Originally Posted by
marcal
As I read this and see new traders wading in I can’t help but think....
please please do not trade options in your retirements accounts if you are new to it. It’s like flying a 737 bc you want to fly when you’ve never done it. Options if used incorrectly can decimate you financially.
Start very small and outside your retirement accounts. By the way paper trading is the equivalent of using Microsoft Flight Simulator and saying you can actually fly an airplane. It’s a lot different when it’s for real. It’s best for learning the platform.
Like flying its all about risk management, knowing your temperament for risk, and be careful entering orders bc if you enter an order wrong it can really hurt you.
I have been trading for two decades and I completely agree. Any type of active trading is only for risk capital. Your retirement funds should be used for carefully selected stocks and covered calls. If you don't have the time or expertise to carefully select stocks (this takes research and the ability to understand balance sheets and earnings statements) then you should be in no load index funds.
Naked options can kill your account. Do not do them unless you can take a loss when needed. Most active traders lose money because they can't take small losses and end up wiping out accounts hoping for the price to come back. Futures and options have way more leverage than you can get with stocks. That 225.00 I made yesterday in ten minutes could easily have been a big loss had I bought instead of selling and then refused to take the loss. Trading is not something to just pick up and think you will succeed in your spare time. It took me five years to stop losing money trading futures and I am in a very small minority who actually receive a 1099 each year. Most lose, some lose a lot. I know of traders who have lost hundreds of thousands and never got it. A humble personality and understanding of probability is key. The best trading strategies will only win maybe 60% of their trades. You have to understand that you will lose forty to fifty percent of your trades and be ready and willing to take those small losses. You also have to have the intestinal fortitude to hang on to winners and not take a profit too early. Your winners MUST be larger than your losers.
Lastly, If you want to trade, watch some videos but be careful. Much of what is on the internet with respect to trading is pure junk. Many people sell training and most of them are failed traders. If you are considering asking for help and buying a course, ask the trainer for audited trade records for the last few years. If they refuse and start giving excuses walk away they are a scammer. The scammer to real ratio is about 500/1.
Trading can be fun. It can also ruin marriages and empty accounts. Be careful.