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Financial trading success is built around four skills and you will have to acquire them by training and practice:
- Making Buying decisions
- Handling your mindset
- Managing entries, exits and risks
- Outsourcing tasks that affect the trading decision-making ability like not doing fundamental and technical analysis by self
How much is the minimum investment required for buying options?
The business of buying Currency Futures options for speculation is suitable for one who can deposit US$10,000 in a broker's account and knows how to trade currency or equity options trading. Some brokers set up accounts (permitting only buying of fx futures options) even for $100 deposit, but trading without a capital of $5,000 is impractical.
The probability of earning $10,000 of income in a year is very much there. If a trader is not in the need of regular immediate income and can retain profits earned in the account and utilise to use furthering capital can make US$50,000 in a year.
Essentially, the trader needs to acquire skills to predict the direction of the market: the intensity of price volatility, the time it is expected to achieve target profit; and must have a realistic quick exit plan. Prolonging the trades in the hope of making an unrealistic profit will result in a loss.
Potential Loss (Stop Loss level), a break-even point and the Probable Profit (Take Profit target) - all should be known in advance.
Options would be bought outright, so no margin account is required. Margin call will not happen. By attaching pending Stop Loss and Take Profit orders while placing the order itself, the investor knows in advance what will be the maximum loss and profit.
When investing, the trader has to determine whether he can afford to lose $750 (an example, the value of stop loss) in case the trade goes in an adverse direction.
Since managing psychology is not involved other than when entering the trade, you are free to invest time in understanding when to buy options which can deliver at least 50% of profit in 10 to 15 days without losing much time decay. It will take a couple of years to get to a point where your predictions start working. There is no shortcut. But if you don't try now, it will not happen. Success is the sum of all small efforts, repeated day in and day out.
Just focus on techniques to predict Breakout and Breakdown by using historical pattern recognition and fundamental analysis methods. Identifying breakouts is challenging. There are different ways to find them. Some use fundamental factors while some study momentum. If you are keen on making money, you have to devote time to mastering the price breakout and breakdown techniques.
Breakout/breakdown opportunities will be limited to 10% -15% of the trading time. It would need some patience. But it is worth trying this particular strategy as trade position does not require any on-going management . You have to enter and exit within 10 days.
As against this, 80%-85% of the time, the market will not be trending. The market will be stalled or consolidation will be happening. Selling options will be the technique to profit from consolidation. But selling would need constant monitoring, risk control skills and somewhat deep pockets.
Who can be a buyer of options?
Fx trader has to know how to execute a trade on a broker's platform offering CME futures options.
An equity or commodity future options trader, who knows how generic options work, and can execute option trades on a platform, just needs to be familiar with how currency market works.
A week is enough for a self-starter. Maximum a month to become an intermediate trader of bought currency options.
Acquiring further skills to make profitable trades will be a life-long learning exercise. If you can find a mentor who holds your hand during the transition period and helps you with specific trade ideas will be a good solution for a couple of years until you become proficient in spotting probability of profitable trades.
Beginners will have to put in three to six months to become an intermediate fx options trader
Newbies have to divide the learning process in two phases:
Firstly, they will study how a currency market works and execute paper trades on demo accounts. A lot of excellent genuinely-free resources are available on retail fx brokers' sites and Youtube. But most of them do have a purpose of selling something to you. Though you can use their services without any obligation.
You will also come across non-trader coaches/educators who possess the gift of the gab or who hire highly-paid copywriters to make you poorer by up to US$50,000. So please take care and don't get trapped by them because no options course is really worth that value.
All the information that can help you to make exponential returns is already provided here. It's a matter of you practising it with discipline and devoting a couple of years to achieve proficiency.
The second step would be to understand how currency futures and options work and the trades are executed on broker's platform. CME site provides excellent free learning material as well.
A beginner should expect to spend six months to become a full-fledged intermediate Fx options trader.
Trading is hard. It takes 5-10 years to gain enough experience to be consistent. Irrespective of what you hear or read, there is no set system or indicator that will work consistently if you take every signal. Your personal involvement and decision-taking is involved.
If you have come to this site thinking that trading is easy money, and that you are going to be a millionaire in a couple years, think again. There is no such thing as "effortless success".
The only people, who become millionaires, are the ones who are managing other people's money and possess good analytical skills or programming skills to code trading systems and robots.
If you have the gift of the gab and closing (making a sale) skills, you can earn living money by writing and selling instructional courses.
Most of the Guru book writers aren't great traders.
The real secret is there is no magic setup. No hard system. Good trading comes from years of experience.
When you watch the market for years you get a feeling of what and when something is likely to happen.
In a way you develop a sense of history. History provides lessons to lead forward, solve tough problems, and evolve new solutions. And, most importantly, helps avoid repeating.
You personal experience will let you know when it's most likely to work, based your personal past experiences. Personal experience can be first-hand or it could be even "second hand", as a voracious fiction reader like me would like to link it to the reading of other people's life experiences.
Trading for self is about your personal understanding of the market, based on experience. You have to find your own hard formula or holy grail. A good mentor can provide you "capsules" of his experiences that can cut the learning curve considerably but at the end of the day a trader has to see the market though own lens of experience.
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