Starting up #OptionsTrading #dosanddonts for #newbies

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Don't get into #OptionsTrading with less than 25L if primary engine is #OptionSelling

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Don't create focus on return in trades.

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Do create focus on method and trading skill development

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Do keep a trade journal to record trade entries, exits, adjustments and new potential trade ideas.

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Don't rely on other trader's ideas, entries, exits, profit statements for your own trade confidence.

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Do spend all the time you can reading, learning #OptionsPricing to develop a basic understanding of the risks that compose the edge in #OptionsTrading

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Don't simply trade options like you would regular stock. Find out what else affects options pricing other than the movements of the underlying stock.

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Don't get lured by massive margins and exposure offered by discount brokers

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Do look for stable brokers even if it means you pay slightly more for trade execution

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Do find mentors that you can access and have interests similar to yours.

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Don't simply rely on attending workshops. They can be useful to lead you into a path of learning. Use them as stepping stones to a faster learning curve, but don't assume large risks coming straight off of them.

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Don't start #OptionsTrading with #ExpiryTrading #EarningsTrading or any #EventTrading.

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Do start #OptionsTrading with risk defined trades.

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Don't get into #OptionsTrading close to expiry

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Do initiate #OptionsTrading positions atleast 45 days to expiry

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Do keep a tab and limits on the exposure you take on naked as well as risk defined short option positions.

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Don't go over a notional exposure of 2, period.

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Do practice #papertrading options for at least 3 months before deploying the initial 25L.
In this period, start off with 10 per day and get to putting on a minimum 50 trades per day. Enter, manage, exit each of them as per your pre-defined rules.

Aim is to develop skill.

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Don't assume that #OptionsTrading can be done easily as a part-time effort.

Part-time #OptionsTrading is possible, but involves a specific subset of strategies that can be deployed.

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Do understand what types of #trading #strategies suit your own #personality.

Ask yourself this question:
Are you comfortable buying or selling when prices break all time highs?

#tradingpsychology
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Looking into trading Directional #trendfollowing strategies when you start out.

These are easier to run and can help you avoid ruin.

#trading
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Working on #TrendFollowing strategies will also help you learn simple price action principles.

#trading
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If you are starting out, work out identification of a trend, and find ways to enter IN the direction of the trend.

#trading #meanreversion with Price action principles is hard and takes a while to figure out.

#trading
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Instead of worrying about which option to buy, when faced with a trend/breakout, first buy then think.

Any strike close to the underlying price works. The option chain is a continuum directionaly and convexity works across it.

#optionstrading
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Always look for simplifying options strategies.

Figure out how to replicate a complex structure using synthetics.

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