Managing trades in the options market is a very difficult task. This market is time-variant, so it is important they know all the details. By the term time-variant, we are referring to a situation where the profit factor is also determined by the time frame. So, managing trades in the options market is very difficult. If you look at the top UK traders, you will realize that they are always using some special technique by which they are taking the trades and making consistent profit. Though it will seem a very difficult task, you can easily do so by following the basic protocols. Never think you will become a profitable trader without doing the proper market analysis. Follow the safety protocol and manage your trades efficiently.
Trade with low risk
The first thing that you need to consider is the risk profile. Taking the trades with high risk and trying to earn more money is not going to work. Being an options trader, you need to stick to the 1% rule of money management. If you are good at trading, you can take high risk and trade the market with a 2% risk. But you should not trade with a 2% risk unless you have years of trading experience. You don’t have to take high risks to become a successful trader. Remember the fact that trading is all about managing the risk. The maximum risk you are allowed to take in each trade is 3% but it is only applicable for the experts.
Trade with the best platform
You need to trade with the best platform to secure investment. Without taking the trade in the best platform it will be hard to analyze the market dynamics. Sign up for a free trial with Saxo and see what the best platform can offer to you. Though you might not be familiar with the premium tools available in the professional platform it can improve your execution process to a great extent. When you analyze the market with a professional tool, you can execute trades with a high level of precision. It allows you to make money at any time. Though it is a very complex business, help from the premium tools can boost your potential profit.
Never keep more than 2 trades running
Being an options trader, the maximum number of running trades should be 2. If you have more than 2 trades running at once, it will be very hard to manage the trades. Since options traders have to deal with time variation, they must trade in the 1-hour chart. However, if you trade in the lower time frame with a lower expiry period, you need to focus on the dynamics of the market. For instance, instead of taking the trades with a 2% risk, you should take less than 1% risk. If you lose two trades in a particular trading session, you need to take a break in the next trading session. You must give your mind some space to assess the condition of the market.
Forget about emotion
Becoming emotional in the trading industry is one of the key reasons why people are losing money. To ensure the survival at trading, you should not think about emotions. Try to use the rational approach so that you can execute high-quality trades without having any trouble. Things might be hard at the initial stage, but once you learn to execute trades with discipline and forget about the emotion, you can make more money.
The moment you make trades for a logical reason, you will be able to manage the trades more efficiently. It is very difficult to manage an emotional trade. So always be careful with the execution of trades.