Trading Blogers

I’ve been a stock trader for the last ten years and I absolutely love the thrills of making a great trade. I find it quite addicting. Unfortunately, losing money on a trade can be just as disheartening, if not more.

I would advise you to study up on options as much as you can before you begin trading them. Too many people learn the hard way by losing the entire amount of their investment. Don’t let that be you. Here are a few words to the wise that I hope you’ll take seriously.

First of all, realize the concept of time decay in options. This basically means that the further out you buy a contract for, the more of a premium it’s going to sell at today since it has more time to fluctuate in terms of price.

As you get closer to expiration, that time premium gradually shrinks over the weeks and month. Therefore, buying and holding is never really a wise options strategy. You should generally look to make some short term trades whenever you’re buying and selling options.

Additionally, the concept of protecting your investment on an option trade is a really important one. Too many people throw all of their eggs into one basket, not accounting for the possibility of the opposite of what they expect.

A patient and wise investor will generally do this for the protection and the piece of mind.

Had they hedged by giving up just a few dollars, they would have kept 90% of what they lost.

By adhering to these tips, I’m sure of the fact that you’ll be well ahead of the typical novice.

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