There are many new platforms the brokers are opening because the interest in digital options trading is high. New technologies are introduced and new indicators invented. But the main question remains the same. How to become a successful options trader?
People often turn into options trading because they consider it a quite simple way to big money. They forget that they can lose their funds as fast as gain the profit. Options trading may be not very complicated, still, it requires a certain portion of knowledge and skills from a trader.
The principal is to have adequate knowledge of different markets and assets. Moreover, a trader has to stay up to date so he needs to follow the news. The trading world is under constant change. The trades are transformed, the innovations are implemented. Options trading is a never-ending learning process.
A successful options trader
Anybody, who is interested in trading, wants to become successful. But let’s think for a moment about the definition of a successful trader. Is it a person with a fortune who can spend holidays in the best hotels all over the world? Well, may be, but I would rather focus on more mundane matters. So I would describe a successful trader as a professional who has developed the following skills:
- Having extensive knowledge in his domain. As I said before, learning never ends. Professionals gather all the information about new trends and technologies. Like for example, they know that cryptocurrencies are hot nowadays. But it is not enough to jump into the crypto’s world. The traders have to know well this relatively new type of financial instrument if they want to make accurate assumptions.
- Need for constant growth. Getting the relevant knowledge is one thing, but ongoing development is another. Once a trader is familiar with the theory and has practised a lot, it is time to go further. It may be sharing his knowledge on the online blog or writing a book. Maybe someone is good in public presentations, in the real or virtual world. Doesn’t matter. Whatever it is, the professionals take advantage of their skills and never stop making progress.
- Stimulation of innovation. Going further on, a successful trader not only has a wide knowledge in his field and is focused on constant development but is also characterised by some degree of curiosity. He wants to deepen his knowledge and skills and implement new strategies and techniques. Professionals are often the ones that come with new developments thanks to their curiosity and desire to invent something useful.
- The right attitude. This is also very important for bringing forth success. The professionals treat trading as work and not as a game. This is a common mistake made by newcomers. They think trading is a very pleasant way to make good money. Soon they get to know it is also a portion of hard work and time investment. So having the right psychological attitude from the very beginning will help to avoid disappointment in the future.
- Maintaining emotional balance. Emotions play a huge role in trading. It happens more than often that newbies fail in trading because they allow their emotions to lead the way. A successful trader keeps the emotions in check. He has full control over them. He knows that sticking to a plan is crucial and one bad day does not mean he will not recover the loss the very next day.
This, more or less, covers the definition of a successful trader. Now let’s move on to how to become one.
4 stages of becoming a successful options trader
Everyone has to start somewhere. It is not possible to know everything right away. Every successful trader had to start the journey from the beginning. So a professional was once a newbie. He had to pass some stages to find himself in a place he is now. And although not a lot of people pass through all the four stages (it is, in fact, less than 0.1%), you won’t know unless you try. So what are 4 stages of becoming successful in trading?
The first stage is an introduction to the trading world. This is a time where people move from interest in the topic to real action. That is, they open their own accounts on the platforms and learn.
Very often the beginners start with the demo accounts. After a certain time spent there trying different assets on different markets without risking own money, they switch to the real accounts. But their trading reminds more of a game than a profession. They follow primitive signals and pick random markets. They lose, but they win as well and they are encouraged to invest more.
This phase will not last long. For some, it can be only a few hours. For others a month. During this time half of the newcomers will resign. They will be discouraged by the way the real trading works. They will discover it is not as simple as they thought and that they do not wish to spend so much time learning. The other half will enter the second phase.
This is the phase where people start to learn and train their skills. They realise trading is not a game. They seek for good strategies and enter the circle of traders. They try different indicators to find good ones that will enable them to make a profit with possibly small effort. They also focus on keeping the money in their accounts and only then start making small profits. They rely on ready-made systems.
This stage lasts usually a period of several months, up to a year. Many will give up as they discover trading is not bringing big money fast. The rest will train to be disciplined in following a particular strategy.
Here comes a kind of enlightenment. Traders who stayed long enough to enter this phase begin to understand that ready-made systems are not perfect. That they have some lacks and everyone has to adjust them to individual needs. This happens on the third level. The traders start to think about how to make small changes in the strategies, so they suit better personal preferences.
Another thing that happens here is that the traders become really aware of the fact they should develop a good money management system. That in order to make a profit first they have to be able to maintain balance in the accounts.
The result is that they lose less frequently and their skills are getting improved.
The last stage. Traders are doing the job consciously. They have control over their emotions. The transactions are opened with confidence. The losses are taken with calm as they are an inseparable part of the trading business. And the winnings are not clouding the judgment as it often happens at the start.
Professionals have developed all the skills I was writing about at the beginning of this article. Everyone experiences loss from time to time, but the professionals are able to recover fast. They are confident they will make money with the systems they have developed during their journey.
The path to becoming a successful options trader is not easy nor fast. And there are no shortcuts. Everyone has to go through each stage to gain knowledge, to train the skills and to learn to control emotions.
Professionals have to stay up to date. They view trading as their profession. They have to keep reading, listening and talking about economic or political events. Anything that is related to trading.
So I have a handful of advice for you. First, you should keep an eye on the economic calendar. News releases have a great impact on the markets. Moreover, follow the news from different countries or companies that are associated with the assets you are trading. It is a good idea to be a part of some trading community where you can share opinions and doubts with other traders. Search for innovations introduced to the trading world.
And the last thing I wish to tell you, be patient! With time you will gain the necessary knowledge and skills.
Good luck and enjoy options trading!