Hi option traders. I hope you are doing well today and that you find your portfolio growing. This article is part two of a series of six, and each article is accompanied by a video. I highly recommend you to watch all six videos if you’re interested in learning how to trade options as a business.
You will learn how to back test all your trades. This is a very important step. It will take time, but it’s very necessary. There are only a few option software programs out there at this time that can help you with this task. Learning how to trade without costing you a dime is well worth your time. I was using Optionvue and Think or Swim to back test my option trades and learned a lot. These two software programs have been very good, but now San Jose Options has just released a new type of back testing tool called the “Options Toolkit.” With this back testing tool you will save a lot of time in comparison to any other options testing software that is on the market.
For example, it used to take me one hour to back test one year of trading a Condor in the Optionvue software. Using Thinkorswim it’s a little bit faster, but there is less information. Now, in comparison, to do the same job and actually gather more organized data, it takes about 2 seconds to back test one year in the “Options Toolkit.” It’s really phenomenal.
Another step in finding success is simply trading for many years. We all call it “experience”. The reason behind this is the stock market is constantly changing. In order to see all sides of the market, we need to trade for many years. There is no other way to gain this kind of “experience”.
Paper trading is an excellent way to learn how to trade options. It is easy to get access to a Paper account. You can open up a free trading account with Think or Swim and/or almost any other options broker. This will give you the practice you will need. It may be difficult, but it is very important to paper trade for at least six months to a year. Remember, it is very important to gain experience over time, and paper trading is one way to gain this experience without risking any money.
At last, I would like to tell you that you should keep about 25% of your capital in cash. This is very important! The best option trades always require adjustments. In order to make these adjustments, you will need extra cash. It is very dangerous to use all of your spending money in your trading account. Every option trader leaves lots of money in cash in order to make adjustments. You need cash to lock in profits and manage your portfolio as needed. Keeping this cash helps you to be a successful trader.
Looking to find the best deal on Options Backtesting Software, then visit www.sjoptions.com to find the best advice on Trading Options and education.
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