very first place or pure gut feel is really a disaster even for professionals. To ensure that beginners to become consistent in options trading, a robust, complete and objective trading system and framework that has every angle covered must be introduced such that all they should 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 to be able to optimize the risk/reward of the trade, an objective method of determining if an entry should be manufactured along with objective profit taking and stop loss policies. Without an objective and proven system and framework, no non-professional options trading beginners can aspire to generate any consistent return.
Now, having that sort of "designed for beginners" trading system is merely the inspiration of success in options trading. What really determines longterm success could be the trading mentality of the traders themselves. What's the utilization of a trading system once the trader is not capable of following rules? Indeed, there are numerous options trading beginners who has made such losses before 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 an investment breaks out, a speech inside their heads will stop them from buying saying that the stock might just drop back down. Then they'll 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 capacity to tune in to and follow the principles of the chosen trading system and methodology regardless of how their emotions are firing up. In addition they need the capacity to detach themselves from the cash they are trading, as being a doctor's detachment to the cries of the patients. A powerful trading mentality comes not by nature. It's something that can be trained. Great options traders takes care of the direction they run their life in generally and focuses on stress reduction and proper rest in the manner their daily routine are run. Conversely, additionally, there are traders who have experienced so much pain in the stock market they are generally unable to regulate their emotions and trade in a disciplined manner anymore. Yes, sadly, there are people who should just stay away from options trading.