here are some helpful hints to newbie option traders
1. i rarely, if ever, hold options overnight, especially weeklies. if i hold overnight its on a LEAP, long dated contract, that i bought at a discounted price (when the STOCK pulled back to support, not the option)..if its a weekly, i better have a dam good reason for holding overnight, and still i wont sleep well..ending the day with all cash...is so much better than worrying what that stock will do the next morning
2. if i am not comfortable with the play (second guessing myself), or i cant be at my desk to watch it like a hawk, ill take whatever profit is there..even if its $50...profit is profit..it all adds up, trust me..i dont, "let it ride"...thats my money, im taking it back...loss, profit,whatever...
3. most important to me: NEVER be afraid to admit your mistakes, or to take a loss...cut the losses as quickly as possible..admiiting what you saw in the trade to begin with, was never there, or , the situation changed, or whatever the cause of the loss..just admit to yourself..it was a bad trade and MOVE ON..do not get discouraged, learn from it..learn form it..learn from it..this way next time you'll understand a little better what your getting into...never get too low from the losses (same goes for wins, never get too high from them)
4. Going in BIG..is usually always the wrong move in options...a lot of money can be made from a very little..that is why we trade options...
5. I Never "follow" someone in a trade, strictly because he/she is a good trader..bad move..we all lose, nobody is perfect...if i dont understand what is taking place in that trade, then i should not participate...watch it from the sidelines and learn from it
6. if i miss a trade, so what, i know and am comfortable with, knowing that there are endless oppurtunities in trading options...i'll just catch the next one..if i sell my option at a loss, then it goes ape chit and i could made so much $$$$...so what, i just feel more comfortable knowing that what i did to begin with was the right move, learn from it and move on
7. understanding that anything can happen, anyday, anytime...first thing i say every morning is, "today is going to be a great day!..not knowing what the markets will do...that way i am ready for whatever unfolds..europe, obama, short restrictions,CNBC, earnings report, news, greek debt, yahoo news headlines..i dont give a chit...be ready for anything and stay focused on your screen, not the BS around it
if this post helps even 1 person, it was worth the time
good luck trading
and i know, tomorrow will be a great day!
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