NYC Independent Traders and Investors Message Board › Are options RISKY??
San Antonio, TX
18 sep 2012
TITLE: ARE OPTIONS RISKY?
As a serious options trader, I herein share a few thoughts toward the advancement of NYCPI in an offer to begin a discussion among other option traders of all levels.
The options world consists of two groups: Those who lose most or all of their money in their first year of trading options (80% to 85%) and those who consistently draw money from the market (15% to 20%).
Thus many people feel that trading options is very risky.
The FACT is that professional options traders find that it’s fun and easy to do!
Why the disparity?
In my estimation, though many traders/investors are lured to options because of their leverage advantages, they get in a hurry to start making money ASAP and do trades that they don’t fully understand. They trade far too large for the size of their portfolios, and have unrealistic expectations of what they can expect to make in their beginning years as a trader.
The quicksand pit that I wish to point out to my fellow trading students, is the ironic fact that the reason most options students lose all of their money is because they are chasing after…………….profits!
That to which I refer is that they get into a HURRY and want to make BIG money and they make the dreadful mistake of putting too much of their money at risk in trades that they don’t fully comprehend. They, as my trading mentor says, “Get in a big hurry to lose their money.”
The most significant OPTIONS TRADING CONTRIBUTION that I have for the NYC Private Investor group, is this: IT TAKES YEARS TO LEARN HOW TO TRADE OPTIONS.
This statement might be DISCOURAGING to the Holy Grail/Fast Track seekers and but is meant to be ENCOURAGING to those who are seriously working on becoming option traders because, I want them to know and be reassured that if they’re studying options, practicing their new skill and are trading SMALL , they are on the right track to success!
What I wish to bring to the group is simple:
1. A suggestion of a specific path to follow in truly learning how to trade options
2. A clarification of why beginning traders, mid-level traders and professional traders trade SMALL
3. A focus on the three Laws of Probability and why they, rather than fundamental analysis or technical analysis, win in the game of options
4. A group of specific steps on how to survive the learning curve long enough to be able to actually LEARN how to trade options
5. Why news and other market debris that is thrown at us is damaging to our chances
6. An explanation of why option traders who are experiencing frustration and despair are, in actuality, holding themselves back.
Options are NOT for everybody.
But they don’t have to be risky.
What IS risky is people that trade them without fully understanding them.
If you would care to discuss options as part of the NYCPI presence in the market place, please share your reactions to this post.
Any and all questions and comments will receive a response.
Forest Hills, NY
This is a GREAT start to a serious open dialogue about options. We know that many of our members actively trade options, some of us trade options exclusively.. This would be a great time and place to start a discussion thread about options. Uh, everybody into the pool!