Options trading tips are tools to help decision-makers make better choices. When people start to research day trading options, their minds get flooded with questions and doubts. So, I will walk you through some options trading tips to help you gain clarity and block out all the rest. In the end, you will do what is best for you since every situation is unique, and we aren’t molded the same. I will tell you these things I wish I knew when I started day trading, although I am incredibly successful today. Had I known these things sooner, who knows where I would be today?
It is a strength to be able to give and receive advice. By seeking advice from the right people and in the right ways, you can develop smarter solutions to problems. You also deepen your thinking and sharpen your decision-making skills. I can teach you how to day trade like the top 10% without a complicated strategy or any technical indicators, even if you are a beginner. I help my students avoid the challenges I faced when I first became a day trader. MK Financial LLC is already the #1-day trading coaching business in the US in just one year.
Options Trading Tips: What Do I Need?
A common question that comes up is, what do I need to get started as a day trader? Well before we even talk dollar amounts, you need to focus on the core. Building the foundation that sets the pace for everything else that follows. You need to be well informed when it comes to the stock market. If you were planning on baking a cake and have never baked it before, you would most likely look up a YouTube video. That would help walk you through the ingredients, steps, and oven temperature needed to bake the cake. If you just tried to wing it by yourself, the likeliness of it being any good is highly unlikely. This same concept applies to option day trading.
The stock market has rules in place that need to be followed, or you can put yourself in a situation where your access may be restricted. So, it is important to learn all these ahead of time to avoid any headaches. The Financial industry regulatory authority (FINRA) pattern day trader rule is any customer who executes four or more “day trades” within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades in the margin account for that same five-day period; business day period. It is very important to know if your account is less than 25k. When your account is over 25k, the only three-day trades pattern day trading rule doesn’t apply to trade stocks.
It is also important to know that you only get one pass on this mistake for the life of your account. So, if you “accidentally” place the fourth trade in five days, you will be required to deposit 25k. Your account will be frozen until the money is deposited, or you use your one-time pass. Another rule that is important to know is if you sell a position that you purchased with unsettled funds in your cash account, you will incur a Good Faith Violation. It’s called ‘good faith violation’ because there was no effort in ‘good faith’ to add necessary funds to the account before the settlement date.
Options Trading Tips: Getting to the Core
The core element that you need for options trading is a trading strategy. This is what you need to master before you even start to touch your own money. A strategy that has been tested and proven to be successful. Once you learn the strategy, you need to use a trading platform to put to the test what you have learned with paper trading. Once you have practiced enough times when your paper money is consistently earning gains, you can enter the live market. Once you enter the market, I suggest only purchasing one contract until you are consistently winning most of your trades for that week.
Keep that momentum and if it is the same for a few weeks then you can start increasing contract size and repeat the same method. This is done to practice risk management and protect your capital. To start trading options, you can start with as low as $100. The amount you begin with is completely up to you. Trade with money you can afford to lose; because the reality is you can lose it all. To trade options, you will need to open up an account, either cash or margin.
It is ok to start small, You also don’t need multiple brokerage accounts for a successful trading experience. You need to keep in mind if you do decide to start small then your gains will also be small. But the important thing is to keep an open mind and be realistic. You can start options trading with $1000 and think your account will be over $15,000 by the end of the week. The next thing you need to do is focus on time because options trading not only requires you to be attentive but to invest time as well.
Options trading requires you to keep an eye on the stock market and have the ability to spot opportunities where you can enter and exit a trade quickly. You don’t have to stay on your device from 9:30 a.m. to 4 p.m. to be a successful trader. But you do want to keep that time frame in mind as a guide as to what time the market opens and closes. Within the first few minutes of the stock market opening a lot of buying and selling by, options traders are heavy. Stock-trading volume and liquidity tend to be clustered between 9:30 a.m. and 10:30 a.m.
The next big, important hour is known as the power hour. Power Hour takes place during the last hour of the trading day between 3 p.m. and 4 p.m. EST. During this time, large and frequent trades are made. Power hour stocks are good for options traders looking to make some quick returns. This is because, during this hour, options traders are looking to close old positions and open new ones to heighten their investment. Now that we have touched on being realistic and time, we need to dive more into the emotional aspect of options trading.
Cool Calm Collective
Emotions are truly one of the biggest downfalls for options traders; if you learn early on to get this in check will save you money and time. Emotions such as fear and greed can have negative effects that cause day traders to act impulsively. Fear may also turn to greed when a trader holds onto losing positions for a long period; fearful of taking or accepting a loss. Anxiety is something that is seen immensely in day trading. One main reason is that you don’t know for sure which way the stock market will go. The unknown tends to send people into a state of panic or worry.
Another emotion that causes options traders to lose their cool is fear of missing out (FOMO). An increase in fear will often lead to “panic selling”. Day traders will rush to get out of trades in an attempt to avoid greater losses. Or act hastily and rush into a trade, fearful of missed opportunities to make money. A negative mindset can lead to anger and depression and have a significant impact on your trading.
Summary: Options Trading Tips
I am sure this was a lot of information, but it was useful objectives we covered that will lead to your success. You want to trade smarter, not harder, and I am sure you want to transform your financial situation from small to large. Being an options trader does involve risk, but doesn’t anything worthwhile? I think you would agree when trading options there is a light at the end of the tunnel that is worth pursuing. As long as you keep an open mind, get a handle on your emotions, start small, protect your investment and work on your strategy you will have more successful patterns.
I believe everyone should have the opportunity to become their boss, plan out their entire day, and only work as much or as little as they want. My goal has always been to teach as many day traders to achieve their personal financial goals, whether they are novice traders or experienced traders. The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. You are just a click away from learning more tips on what you need to become an options day trader. You have made it to this point of the article, so I know you are ready to take your life and finances to the next level.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
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