Quantcast
  Free Trial!
  Today’s Best Stocks To Trade!   
Click Here


Quote


Options

Trading Ideas

Daily Options Ideas


Trading Lessons

Strategies
Courses
Interviews
Glossary
All Trading Lessons


Daily Stock Setups

Connors Daily Battle Plan
Haggerty Professional
Kaltbaum Intra-day Set-ups
Short Term PowerRatings
Long Term PowerRatings
TM Indicators


Trading News

Markets Updates
Technical Alerts
Breaking News


PowerRatings

Short Term
Long Term
Charts


Indicators

Options
Strategy Finder
Stocks
Market Bias


Quotes

Markets
Stocks
Charts
Level II
Historical Data
Options


Trading Contests

Up or Down




The two reasons most options investors lose money
| TradingMarkets.com | July 13, 2006
Stocks RSS

Charles Sachs has utilized S&P 100 for the past 14 years, both as a trader and an advisor. He uses 24 proprietary indicators in order to structure options strategies which can generate gains whether the market moves up, down or sideways.

 

Option trading can deliver exceptionally high returns with limited risk if you have a disciplined approach.  Unfortunately, as many as 90% of all persons buying options lose money.

 

There are two very good reasons why most retail option investors lose money:

 

1. Traders lose money because options are a depreciating asset. This means that options lose value with the passage of time. Since options lose money with each passing day, the purchasers of options are at a mathematical disadvantage; they lose money if the security underlying their option stands still, and lose even more money if the security underlying the option moves against the bias (up or down) of their option investment.

 

While it is not impossible to be profitable with the purchase of options despite this mathematical disadvantage, it is statistically unlikely to be profitable over time. It is fairly easy however to offset the time depreciation element in options by setting up your trades properly. Essentially, you want to be a seller of time premium when you use options. Having time work to your advantage shifts the odds of success in your favor. I will be discussing the proper manner to utilize options today at an online trading seminar at 11 a.m. EST.

 

2. Most traders lose money because they are too eager to trade. They can't do the most important thing: weigh the risk/reward of each trade before executing it.

 

Impatient traders and "expert advisors" with very few exceptions deliver nothing but significant losses. The reason why most option traders are unprofitable is that they trade too frequently. The truth is: The most successful traders are the ones who know when to sit on the sidelines and pick their spots. Patience is the key to making very substantial profits, and doing so on a consistent basis.

 

Bottom Line:

 

Successful option trading requires utilizing the time depreciation elements of the options to your advantage by structuring one’s trades to profit with the passage of time. Additionally options investors should only undertake an investment in a patient manner, and with a written game plan..

 

Again, I will be giving an online options seminar today at 11 a.m. EST. to discuss more fully the proper approach for trading options.

 

Sincerely,

Charles Sachs

Editor

PatientTrader.com


Stocks RSS
Related Articles

PREMIER SPONSORED LINKS
TRADE CENTER

The TradingMarkets Directory
Stocks
Quotes
Charts
How to Trade
Commentary and Analysis
PowerRatings
Training Classes
Tools
Stock Scanner
Daily Market Bias

Options
Quotes
Charts
How to Trade
Commentary and Analysis

Forex
How to Trade
Forex Momentum Index
Pivots

E-mini/Futures
Quotes
Charts
How to Trade
Daily Market Bias

How to Trade
Stocks
Options
Forex
E-mini/Futures
Glossary

Tools
Short Term PowerRatings
Long Term PowerRatings
Stock Screener
Quotes & Charts
Stock Indicators
Market bias Indicators

PowerRatings
Short Term PowerRatings
Long Term PowerRatings
Industry PowerRatings
PowerRatings Charts
Training Classes
PowerRatings Strategies
Search PowerRatings

Trading Contests
Up or Down Stock Contest
#1 - Win $1000 every month

Up or Down Forex Contest -
Win $1000 every month


Premium Subscription Services
Short Term PowerRatings Free Trial
Long Term PowerRatings Free Trial
TradingMarkets Subscription Free Trial
Daily Battle Plan Free Trial
Gary Kaltbaum - Intraday Breaking Alerts Free Trial
Kevin Haggerty Professional Trading Service Free Trial
Forex Force with Mark Whistler Free Trial

RELATED SITES
Nothing but forex



All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.

© 2008 The Connors Group, Inc.