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The Characteristics of a Great Options Trader

Posted by Pete Stolcers on December 17, 2009

Option Trading Question

What are the characteristics of a great trader?

Option Trading Answer

It takes a lot to become a great options trader and only about 10% of the traders out there are truly successful. Whether you have been options trading for years or if you are brand new to it, you may be wondering what it takes to become one of the 10% who are making good money in the trade. There are five main characteristics of a great options trader and they are as follows.

Practice, Practice, Practice

It is said that to become great at option trading you have to practice it for around 10,000 hours which equates to 4 hours a day for 10 years. Although this might seem daunting, it won’t take this long to get really good. It is just a number to shoot for.

Education and Research

Don’t ever assume that you know enough about something. When it comes to options trading, keep researching and learning until there is simply nothing left to learn. By that time, you will most likely have put in the 10,000 hours of practice.

Have a Backup Plan

Always have a plan or a strategy to work with. Every options trader should have something to work with and if they don’t, they stand a very good chance of losing big time.

Be Flexible

Options trading can change at any time so you need to be able to change and adapt along with the industry. Don’t be stuck in your ways or else you may end up being left behind.

Think for Yourself

Although you should always be networking with other options traders and finding out how they do things so that you can learn and adapt your style of trading, you should never listen to anyone completely.  Always think for yourself. After all, it is your money and you know the best way to invest it. Be open, but never be 100% trusting.

Following these guidelines, you will be far more successful than the vast majority of those who are getting started in option trading.

Option Trading Comments

  • On 04/27, Noah said:

    Hi Peter,

    I’m just starting on options trading, and I really want to be successful at it. I like your systematic approach to the whole trading game and would like to follow it more. The problem with my outlook at the moment is though, that I look at things from a mathematical perspective, much like the first result from this pdf I found on this pdf search engine: http://pdf.documentsfound.me/search.php?q=options+trading+strategies&c;=10&o;=0.

    It is very mathematical and I’m just wondering whether you could tell me if this was also a good way of looking at the whole options world. The reason I ask is because I have a mathematical background and feel really comfortable with it, but I also want to move away from that and use an approach such as yours.

    Any feedback would be greatly appreciated.

    Kind regards.

  • On 05/02, Pete Stolcers said:

    You mathematical background will help you in option priocing and in determining statictical probabilities. However, don’t rely on that solely.

    First, use technical and fundamental analysis to find attractive opportunities. Then use your math skills to devise a game plan.

  • On 05/27, Matt said:

    I’ve been trading options now for over 6 years & I have to agree that it takes a while to discover how to trade options best to be the most profitable. I actually day trade options using a daily candle stick chart with 5 minute bars. I use stochastics generally to get into a trade & once I’m in I stay in until the stock moves back & breaks through its simple moving average (SMA). I don’t lose very often & typically have daily returns of 30% or more. Weekly options have become my favorite & I do stick with high delta’s of 60 or more. I was glad to stumble upon your blog & am glad to see that there are many others out there like me making profit using options. Thanks for your efforts to make options something that more people can understand & benfit from. It is alot less expensive than buying stocks & alot more profitable too. 

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