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How to Get Started in Options Trading

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  • How to Get Started in Options Trading

    If you want to know how to get started in options trading, the first question that you need to ask yourself is, "What is my objective?" In other words, why do you want to learn options trading? This is an important question because there are multiple ways to approach trading options, and not every approach may be amenable to your needs. If you have any experience with or knowledge about the stock market, you know that there are the "buy and hold" people who will buy a stock and are quite content to keep it in their portfolio for several years before selling it at a profit, and that there are also "day traders" who buy and sell stocks on a daily basis for quick income. If your desire is to utilize stock option trading as a reliable source of monthly income, as opposed to a long-term investment strategy that may take several months to pay off, then continue reading.

    When first exposed to the option business, many people do not believe that they can earn monthly income from this activity, but what they don't understand is that stock option trading can be treated just like any other type of business that manages their flow of revenue according to certain performance indicators. To put it in simpler terms, every business engages in buying and selling. The business must buy supplies and services from other businesses before they can sell products and services to their own customers. Successful businesses are constantly seeking to maximize their profits by not only providing superior products or services, but also by taking advantage of cost-cutting opportunities and getting more value for their money.

    The same approach can be taken when trading options. As an options trader, your "products" are stock options. You'll buy and sell them, and you'll look for opportunities to capitalize on fluctuations in both stock prices and option prices. You'll also be able to alter your strategy based on changing market conditions so that you make a profit no matter what direction the market moves. In the business world, this is called "positioning," while in the options world, it's called "adjustment." (Incidentally, not many options training courses teach you about how to properly make adjustments, and not many courses even mention adjustments, so just be mindful of that in your search for a suitable mentor because adjustments, or lack thereof, will "make or break" you, respectively.)

    So how do you get started in options trading? If you're totally new to the subject, then you can peruse the many websites that offer tutorials, but you'll quickly discover conflicting information and an overwhelming number of sites whose sole purpose is to sell you something. For familiarizing yourself with basic options trading concepts and terminology, a great place to go is to the Options Industry Council website. Keep in mind, however, that the information there is mainly academic and theoretical in nature.


    Article Source: http://EzineArticles.com/5513181
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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."


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