Im new to options been trading for almost six months, but in that time I have had some winners and mostly losers. I will be honest, there have been times when I left money on the table. I feel that when I do place a trade in the right direction it tend to go opposite of the direction intended so to minimize a huge loss I close out the trade. Currently I am not using any other strategies other then just simple Calls/Puts. I guess my question is what are some advice to be a little more consistent to minimize losses? Are there any other resources that you can point me to in order to improve my knowledge?
New to Option and need advice
- Thread starter DatDude
- Start date
do the same thing what u are doing, but sell something above or below.. Read up on verticals / spreads. see how it affects your psychologically, take good notes.. then move on to other strategies. Books like Larry MCmillan, Sheldon Natenburg ,then Charles Cottleshould be understood cold before u size up. Good luck.
DatDude -
Pick one financial instrument and only trade options on that. Your approach of just puts/calls is the way to go. All the other approaches are not suited for a beginner. Do not worry to much about the Greeks. Know a little about Delta and Theta but if anything turns into big time math you are heading in the wrong direction. There is no book or You Tube video or ... that is going to make you into a Big Time Player. Learn a little about Bid/Ask spread.
Keep your trades small and keep a detailed journal and or paper trade and keep a detailed journal.
Everybody has left lots and lots of money on the table.
Many traders get in too soon and out to early. If you figure how to handle this never tell anyone.
Pick one financial instrument and only trade options on that. Your approach of just puts/calls is the way to go. All the other approaches are not suited for a beginner. Do not worry to much about the Greeks. Know a little about Delta and Theta but if anything turns into big time math you are heading in the wrong direction. There is no book or You Tube video or ... that is going to make you into a Big Time Player. Learn a little about Bid/Ask spread.
Keep your trades small and keep a detailed journal and or paper trade and keep a detailed journal.
Everybody has left lots and lots of money on the table.
Many traders get in too soon and out to early. If you figure how to handle this never tell anyone.
Read this thread, especially Maverick74's posts within:
https://www.elitetrader.com/et/threads/writing-options-for-a-living.53037/page-2
If you can understand and appreciate what were said you can become a better options trader.
And make sure you understand how options are priced so you can build your position around....
Good luck.
Ayn Rand,
Thanks for your response and advice.
The plan was to stay away from the advance strategies because they all seem very confusing and the last thing I need is more confusion. After reading some books and videos, there are a lot of things that they don't teach you when it comes to dealing with cutting losses.
I have a great grasp on the Greeks. As you stated Delta and Theta are the Greeks that I care about when it comes to choosing an expiration date.
I will definitely start keeping track of my trades using Microsoft Notes. I have used it before for other note taking reasons, which should be very helpful. Do you suggest using another platform for keeping a journal?
Thanks for your advice. I think the emotion part is whats hurting me as well. There have been trades I close only to see them run up again.
Emotion has little to do with what I do after 12 years in the field. Think of yourself as a poor chap storming the heavily defended trench without artillery barrage, without armored units (all this hasn't been invented yet in your world), without even the machine guns we're scything you with, and still hoping to reach the riches.
Good luck (You're gonna need it)!
my advise re: journal.? If you know MS Access, create a simple database w various flags. so as you get better and more strategies under your belt you can query your journal every quarter.. so you database might have follwoing fields -- tradeDt, trade, quantitiy, price entry, price exit, PnL, flag 1, flag 2, flag3...flag 8. so flag 1 might have values 1 ,2,3,4 depending if strategy was a vertical, condor, fly, simple call buy,etc. Now you have a database of your 100 trades, now later you can query all your trades and filter flag=1 and see how you did,etc.
In the spirit of saving you a lot of time and aggravation, you won't consistently show profits on trading long calls and puts, unless you focus on just a few instruments and have one hell of a good system in place. The house has all the odds with long options, and the odds are squarely against you.
But good luck.
What instruments do you recommend for newbies like us to focus on?