I've decided to invite AJ Brown, from TradingTrainerHomeStudy.com, as he was a great guest blogger and hit a very hot topic...options! You can read his last article on OTM, ITM, or ATM, which was a great success. I asked him back today because options are getting much more play in this economy and he has 3 great rules for trading options that he would like to share with you today. Comments are welcome and expected, and just as before, he will be responding to ALL comments!
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The most difficult part of trading options (or anything else) is controlling your emotions so you can make smart trades.
There's always this tug-of-war. On the one hand you have logic and common sense. On the other, you have fear and greed. Problem is, fear and greed are too often the winners! (I know; I've been there.)
With that in mind, here are three option trading rules I suggest you obey to eliminate emotional decisions.
Rule #1: Be an End-of-Day Trader
Do some people make money day trading? Absolutely. But for most people I advise against it. Here's why...
Watching the market real-time can send your emotions soaring and diving like a roller coaster on a rickety track. Sure, it's thrilling. Sure, you'll experience something like a gambler's high. But it ain't going to do your trading account any favors.
