Options:The Trader Journey part 2

Terrapin Trader,

Finding Your Own Way

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This is such a huge subject and it would be fatuous to assume you know nothing about trading. You may however, have no knowledge of yourself when in a new scary environment. Do we all relish the prospect of skydiving? What about public speaking? Your first game of cricket in 20 years? Buying or selling your home?

It’s All About You

With options you can choose to trade very small- OK you can trade small with spreadbets: live long and prosper.                 There are plenty of sites to help with that, just Google spreadbetting.                                                                                                                                                                     You can trade option strategies that cost as little as say £50, or you could buy very far OTM(out of the money) options for pennies. I have seen a put trading at 2(£20) go to 300(£3,000) in the space of 2 weeks. You have to figure out your own risk profile, and get comfortable with being uncomfortable. By that I mean you should always have some sort of emotion about trading, that is natural. Thrill seekers are advised to gamble-we manage risk, and that is very different.Taking those first steps is frightening, and we may have doubts in the early days-what is my risk? Did I place the trade correctly? So many variables.

It’s not without its ‘buzz’ however. You may  find you are addicted to checking option prices, looking for that next trade.

Paper Trade,But With Feeling

Not easy to do but you have to picture real money in a paper trade. You have to envisage placing the trade. It is so important to get your head around the concepts in options trading before jumping in. You will have doubts, minor panics and surprises. But you won’t wake up to find your shares suspended.enront2

Option trading shouldn’t be reckless. It can be super cautious. You can find your own way.

Published by Terrapin Trader

First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

1 Comment

  1. In ’99 and 2000 I had a share portfolio and I was on a long journey reading the FT. It sang the praises of Invensys- a share I bought. A few days later it was less sanguine, calling it ‘troubled engineering group’ Invensys.The price plummeted.
    The pundits are not idiots, they simply do not know what really goes on-so why try to board that train? It breaks my heart to hear so many sob stories about shares-we’ve probably all been there.
    I was in the USA when Enron was flying high- I asked why they were selling electricity at below cost price, and nobody seemed to care, now I’m no accountant but…..

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