Top 34 Tips to avoid losses & make KILLER PROFITS in Option Buying -
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1- For Option buyers 'Timing' matters most. You enter too early - choppiness will kill your trade ; you enter too late - IV starts falling & kills your trade.
2- As an option buyer not much is there which you can do 'after' you enter any trade - only before it.
2- As an option buyer not much is there which you can do 'after' you enter any trade - only before it.
3- Always have a fixed 'daily loss limit', which can be 2-3 % of your total account.
4- Always have a fixed "per trade loss limit' ~ not more than 20-25% of your daily total loss limit, thus you'll be risking < 1% of your total account in one trade.
4- Always have a fixed "per trade loss limit' ~ not more than 20-25% of your daily total loss limit, thus you'll be risking < 1% of your total account in one trade.
5- Remind yourself of your max loss limits every morning.
6- Never exceed these two limits. Shut your system when they reach & don't look back for the day.
6- Never exceed these two limits. Shut your system when they reach & don't look back for the day.
7- For every trade, SL is different but the 'loss per trade' is fixed, so change your quantity accordingly.
8- Try to initiate your trades from important S/R levels, so that SL is small & R: R is high.
8- Try to initiate your trades from important S/R levels, so that SL is small & R: R is high.
9- Have an idea about the direction of the index/stock you're trading but also keep in mind other factors like IV & Theta which bleed us money.
10- Do not take random trades based on just 'gut feeling'.
10- Do not take random trades based on just 'gut feeling'.
11- Every trader has an 'edge' that separates him/her from others : find what's yours & play to it only.
12- Discard ruthlessly the trades which don't fall in your comfort zone bracket.
12- Discard ruthlessly the trades which don't fall in your comfort zone bracket.
13- If you face losses in two consecutive trades, stop trading for an hour. Take a break, relax, clear your head & then come back.
14- We tend to lose maximum when we do revenge trading. Avoid that completely.
14- We tend to lose maximum when we do revenge trading. Avoid that completely.
15- If you face losses for two consecutive days, stop trading for that week. Come back fresh next week
16- If you face losses for two consecutive weeks, stop trading for that month : introspect, improve & then come back.
16- If you face losses for two consecutive weeks, stop trading for that month : introspect, improve & then come back.
17- Whenever you enter any trade, the first question you should ask is - "How much I can lose" not "How much I can earn".
18- You can't have Rewards without Risks : the key is to balance them in your favor.
18- You can't have Rewards without Risks : the key is to balance them in your favor.
19- Market tests your patience to the extreme by bringing lots of choppy days before giving a trending day.
20- You can make big money in trending days only if you survive the choppy ones.
20- You can make big money in trending days only if you survive the choppy ones.
21- Plan your trades in advance & always have a clear-cut point in sight where you'll declare your trade as 'failed'.
22- Don't hesitate to kill a trade if you realize you are wrong.
22- Don't hesitate to kill a trade if you realize you are wrong.
23- Your trading style is generally an extension of your personality ; don't go against your basic instinct.
24- If you are conservative by nature, there's no reason you should take unnecessary aggressive trades.
24- If you are conservative by nature, there's no reason you should take unnecessary aggressive trades.
25- Never let your emotions drive your trades ; be it 'fear' or 'greed'.
26- Never pressurize yourself to make money in the markets : the more you do that - the more you'll lose.
26- Never pressurize yourself to make money in the markets : the more you do that - the more you'll lose.
27- Shut yourself from outside noise completely. Play only on your strengths.
28- Your strength will come by mastering your set-ups completely & testing them thoroughly in all market conditions.
28- Your strength will come by mastering your set-ups completely & testing them thoroughly in all market conditions.
Those were the 28 frameworks. Six more are remaining which you will get in your Twitter Inbox when you Retweet the first Tweet of the thread below.
Make sure you follow me @CnceptualTrader to get the DM.
Make sure you follow me @CnceptualTrader to get the DM.
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