What does it take to be a great options trader?
Is it the ability to navigate complex trading strategies with ease?
Perhaps it’s the talent for accurately predicting market movements in the face of crazy volatility?
Or maybe it’s simply the perseverance to stay the course when the going gets tough…
The truth is, a great options trader embodies all of these traits and more.
It takes a unique combination of skill, knowledge, and discipline to truly excel in the options market.
I know firsthand, having spent the last 12 years of my life studying every aspect of this game and earning $4 million in the process.
Now, I want to share some of the things I’ve learned with you…
Today, I’ll delve into a few of the qualities that set the top options traders apart from the rest and provide three critical tips for honing your own trading prowess.
Whether you’re an up-and-coming newbie or an experienced trader, it’s time to pay attention…
Manage Your Risk
Options trading requires serious risk management to protect against losses.
Without proper risk management, traders can quickly find themselves in an account-ruining situation.
But you don’t have to overcomplicate your risk management…
By simply sizing your trades to match your risk tolerance and account size, you should never endanger your overall account value.
This doesn’t mean you won’t take some losses, because you will. This is an unavoidable part of trading.
And realizing you’ll take losses is the first step toward professional-level risk management.
Then, it’s about limiting your losses to an acceptable amount and identifying the mistakes that led you to those subpar trades.
Once you’ve pointed out the errors in your ways, do everything you can to avoid the same mistakes in the future.
Know Your Market
Successful options traders need a deep understanding of market trends, economic indicators, and industry news to make informed decisions.
Keeping up with the constantly changing market conditions can be challenging, but it’s a vital part of trading.
Personally, I track market trends primarily in search of catalysts…
Are you familiar with this trading “loophole?”
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This little-known options “loophole” is something you can use to grow your trading account right now…
Catalysts are a major pillar of my trading strategy. I love to trade stocks with big events happening around them.
Why? Because when a company has an eye-catching headline with its name involved, it usually brings some juicy volatility to the share price.
Keep in mind that this is a news-driven market. With so many volatile headlines occurring this year, traders are extra-sensitive to negative shifts in the news narrative.
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And as always, pay attention to the five-star setup. Or worse, you could make a mistake that leads to a devastating loss.
Bottom line: Know your market to stay ahead of your peers.
Control Your Emotions
I’m not gonna sugarcoat it … options trading is emotionally challenging.
At one point or another, every options trader will experience some level of fear, greed, or anxiety.
But emotional decision-making is the enemy of options traders.
Letting your feelings guide your trades can lead to bad choices, poorly executed strategies, and significant losses.
There’s a good reason that hedge funds build algorithms (robots) to quantitatively trade — these machines have no emotions.
Ideally, you want to trade like a hedge fund robot with one mission and one mission only — to profit in the stock market.
That said, every trader will eventually face a moment where their emotions test their discipline.
From there, the choice is yours…
Will you allow your emotions to affect your decision-making, or can you set them aside to trade like a machine?
Final Thoughts
Becoming a world-class options trader isn’t easy.
Truly excelling in the market takes a combination of talent, skill, knowledge, and discipline.
But by simply following the three critical tips outlined in this article, gain a greater understanding on risk management, stay informed about market trends, and control your emotions to make better trades.
