Video of "Splash"
In case you're wondering who this Tom Sosnoff (Tasty Trade.com) guy is.
Wednesday, January 29, 2014
Tuesday, January 28, 2014
Early on, I wrote glowingly about these and other mentors. I believe they are honest people, I believe that they have knowledge about options. I paid HUGE fees to said mentors to learn how to trade options. IT IS ONE OF THE BIGGEST REGRETS OF MY LIFE. If I had it all to do over again, I would NOT PAY ANYONE ANYTHING to learn options. They did NOT have the answers I needed anyway.
So, instead of answering emails over and over again, I want to make my current position very clear.
Here's what I would do instead:
1. Open a brokerage account with TD Ameritrade and download their option trading platform "Think Or Swim" and fund it with $2000. (that amount of money will qualify you for margin). (Of course if you're already a trader, you'll fund it accordingly.)
2. Open a TastyTrade.com account, and download "Dough" which is new software that is a handy addendum and gateway to Think Or Swim. (It does not replace it, but simply does some of the calculations and provides volatility information for you). Both softwares are superior to any others I've seen.
3. Learn how to navigate both of these pieces of software using the Doughjo and the video trainings on navigating TOS. There's plenty to learn, so don't shortchange yourself by ignoring the nuances that do not exist in other software in the industry.
4. If you are new to options, start watching the hundreds of videos in the TastyTrade.com archives which are FREE. There are beginning series ("Where do I start?") and small account series ("Liz & Jenny"), and endless, searchable videos for intermediate and advanced traders. Some of the best are "Market Measures" (advanced) and "Tasty Bites" (small accounts) and "Best Practices". They have videos for IRA accounts, for futures traders, just about anything you could want. FREE.
I would not spend one red cent on education. Besides Tasty Trade.com, there is another website called "Options Playbook" which has some clean, easy to comprehend lessons. FREE.
I would be, generally speaking, a SELLER of options, not a buyer. In other words, a Contrarian trader. This is a big difference between Wendy Kirkland, Options Animal, and all other mentors I had in the past. This is as different as learning another language altogether. This is, in my opinion, the only way to truly succeed, long term, regardless of trend, in options.
5. I would not make real trades until I was thoroughly educated on one simple strategy. It is not necessary to know ALL strategies at once. Just learn one at a time, but learn it thoroughly and then trade it with real money, with different underlyings and keep copious journals on your results. You need to be interested in your probability of success, the return on your investment, and your risk. There are dozens and dozens of videos to teach you what to look for. While you trade one strategy, go to paper trading and learn the next strategy without losing real money.
6. TRADE SMALL. TRADE OFTEN. By that, I mean that for you to mathematically succeed in options trading, you MUST make enough trades to get the probability of success to work in your favor. Watch the videos about "The Skinny on Options Math" if you want the true mathematical information on how random walk theory and mean reversion. (I first learned some of this in a book "Options and Options Trading: a Simplified Course that Takes You from Coin Tosses to Black Sholes" . I'm not saying I understood it all, but it helped. But this is advanced KNOWLEDGE and THEORY. You only need to implement it by keeping your trades small, and making a LOT of them. The odds will fall your way, once you know how to determine your probabilities of success.
And here's a little link to the Rookie's Corner on Options Playbook that I think every beginner should read before they buy that first Call Option. Sell a Put instead. Getting Your Feet Wet.