Over the past eight years I have been a full-time trader and options trading mentor, and have come to the realization that my time as a mentor has helped my trading more than any thing else could have done to improve my trading.
As a mentor, I see day in and day out what works and what doesn’t.
So whenever someone asks me how they can trade options successfully, I think I can speak with some experience.
The most important thing to being a successful options trader is to have a plan. The plan is what will I trade, how will I trade it, what will my profit goal be, and what will my max loss be.
Find a Valid Option Strategy
A very important part of the plan is that it has to be a sound one, meaning I have to find a valid option strategy and I have to understand how the stocks or indices that I use, move.
The plan must involve which options I’m going to use, which underlying, the strategy, and finally, when am I going to enter the trade.
Once I enter a trade how will I manage it if it works for me or if it happens to work against me how can I hedge my risk and how can I adjust my trade. These are all very important things you must know before you ever enter a trade.
Many times I see traders think they have a sound plan but once they enter a trade they change around what they are going to do and become listless and indecisive and that causes problems.
Stick With Your Plan
You must have your plan and stick with your plan and adjust it only over time, and make sure you are not following every emotion and whim that you have while you are in a trade. I think it is also important that the trade not only has a strategy and a plan but that you have trading goals.
You should keep a written record of your trading goals and your trade results over time so you can see for yourself what works and what doesn’t and make changes along the way.
I cannot stress enough the importance of Risk management, and also having a max loss number and sound adjustment plans.
Minimizing Your Losses
Many times when you are making a monthly living in options trading it is not necessarily about how much money you make on a winning trade, but rather minimizing your losses when you lose, which I know can be easier said than done.
For example, if you have a 10% profit goal a month and you are successful most months, that will work if you only lose about 10 or 15% on losing months, but if you are losing 30% and 40% that will become a problem.
Lastly, You Need Some Accountability
I found for myself and for other traders if you have someone to talk to about your trades and who can give you a second set of eyes to look at them and give you some guidance I think that will do great things for your trading and take you to new levels of ability and success.
At Sheridan mentoring, we feel that one on one mentoring is the best process for developing traders. Trading can often times be a lonely business and many traders can tend to lose their way and get frustrated without proper guidance.
Unique Trading Plan
Having someone checking in with you that you feel accountable to will keep you on the right track and make you a more successful trader with the end goal of turning you into a trader that is confident enough to execute there own unique trading plan without being dependent on others.
We at Sheridan Options Mentoring are here to help you with your planning and educational needs.
Senior Mentor: Mark Fenton