Options Investing: Successful Habits of a Trader
1) Follow the Rule of 3: I will not enter a trade unless I have 3 reasons from my list of indicators for doing so.
2) We keep our losses small
3) We adjust targets and stops at the end of the day
4) We try to keep our commissions low
5) We dont trade first thing at the open, we wait a while and trade later in the day.
6) We know the general market trend and trade accordingly
7) We write down our trades.
8) We never average down a losing position
9) We never overtrade
10) We give 10% of our profits to charity. Per the words of John D. Rockefeller:
Work for all you get
Give away the first 10%
Invest the next 10%
Live on the rest
Account for every penny
Best option trading tips and habits
Thanks to member George A. for sending these to me. He notes that these habits are taken from Chapter 4 of a book he is now reading Trend Trading for a Living by Dr. Thomas Carr. Keep in mind that these are habits written for stock daytraders.
I agree with all of them except with maybe number 1. I don’t use too many technical indicators in my options trading and options selling and so this does not apply. But I do like #5 a lot – do not trade at the open. I have made this a rule for my own trading. I learned this the hard way after many losses. Now I wait until 10am central (1.5 hours after the open) to enter or adjust. I don’t mind getting out of a trade at the open to take profits. But otherwise the open is too crazy and often not a good indicator of how things will play out during the day.
There are many other rules that I follow and members of the www.optiongenius.com site can access these rules in the Resources section of the member’s area.