Getting Started With Options Trading
This section is essentially a guide through the process of everything a beginner options trader needs to do to actually start trading options. From the initial preparation required, to choosing an online broker, finding trades to make and managing your capital, this guide will help you understand all the necessary steps you need to take.
Although the information contained in this section is specifically targeted towards beginners, we are assuming a certain level of knowledge about options contracts and options trading. If you don’t have a decent grasp of the fundamentals, we would suggest that you take a look through the following sections on this site first.
The information contained in these sections will give you a solid foundation to what options trading is all about, and you can always refer to our Glossary of Terms if you come across any words or phrases you are unfamiliar with.
To get the most benefit out this guide you should read through all the articles in the prescribed order. Most of what is included is relatively straightforward, although there are a few more complex topics included too. Reading it in order should help you make sure that it all makes sense and know there's nothing that is really too difficult to understand.
All the articles included in this guide are linked in order on the right hand side of this page. For a brief overview of what each one is about, please see below.
This article covers the first steps you should take to ensure that you are ready to begin trading options. We talk about the knowledge base that you need and the importance of clearly defining what it is you want to achieve. We also provide details on how to prepare to a trading plan and why a trading plan is an essential tool in options trading.
For the full article please visit the following page – Initial Preparation.
Choosing a Broker
The easiest way to buy and sell options is through an online broker. Our article on choosing an online broker covers all the different factors that you should consider when you are deciding which of the many available brokers you wish to sign up with. These include the commission rate and the quality of the trading platform. Choosing the right broker really is a big decision and one that you should put some time and effort into.
You can read the full article on the following page – Choosing an Online Broker.
Trading Levels at Options Brokers
Trading levels are essentially the way that options brokers control the risk that their customers are exposed to. Brokers should always have the best interests of their customers in mind, and they are obliged in to ensure that their customers aren't taking risks that they shouldn’t be. By carrying out risk assessments on all new customers, they can assign them trading levels which reflect the maximum amount of risk they should be taking.
The full article on this subject is on the following page – Trading Levels.
Identifying Trading Opportunities
A key part of options trading is focuses on finding opportunities to make trades. There are a number of ways that you can identify and assess such opportunities, and we have provided information on what is involved in the process. To be successful in your trading, you will have plenty of opportunities for trades, so this is definitely something you will need to commit some time to.
You can read the full article on this particular aspect of trading on the following page – Identifying Trading Opportunities.
Risk & Money Management
Good management of your exposure to risk and your trading capital is absolutely vital in any form of trading if you are able to make money in the long run. There are a number of methods you can use for managing risk and controlling your budget, such as using options spreads and position sizing; our article on risk and money management covers several of the most effective ones. We also offer advice on how to use them.
For the full article, please visit the following page – Risk & Money Management.
Planning Individual Trades
Our article on planning individual options trades is essentially about putting together everything you have learned so far to actually place your orders and make your trades. We provide details of the various steps involved, such as setting your targets for a trade and choosing which trading strategies to use. We also go over the different ways you can exit your trades once you have entered them.
You can read the full article on the following page – Planning Individual Trades.
Monitoring Your Trading
The final article in the guide is about the importance of keeping good trading records and how you can use those records to evaluate your performance and look for ways to improve. Monitoring your options trading can be really useful for finding out what you are doing well and where you might be making mistakes. It's one of the easiest ways to develop your trading skills and is something any options trader should dedicate their time to.
For the full article, please go to the following page – Monitoring Your Trading.