4 things you must follow as an options trader

By
IntelligentHQ

Options trading is one of the most complicated tasks in the world. It’s harder than the currency trading business. In the Forex market, the traders don’t have to deal with the complicated timing issues. They take the trades and use the stop loss and take profit. But the option traders have to deal with the expiry period. Based on the expiry period, the trades get closed. However, traders can close the trade with partial profit before the option expires.

By now it should be clear the complexities associated to option trading business. Today, we are going to learn 4 amazing things which can help us to become professional options traders. Follow the rules and you won’t have to take things in a complicated manner.

Dealing with the chart

Selecting the time frame is the most important factor for the options trader. It must be synchronized with the expiry period. Let’s say you are trading the options market with an expiry period 1 hour and analyzing the data from the minute 15 chart. It’s obvious the trades will not be valid for such a long period. In order to ensure the setups will be valid for such period of time, you must select 1 hour or above time frame. Try to use the higher time frame trading method as they are more profitable and allows the trader to make more profit. In fact, the win rate is also very high in a higher time frame.

Analyzing the PA signals

PA signals are often known as price action signals. The professional traders in the options trading industry always use the PA signals to execute the trade. They never become confused with the support and resistance level because they look for rejection. In order to become a professional trader, you have to be very careful about your trade execution method. If you start taking the trades with the PA signals it won’t be hard to take the trades with low risk. The basics of the PA signal can be learned by taking the trades in the demo account. So, start practising with a demo account so that you know more about the rejection and price pattern.

Trade with the trend

The trend trading method is always effective to boost up the profit. Those who don’t follow the trend are losing money most of the time. The elite traders in the United Kingdom prefer to trade with long term trend as it reduces the risk exposure to a great extent. Once you start to follow the trend, the false signals can be eliminated from the market. Taking the trades is not so hard provided that you are analyzing the daily trend. Though it will take some time it can improve the process of trading to a great extent.

Trade with low risk

You must trade with low risk. Trying to trade with high risk is nothing but a great mistake. In order to protect your investment. Taking aggressive steps and trying to become a millionaire is not a justified act. You have to ensure the maximum risk you are taking per trade is not exceeding 2% of your account balance. By maintaining the risk exposure properly, the traders will get the unique chance of keeping the losses small. Some of the retail traders often get excited thinking that they have the ideal setup in the world. But nothing in this world is ideal. In order to ensure the safety of your capital, you must be prepared to take small losses.

Conclusion

Learning about the options trading market is a very easy task. But you have to do things in an organized way. Never think it is a way to become rich quick. If you ever try to follow a shortcut in trading, you won’t be able to become a fulltime trader.

 

This is an article provided by our partners’ network. It does not reflect the views or opinions of our editorial team and management.

Contributed content

RELATED ARTICLESMORE FROM AUTHOR