Struggling With Options? Here Are the Only 3 Things You Need to Understand
Trading options profitably can seem challenging, but it doesn't have to be.
From my 7+ years of trading experience, out of which 4+ years involve option trading, I have learned that by genuinely understanding just a few key concepts, profitable options trading is possible.
Learning the right skills will help minimize losses, maximize gains, and scale up your trading capital.
When you master the core fundamentals, you'll gain the clarity and confidence to thrive in any market environment.
The key is distilling options trading down to its essential elements.
When you focus on the few critical things that matter most, you can trade with the calm and discipline of a Zen master.
Unfortunately, most options traders struggle because they never learn these foundational pillars.
They get lost trying to understand complex strategies when they should be focused on basics that make all the difference.
Many struggling traders also:
Try to mimic furus instead of understanding principles.
Have no risk management plan.
Let emotions drive decisions.
Overcomplicate instead of simplifying.
Never review mistakes to improve.
The good news is when you dedicate yourself to genuinely mastering a few key aspects, your consistency and profitability will skyrocket.
So, what are these? Let's dive in!
Skill #1: Proper Position Sizing
The key to managing risk in every trade.
Size each trade correctly for your account to survive normal variance and max drawdown.
Use a systemized rule-based trading process, not gut instinct guesswork.
Determine the percentage of capital to risk per trade.
Calculate the dollar/ rupee amount based on stop loss.
Divide the amount by the option price to determine the lot position size.
Get this right, and you stay in the game.
One essential tip is to risk no more than 1-2% of capital per trade. This ensures you live to fight another day.
Mastering position sizing is step #1 for consistent profits.
Skill #2: Master Reading Price Action
Charts contain the pulse of market psychology.
Identify high-probability setups based on price movements.
Learn to spot trends, momentum, support, and resistance.
Study charts daily - know key levels on major indices.
Learn key reversal candlestick patterns.
Use volume to confirm breakouts and spot exhaustion.
The key is keeping analysis simple - don't get lost in indicators and algorithms. Price action carries the true market signal.
When you become a price action expert, you'll spot great setups instantly.
Skill #3: Stick to Defined Entry and Exit Rules
Preset rules remove emotion from trades.
Entries define ideal setup conditions to go long/short.
Exits protect profits and limit losses.
Write down rules for each strategy - follow them precisely.
Set stop loss and profit targets at entry - no exceptions.
Review losing trades - adjust rules if needed.
Discipline is the difference maker. With rules in place, emotions won't destroy your profits.
Defining - and sticking to - solid rules makes you a systemized trader.
That's it! When you master these 3 core pillars, options trading success will follow.
But it takes diligence and commitment to implement them effectively. Use what you've learned here to start improving each area of your trading. Consistency comes from the mastery of these fundamentals.
So, you now have a blueprint!
Dive deeper into this with focus and determination to achieve profitability in options trading.
The path forward is clear.
Go, be profitable!
Pratik
Your Systemized Trading Coach
P.S. If you enjoyed this newsletter, please share it with your friends and win referral rewards!
Discover the Hidden Hacks of Profitable Options Trading! Join My Upcoming Masterclass! (Limited slots. Click Here to Register NOW)