I need some advice. I've taken tons of options trading courses and paper traded for a long time. I've been options trading with real money for about two years now and have done nothing but loose money. I spent a lot of money on classes and have learned a ton. I've practiced like crazy too. I've analyzed everything and don't see any issues with emotional trading. I recently (two weeks) started using Ichimoku. I'm seeing a slight improvement, but the market is such a mess right now its hard to tell. There is a lot of chop, which messes up Ichimoku. I haven't been using Ichimoku long enough yet. My question is: do retail traders ever really make money long term or am I better off investing my money? Everybody I speak to in the financial world tells me trading is a waste of time. I'm considering dropping trading options and investing in ETF's. Maybe focus more on dollar cost averaging. Trading is time consuming, but I enjoy it. Its difficult because I've put in 110% and am not seen any results. Oh, I've also been through all the TastyTrade stuff and haven't found much success there either. Any thoughts? Thanks. -- Quita
Open and fund a ROTH IRA and migrate to holding equity based positions ( ETFs) longer term. An intelligent tactical process can produce geometric compounding (with tax deferral) as well as? short term "trading", with less work. Options and forex are expensive markets to experiment with the "randomness" of short term movements. Retail traders are paid to experiment ( with other people's money unfortunately ). If they don't meet performance "quotas", then they are let go, and another crop of replacements comes in.
Q: To Trade or Not to Trade? A: Trade small positions with a risk of about $100.00. Then scale up if successful.
Most people who trade options lose money. A (now stale) study by the CBOE had put the failure rate at 90% or so. It's hard to tell the real percentage since many options are bought or sold to hedge equity positions and are not intended to be successful trades. The odds are against you being a successful retail options trader. It's like roulette. I occasionally log onto a roulette site and play until I have either lost $100 or won $400. There are time periods when I am ahead and time periods when I am behind but we all know that eventually the odds will even out and I will lose. But its fun in the meantime. In the account I use for trading right now I show 23% of my money tied up in option trades, 57% in dividend paying equity positions and 20% in cash. Every day I look for option trading opportunities. If I find one that seems compelling AND there is room in my portfolio, AND the market seems favorable to the trade I MIGHT take it on. Right now I am passing on all but the most compelling trades as I feel that the 23% I have tied up in option trades is pretty full given market risk. I just did my 2015 tax tables and have found that (as usual) I made the most money last year from my dividend paying equity positions. If I were a pure optimizing machine I would let all my option positions expire and put the money into dividend yielding equities. I don't do that because I enjoy the option trades... and lemonade stands are illegal in my community. After all: 'in the long term we are all dead' John Maynard Keynes
Well, there is one or two rules it seems you may have not fully grasped about the market. The First Rule: Silence: In the event that an instituion, individual or group happens upon a winning strategy and produce significant alpha, then all attempts to keep it secret will be made. Under that premise all stock advise will be not worth the cost of taking the course, because they teacher is charging you and not applying his skill to make money. (Unless it is the rare case of a 'noble teacher' who has pure intentions) The reason for silence is because as knowledge spreads the strategy will become ineffective, or worse: predicted and countered. You have the necessary ambition, but the wrong learning strategy. The only teacher you should have is yourself and google. Also you should create a log of each trade where you have investigated exactly your reasoning for the trade and the reason it won or failed. Eventually you will find some truths that are semi-reliable. Keep finding these puzzle pieces and use them in all meaning combinations to see what works. Know when an indicator is misleading, by knowing what it doesnt account for. (Sometimes large gaps can mess with the numbers enough that it negates any actual meaning you ascribe to it) Dont use an indicator if you do not know the math behind it. Know when a chart is misleading. A line graph without volume is useless, look at ELMD today. First look at a day chart using lines, then use candle stick minute data. It would at first seem very easy to profit from the early day ranging until you look at the candlesticks that reveal the volume was insignificant. Anyways, this is all just opinion, the points dont matter, and past returns do not indicate future profits.
Retail traders do make money but only a small %. It takes seasoning beyond knowing how Xs and Os work thus since you do enjoy trading stick with it till you get there, perhaps reduce position size until consistently profitable.
I would also like to add that find and stay within your niche. Start out within a certain Volume range, Price Range, Relative Volume Range, and Sector. And only stick to trading this subset of stocks.
How about put in 20 years and not have much success? I kid you not. I sucked at trading for 20 years. It's amazing I kept at it. Fortunately, I wasn't taking huge risks and had a decent job but still managed to blow up some small accounts along the way and stuff like that. About 6 months ago, something clicked for me. But I also made a huge mental shift. My point is this -- how much is it worth to you to keep at it with the possibility of being successful -- at some point in the future -- which may be way down the road?