Three Lies You Hear Regarding Options Trading
Before breaking into the options trading game, chances are you are going to ask some of the so-called “experts” for advice. They’ll give you their tips and tricks, but most likely they will tell you how risky it is to get started and that something like options trading should really be done by professionals (and then they’ll probably give you their business card and tell you to call them).
Well I’m here to tell you that you can be that professional; and some of the things the “experts” told you are probably doing more to hurt your potential to make money than help it. Here are three common lies that new traders often hear, and the truths behind them:
Lie 1: Options are risky, and you will lose everything
Everything we do in life carries some form of risk. Driving to work risks a car accident, eating that double cheeseburger risks an expanding waistline and petting a cat risks a scratch or two.
It’s no different in trading.
There is a risk that you will lose your money, but the level of risk depends on you. In fact, options were created to reduce risk while trading.
Options are much cheaper than owning full shares of stock, and you get results much quicker. There are also ways to limit risk even further, like listening in on MTI’s free webinars and taking our advice.
Lie 2: You can’t trade options, leave that to the pros
This is something the talking heads will tell you so you pay them to do your work for you. Almost a quarter of all contracts are traded by “retail investors” (non-professionals), and there’s no reason why you can’t join the fray.
Sure, there are some things you will have to learn, but nothing worth doing is easy. Taking the time to learn what options trading is, and what strategies you can follow to do it, will provide you a way to not only trade like a professional, but better than one.
Lie 3: You can’t use your IRA to trade options
No one likes to risk money, and no one especially likes to risk their nest egg. It’s because of this that the talking heads will tell you that you can’t use your retirement to trade on the markets. This is a lie because there are ways to trade options that have virtually unlimited rewards for very little risks, even using your IRA.
The key to trading with your IRA account is to never risk more than you presently hold in that account at any given time. Which is to say, don’t bet your entire future on something you don’t completely understand.
To best get a handle on the trading strategies that work for you, tune in to a free webinar or by taking Market Traders Institute’s Ultimate Stock and Options Package.