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9 Simple Habits to Becoming a Successful Options Trader

Follow some of these habits and it just might improve your trading experience.

Become Successful today with our Recession Proof Options Alerts


Introduction


The stock market is one of the most exciting opportunities to make money. However, it can also be very intimidating. The fact that many people have lost their life savings in this industry should tell you just how risky it can be. But with a little preparation and some research, anyone can learn to trade successfully in order to make money while having fun at work! In this guide, we'll go over everything from mindset (you need this!) to what matters most when trying to succeed as a trader.


Prepare your mindset


One of the most important elements of successful options trading is a positive mindset. In fact, you can hardly overstate its importance. The mind has the ability to create reality, so if your mindset is negative, you will attract more and more negative things into your life. On the other hand, if you have a positive mindset and believe in yourself and your abilities, then good things will come to you easily (and quickly).

So what exactly do I mean by “positive mindset”? Basically it means that during any given day:

  • You expect good things to happen instead of bad things happening;


  • If something goes wrong or doesn’t go as planned (which inevitably does happen), then instead of getting upset about it or blaming someone else for what went wrong (or blaming yourself for not being perfect), instead focus on finding solutions that work within those circumstances so that whatever problem arises becomes an opportunity rather than an obstacle.


Be a hunter and not a farmer


It's important to understand the differences between being a farmer and a hunter. Farmers are reactive and passive, while hunters are proactive and aggressive. As such, it's important to know when to act on your opportunities and when not to. If you've done your research, then you should be able to identify when certain trades have high probability of success based on the information available at that time; this is what traders refer to as "technical analysis."


Proper risk management is crucial if you want your trading career to succeed long-term. While there may be some small losses along the way (and even some big ones), with discipline and proper risk management in place, these can easily be overcome by consistent profitability over time - provided that you continue making good decisions about which trades are worth taking part in!


Write down your trading plan in detail.


In order to trade successfully, it is necessary for you to have a written trading plan. This can be used as a checklist of what needs to be done before entering any new trades and will ensure that you are covering all of your bases. It should include:

  • Your goals and motivation (why are you trading?)

  • What type of investments would suit your personality?

  • The amount of capital available for trading

  • How much time each day will be devoted to trading activities


Embrace discipline.


Don't get me wrong: trading is a lot of fun. But it's also extremely challenging and requires massive commitment. You need to be disciplined in your approach, develop good habits, and stay focused on the long term if you want to make money consistently as an options trader.

Of course, there are many ways to develop discipline in your trading. One way is by following the advice of successful traders like Larry Connors or Guy Cohen (both featured in this guide).


They both have a thing or two about trading discipline that's worth learning from!

But one thing no one can teach you is how to keep yourself disciplined once you've found success as an options trader - because everyone has their own unique battle with their emotions when it comes time for them to trade.


For example: I often find myself wanting nothing more than just sit back and relax on my couch after hours of hard work during which no trades have moved my account balance much at all - but instead, I remind myself that a little bit every day adds up over time; just as one drop will eventually fill up even the deepest well when left alone long enough..


Simplify your trading processes.

  • Simplify your trading processes.

  • Use a trading platform that has a simple interface.

  • Use a trading strategy that is easy to understand.

  • Use a trading strategy that is easy to apply.

  • Use a trading strategy that is easy to monitor.

  • Use a trading strategy that is easy to adjust.


Do not trade against the trend.


If you’re trading against the trend, don’t do it.

It's a bad idea.

You should never trade against the trend.


Diversify your portfolio


Diversification is essential to managing risk. If you have all your money in one asset class, such as US stocks, and the market crashes, it’s going to hurt your portfolio. You don't want that.

A good way to diversify is through asset allocation. This involves dividing your investment portfolio into different categories based on their risk and return potentials, including:

  • Bonds

  • Stocks

  • Real estate (both commercial and residential)

  • Commodities like gold or oil

Learn & evolve!


You've probably heard the old saying, "to learn from your mistakes." But you can also learn from other people's mistakes.

Follow the markets and keep an eye out for how different strategies work for different traders. Don't be afraid to try something new if your current strategy isn't working!


For example, if you're using options to hedge against company earnings announcements, but notice that not everyone who buys calls before earnings announced themselves as winners... maybe there's a better way!


Don't be afraid to experiment with new strategies or even change up what you're doing if it's not working out right now. Remember: trading is a constant learning process!



There are some key things to consider on your path to success.


There are some key things to consider on your path to success.

You need to prepare your mindset, be a hunter and not a farmer, write down your trading plan in detail, embrace discipline and simplify your trading processes.


Also remember to do not trade against the trend or diversify your portfolio by at least 20% of what you invest in the stock market. Finally, learn & evolve!



Conclusion


We hope that this guide has given you a better understanding of how to trade options and what some of the key factors are in successful trading.


We realize that not everyone will be able to take all these tips on board, but by following the advice we’ve given here at least you will have a better idea of what works for each individual trader.


Get started today with Options trading and join our Premium community where you will get access to 3 alerts daily as well as access to multiple other platforms we provide for our premium community.


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