We all want to have the holy grail of trading right? Well, besides just being long AAPL, you need to know a few more investing strategies to help you meet your retirement goals.
Investing in this market can cause many to lose more than just a few hours of sleep at night worried about the next flash crash. At OptionsAnimal, the premier options trading education in the industry, we focus on not just learning options trading, or about online stock trading basics, but about a lifelong goal of protecting your assets, growing your portfolio in any market trend, and becoming part of an online community of successful investors.
Over my years of investing and thousands of trades I have executed, I have found a couple of keys things to look for when you are learning to trade stock and options.
1. Have a trading plan. – Plan a trade and trade a plan, every trade must have a plan with well-defined exit points. If you are not sure why you are in a trade, whether it be a spread trade strategy, a long stock investment, or simply an ETF, the market is a very expensive place to find out why you are in that trade. Always know your risk/reward for every trade you are in and how that fits.
2. Do not limit yourself in your option trading strategies. Be flexible. There is more to spread trading than bull calls or bull puts. Think of the options as instruments that can be moved around to fit whatever the stock market decides to throw at you. If you are focused on trying to correctly predict where the market is going to move, you will likely end up with a lot of frustration over why you cannot explain how NFLX keeps moving higher and your long puts are getting killed.
3. Expect the unexpected. Although you mean well with your market timing skills and your mastery of placing option strategies, expect the unexpected. The stock market basics class you took in that online trading school you attended probably talked to you about green and red arrows, or the investment workshop you attended talked about the benefits of credit spreads, but didn’t talk about the risks of what happens when the market breaks outside of that Iron Condor. ALWAYS, prepare for adjustments to your trades in advance to avoid rude awakenings in the options market.
In the end, the stock market doesn’t care if you think you get it or not. You are simply right or wrong. The great thing about learning options trading is that if I am wrong, I can adjust and change my trade, leaving me with one less thing to lose sleep over at night.
OptionsANIMAL CEO & Founder