I've done some stock trading over the years, mostly for long term investments and want to try more. Options have always interested me and I've been reading about strategies and getting more into technical analysis. Now I have information overload. I need some guidance to start my paper trading. I wish to learn more about analysis and spread trades but the only trades I want to do at this time are calls as I cannot risk margining myself. My current employer (auto supplier company) is going out of business and I have till June to learn enough to at least supplement my income. Again I've been reading for months but need better direction for my education. I have a watch list and am able to check the stocks periodically throughout the day. Am I thinking to simplistic that I could catch an option on the rise and then simply add a trailing stop? I use 5 of the more common indicators and paper-trade when the general consensus is bullish for the stock. I know there is a lot more to it than what I have been doing hence the need for a mentor or at least experienced advice.
First off, let's be realistic here, take the amount of capital you have and run the numbers. The best of the best, do 40% a year, IMO that's the most optimistic scenario you can hope for in the near term, and 15 to 20% is more realistic. So if you assume a realistic ROR, then 20% of your capital is your expected annual return, will that supplement your income? If not, then you should start looking for another job, build your capital, and hone your skills until you have enough to accomplish your financial goals. Good luck!
I don't think it is realistic to expect consistent profitability within a few months. It takes years (and for many people, never) to accomplish trading success. However, you may want to keep yourself sane by limiting yourself to one or two setups and paper-trade them exclusively. If the setup doesn't appear that day, don't make any trades. Make sure you have predefined entry, loss, and profit targets. This allows you keep things simple, disciplined, and hopefully profitable. Mark
You are absolutely right Mark. Learning a few setups and trading only those ones until you become a master is essential. I sticked to this philosophy and I am collecting the fruits. I have a long trading history and I switched to trade only E-Mini S&P contracts just last week. One market and a few proven setups is enough. Regards, Gregor
Thanks all, My goal was more in tune with starting slow, paper trading and learning the market over a couple of years. I still plan on this. My day job does not offer me the luxury of watching the market all day so I have to set-up my trades before the market opens and let the triggers play it out. This is good for me as all emotion is removed from the trade. I'll then have the trailing stop kick in automatically. Hopefully another job comes my way before I get laid-off and I can continue to trade, build up a bank and my education. I have information overload though when it comes to analysis and need some advice to organize myself. I know no-one would mentor for free but I could only pay with funds from profits right now. If I could get a good education in a reasonable amount of time they could have "all" the profits until I could trade confidently on my own. Again, am I thinking to simplistic as for just watching my list, catching a wave and making money on some short price increases? Could Level II be used for options? Thanks again all.
1. Yes, your thinking is much too simplistic. 2. What is your fixation with options? If you are not already a successful trader, options will only excellerate your losses and frustrations, as you fight spreads and time decay. You may think that buying calls is "safe" because your risk is supposedly limited. But it isn't. It's very easy to drop 100% of the capital you put into each trade. A very difficult road even for those who are profitable at trading the underlying. A real fool's game until and unless you are highly experienced. Every moment you spend studying options strategies is time you should be spending in other areas.
You obviously know little or nothing about options, except to buy a call or put. You can build a profitable strategy using only options, e.g. calendars, verticle spreads, butterfly, etc.