Hello there, I sure hope your Option Portfolio is growing. This is the second article in a series of six articles. This also includes a video for each article for you to follow. If you want to be successful in learning to trade options, you will need to watch all six videos.
A very important step in learning to trade options is to spend a lot of time back testing your trades. There are just a few option software programs on the market at this time that can help you with this task, but learning to trade without costing you a dime is worth your time. I learned a lot by using Optionvue and/or Think or Swim to back test my option trades. These two software bundles have been very good, but now San Jose Options has just released a new type of back testing tool called the “Options Toolkit.” With this back tester you will save a lot of time in comparison to any other options testing software.
It would take me one hour to back test one year of trading a Condor with the Optionvue software. When I used Think or Swim it would be a little faster, but I would get less information. Now, by using “Options Toolkit” I actually gather more organized data in about 2 seconds to back test one year of Condor trades. It’s really a great program!
Another step in finding success is simply trading for many years. We all call it “experience”. The reason behind this is the stock market is constantly changing. In order to see all sides of the market, we need to trade for many years. There is no other way to gain this kind of “experience”.
Paper trading is the perfect way to learn how to trade options. It is very easy to start. You can open up a free paper trading account with Think or Swim and/or almost any other options broker. You will need to practice and this gives you a good, safe way to do that. It may be difficult at first, but you need to paper trade for at least six months to a year; this is very important. Remember, it is very important to gain experience over time, seeing all sides of the market, and paper trading is one way to gain this experience without risking any money.
Finally, you should keep about 25% of your capital in cash. This is so very important! All of your trades, even the best option trades, will always require adjustments. You will need extra cash in order to make these adjustments. It is very dangerous to use all of your spending money in your trading account, for when it is gone, there is nothing to make adjustments with. Every option trader will leave a lot of money in cash so he can make those adjustments. You will need cash to manage your account and to lock in profits as needed. Keeping cash on hand helps you to be a successful trader.
Looking to find the best deal on Options Backtesting Software, then visit www.sjoptions.com to find the best advice on Trading Options and education.
Tags: investing, options software, stock market, trading options