Life with options #7
Stepping into trading...
Making that first step towards something new is always slightly daunting and unnerving, at least for me. Especially when it's into a seemingly inaccessible world like options trading. I've shared some of my thoughts and emotions that come into play when trading, but a big part is where to start the whole process, as it's all very well to share my insights but my goal is also to get people to break down those entry barriers and set their own course.
Firstly, trading isn't some sort of higher intellectual entity. It does require a bit of knowledge from the technical point of view, but I would argue absolutely anyone could learn the basics in a day, and probably more. Of course experience is one aspect that cannot be quickly learned or gained, but we all have to start somewhere and each little piece builds you up as you go.
There are plenty of courses out there on offer to teach you the world of options trading. They fill the spectrum from "quick fast money" to "complicated theories and strategies". In my opinion none of these are highly necessary. I'm sure they teach you a lot and I do not mean to suggest they aren't valuable, but for their price tags the alternatives are much more approachable and affordable. I didn't take a course and I would argue am fairing just as well as those who did - albeit my self confidence on this hasn't actually been tested.
My advice is to start online. We all know how wonderful the invention of the internet has been as it's given us the capability to become experts at pretty much anything from the tip of our fingers.
There can be an overwhelming aspect of the information available but websites like Investopedia are a great place to start. I have also found YouTube, naturally, to be a great source of getting decent explanations. If you're at a loss to even know what to be searching, start with "what are calls and puts?" in a Google search and you'll be on your way. I stress that if you're interested but timid, don't be! You'll find it's not as a frightening task as you originally thought.
I've also found that the old tried and tested method of books still holds strong. There are some great books out there that make life very simple and easy for you. One I found extremely helpful for picking strategies was the "The bible of options strategies" by Guy Cohen. This is one does require you to know a bit of the basics, but it's perfect once you've grasped it and you've moved on to figuring out how you want to employ the knowledge you've acquired.
After the initial questions of what options are and how they work, I find the most common questions are "how much money do I need?" and "how much money do I make?". These have very dynamic and varying answers and are not the straight forward answers I feel people want. For instance, two traders could be given the same investments (say $10,000), told to trade on the same stocks and same strategy and given the same time frame to trade within. One might think very similar results would occur, and yes the could, but in reality you would see a vast difference in what they achieve.
The real answer lies only within yourself, much like most things in life. As most of my blog is about, I think your inner thoughts and emotions are the specific determinant of the money outcome. But for the purposes of this post, what I'm trying to say is you can start with any amount you want. Succeeding will not come from a higher account value.
I personally started with a $25K because the platform I trade on (Charles Schwab) do require it as minimum investment. But I arguably could have at least half of this or even a quarter and still have a $2000 a month goal be achievable. There are a plethora of platforms out there that don't have minimum deposits and more importantly don't have any commission fees attached. Something to look for when choosing where to trade. Find one that suits you as I would argue they are all much of much-ness.
I hope these few tips help bring down the smoke and mirrors that mask the entry points of options trading. Options trading really is for anyone. It is not reserved for the predominately male, white world of the financial industry as they like to try and portray. I urge anyone to give the learning a go and dip a toe into the unknown, the rewards may surprise you!
Photo by Mette Kostner on Unsplash
Making that first step towards something new is always slightly daunting and unnerving, at least for me. Especially when it's into a seemingly inaccessible world like options trading. I've shared some of my thoughts and emotions that come into play when trading, but a big part is where to start the whole process, as it's all very well to share my insights but my goal is also to get people to break down those entry barriers and set their own course.
Firstly, trading isn't some sort of higher intellectual entity. It does require a bit of knowledge from the technical point of view, but I would argue absolutely anyone could learn the basics in a day, and probably more. Of course experience is one aspect that cannot be quickly learned or gained, but we all have to start somewhere and each little piece builds you up as you go.
There are plenty of courses out there on offer to teach you the world of options trading. They fill the spectrum from "quick fast money" to "complicated theories and strategies". In my opinion none of these are highly necessary. I'm sure they teach you a lot and I do not mean to suggest they aren't valuable, but for their price tags the alternatives are much more approachable and affordable. I didn't take a course and I would argue am fairing just as well as those who did - albeit my self confidence on this hasn't actually been tested.
My advice is to start online. We all know how wonderful the invention of the internet has been as it's given us the capability to become experts at pretty much anything from the tip of our fingers.
There can be an overwhelming aspect of the information available but websites like Investopedia are a great place to start. I have also found YouTube, naturally, to be a great source of getting decent explanations. If you're at a loss to even know what to be searching, start with "what are calls and puts?" in a Google search and you'll be on your way. I stress that if you're interested but timid, don't be! You'll find it's not as a frightening task as you originally thought.
I've also found that the old tried and tested method of books still holds strong. There are some great books out there that make life very simple and easy for you. One I found extremely helpful for picking strategies was the "The bible of options strategies" by Guy Cohen. This is one does require you to know a bit of the basics, but it's perfect once you've grasped it and you've moved on to figuring out how you want to employ the knowledge you've acquired.
After the initial questions of what options are and how they work, I find the most common questions are "how much money do I need?" and "how much money do I make?". These have very dynamic and varying answers and are not the straight forward answers I feel people want. For instance, two traders could be given the same investments (say $10,000), told to trade on the same stocks and same strategy and given the same time frame to trade within. One might think very similar results would occur, and yes the could, but in reality you would see a vast difference in what they achieve.
The real answer lies only within yourself, much like most things in life. As most of my blog is about, I think your inner thoughts and emotions are the specific determinant of the money outcome. But for the purposes of this post, what I'm trying to say is you can start with any amount you want. Succeeding will not come from a higher account value.
I personally started with a $25K because the platform I trade on (Charles Schwab) do require it as minimum investment. But I arguably could have at least half of this or even a quarter and still have a $2000 a month goal be achievable. There are a plethora of platforms out there that don't have minimum deposits and more importantly don't have any commission fees attached. Something to look for when choosing where to trade. Find one that suits you as I would argue they are all much of much-ness.
I hope these few tips help bring down the smoke and mirrors that mask the entry points of options trading. Options trading really is for anyone. It is not reserved for the predominately male, white world of the financial industry as they like to try and portray. I urge anyone to give the learning a go and dip a toe into the unknown, the rewards may surprise you!
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