Why People Fail at Trading Options

Two factors that are critical to success in trading options are competence and mindset. The majority of those who try to make money trading options fail at the task. A common issue is that a person thinks options trading is easy and that one only needs to follow some dude on social media for tips and then quickly enter a trade using the Robinhood app. This hypothetical but all-too-real person does not bother to work with folks like Top Gun Options to learn the basics and then work with a group of dedicated traders who routinely make profits no matter which way the market is going. So, they do not learn what they need to know and typically let fear and greed drive their trading decisions.

Trading Options Is a Business

Novice options traders who go through similar training do not necessarily end up with similar results. This is the mindset part of the equation of why people fail at trading options. Trading options is a business. A person needs to allot sufficient time to learn the basics, trade in simulation until profits are routine, and manage their trading capital wisely. Traders who succeed at trading options follow a systematic, proven approach. They start with simple trades and only progress to more complicated trades as their skills and success allow. And successful traders have a trading mentality. Options trading is not long term investing. When picking stocks to trade one is looking at profitability over the years but rather short term price fluctuations in terms of days, weeks, and, occasionally, months. At Top Gun Options we preach to always hedge risk in every single trade. This approach typically excludes the usually remote opportunity for huge profits but it does eliminate the likelihood of substantial loss and increases the odds of repeated small gains. Since trading is a business, a trader needs to manage their trading capital wisely as not all trades are successful even in the hands of professional options traders.

Pay Attention to What Is Going on in the Nation and World

At Top Gun Options we have an acronym, DRINC, which stands for Democrats, Russia, Iran, North Korea, and China. Democrats are commonly responsible for excessive government spending and regulations, Russia is currently at war in the sovereign nation of Ukraine and damaging the supply chains for food, fertilizers, and strategic minerals, Iran is trying to make a nuclear bomb in order to destroy Israel, North Korea is governed by a nut case with nukes and missiles, and China simply wants to run the world starting with Taiwan and all of the South China Sea. As is apparent from the war in Ukraine, events on the other side of the world can have dramatic effects on markets at home. A common reason for failing to make money trading options is that the novice trader gets a “tip” that is unrelated to anything going on in the wider world, pours money into the trade, and loses. A successful options trader can often make money in the market simply by paying attention and applying common sense!

Work with a Dedicated Trading Squadron

The world is a big place and so is the stock market. Keeping track of all trading possibilities is not possible for any individual. Successful traders have their reliable information sources, traders with whom they work on a constant basis exchanging intelligence and prospective trades. Sometimes the markets are such that a businesslike trader can virtually print money and sometimes it is a matter of hunkering down in the trenches like World War I. When trading is easy and when trading is difficult the best results generally occur when one joins a trading squadron like one of those at Top Gun Options where we routinely profit no matter which way the market is headed.