If you trade options part time or full time, and you don't have at least a basic understanding of technical analysis, you're probably missing out on a lot of very profitable trades. The fact is that understanding technical analysis can help you to take a lot of the guess work out of your options trading, meaning you'll have a chance to become a much more profitable trader.
The simple fact is that if the market is making higher tops and bottoms on a chart, you want to take advantage of that. As traders, we need every piece of help we can get, and riding a persistent trend is one of the biggest legs up we could ask for. Using moving averages can also be helpful in determining the trend, because they provide a visual cue to which way the market is going.
But if the options trading system you are using ignores technical analysis, it can make it harder to be consistently profitable because you can be fighting the trend a lot of the time. Understanding where support and resistance lie on a chart can also allow you to open positions for extra contracts in the direction of the trend. By doing this, you can compound your profits with less risk, but if you ignore technical analysis, you can be flying blind. As the old adage says, the trend is your friend, and that's the direction you want to trade.
So does a system that incorporates technical analysis give you profitable trades every time? Of course not. The fact is that as a trader, you are going to lose on a percentage of your trades because we never know for sure what the market is going to throw at us. But using technical analysis can highlight potential trade opportunities for us, and we can then make decisions based on our trading plan.
The great thing about trading options is that you are never locked into a position. We can always roll our options out to a later expiry, or up or down to a different strike price as we need to. That means if we get the trend wrong, we can modify our position and strategy to suit the market. If you compare that to betting on a horse, where once they have jumped, you're stuck with your position. With options, you can make changes over and over again based on feedback from the market.
So what are your choices if you'd like to become a profitable options trader, but you're not confident in your ability to pick the trend or good entry and exit points? An easy way to reduce the learning curve and get started quickly is to model a successful trader's system and simply implement it for yourself. That means you could start trading profitably almost right away.
It really makes sense for new traders to let somebody else spend the vast amount if time and money it takes to learn an options trading system that actually works and makes money. That way all you have to do is take the trades as they are called, and enter the positions to get on board.
The simple fact is that if the market is making higher tops and bottoms on a chart, you want to take advantage of that. As traders, we need every piece of help we can get, and riding a persistent trend is one of the biggest legs up we could ask for. Using moving averages can also be helpful in determining the trend, because they provide a visual cue to which way the market is going.
But if the options trading system you are using ignores technical analysis, it can make it harder to be consistently profitable because you can be fighting the trend a lot of the time. Understanding where support and resistance lie on a chart can also allow you to open positions for extra contracts in the direction of the trend. By doing this, you can compound your profits with less risk, but if you ignore technical analysis, you can be flying blind. As the old adage says, the trend is your friend, and that's the direction you want to trade.
So does a system that incorporates technical analysis give you profitable trades every time? Of course not. The fact is that as a trader, you are going to lose on a percentage of your trades because we never know for sure what the market is going to throw at us. But using technical analysis can highlight potential trade opportunities for us, and we can then make decisions based on our trading plan.
The great thing about trading options is that you are never locked into a position. We can always roll our options out to a later expiry, or up or down to a different strike price as we need to. That means if we get the trend wrong, we can modify our position and strategy to suit the market. If you compare that to betting on a horse, where once they have jumped, you're stuck with your position. With options, you can make changes over and over again based on feedback from the market.
So what are your choices if you'd like to become a profitable options trader, but you're not confident in your ability to pick the trend or good entry and exit points? An easy way to reduce the learning curve and get started quickly is to model a successful trader's system and simply implement it for yourself. That means you could start trading profitably almost right away.
It really makes sense for new traders to let somebody else spend the vast amount if time and money it takes to learn an options trading system that actually works and makes money. That way all you have to do is take the trades as they are called, and enter the positions to get on board.
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