Options trading is a very tough task. You have to be cautious about the execution and closing time of the trades. If things are not done in a professional manner, it will be a tough challenge. People who have years of experience in the investment world, suggest the rookies opt into the demo platform. The demo platform gives the investor a strong clue about the potential trade setup. As investors are eager to earn a huge amount of money, they often forget to develop the strategy with caution. The rush in the development phase and eventually end up with a faulty strategy. To avoid such a crisis, you can follow the tips of this article and take trades with strong discipline.
Practice for three months
You may learn trading within a day but you should stick to the demo platform for 3 months. During this period, you should be taking trades each day. It’s not like, you will open 1 trade at the starting of the week and go on vacation. Since you have 90 days in hand, you must execute a minimum of 90 trades. In this phase, you will find many weaknesses and strengths about yourself. Since you have a fixed time period for the demo trading, you won’t be rushing to create the strategy. Dedicate yourself to develop a well-balanced strategy so that you can take quality trades. After taking 90 trades or you start to feel the change. Instead of taking aggressive steps, conservative actions will become your favorite.
Lower down the risk
People who start with a demo account increases the risk as they think it won’t impact their performance. Click to read more about the actions of the elite Singaporean traders. No one at Saxo is taking trades with high risk. Everyone is aware of the losses in the options trading business. In your learning stage, the maximum risk you can take is 2% of the balance. Since it is an options market, you might not feel comfortable with the 2% risk exposure. Feel free to lower down the risk in the trades so that you don’t get lost when you take aggressive steps just earn a big sum of money. Follow the safety protocol and it should provide you great ease.
Find the right exit
Finding the perfect point of exit is not enough for a strategy. You have to know the exact time when you should close the trade. For that, you should study more about trading sessions. Instead of picking up the random asset, try to concentrate on the major hours. Learning to open trade at major hours is a big challenge for new investors. But this should be done very slowly. Stop taking too much risk in the learning stage. Beware of the risk management technique. Study the support and resistance level in a higher time frame so that you can assess the potential time to close the trade.
Test the system in the real market
This is the most critical stage for the new option traders. When the rookies get into the real options market, they start losing patience. Instead of waiting for the perfect signal, they take early trades. When the trades are profitable, they close it early and book a certain portion of the profit. Keep faith in the edge and accept the bad trades. No one can avoid them. Even the most successful traders in this world often have bad times. But if you struggle hard and think something is wrong with the system, go back to the demo platform. Test your strategy and try to fix the faults.
The development of a new strategy is more learning to drive a car. You have to know the theoretical and practical part of this business. People who have weakness will never succeed at trading. So, get ready to push your limit and keep on learning new things.