When Not to Trade Options
There are times when the market gets ready to fall off of the earth. We typically suggest that you get long volatility, buy puts on the S&P 500, or go pop some popcorn, go for a walk, or get into cash and don’t trade anything. There is a time when not to trade options. It is when you have no good idea where stocks or the economy are going. When the market is crazy is not the time to guess. It is a great time to trade with a dedicated squadron like at Top Gun Options where we called the Covid crash to the day and printed money for the next month while the “smart money” kept saying to “buy the dip.” But if you did not know how to trade in that situation you lost your shirt.
Free Video Training - Why Diversifying Isn’t as Important as You Thought
Learn Technical Analysis Skills Before Risking Your Own Money
Some folks are purely technical traders. They use technical indicators to profit from short term ups and downs in the market. These folks do not worry so much about fundamentals but trade solely based on technical cues. If that is the route that one wants to take it is essential to learn the appropriate skills before risking any money. Traders can do simulation trading on their trade station day in and day out. They can try out various strategies. All of that can be done without risking any of their own money. Common advice for these folks is never risk any of their own money until they are routinely making a profit in simulation trading.
Another bit of advice that we suggest is that when your technical strategies are not working any more, stop trading until you figure out what is going on. Better yet, that is when you need to join a dedicated trading squadron like at Top Gun Options where we combine technical trading skills with attention to what is going on in the world like an emerging virus in China that will shut down the world economy! There are many times when the market gets disconnected from the economy and at those times having a sense of what is going on behind the scenes is critical to the kind of profits we commonly make at Top Gun Options.
Make Trades That You Understand
Options trading is not a guessing game or a trip to the casino. We have written about how a trader only needs a handful of strategies. One can apply those strategies time and time again in market situations that keep happening over and over again. That is the nature of successful options trading. Make trades that you understand. Hedge your risk on every single trade. Make money again and again. And, when you do not understand the market or why your trades are losing, stop trading, get sound advice, and do not resume trading until you are clear about how you will resume profitable trades.
Only Make Trades from an Expert at Trading Options
Not everyone who trades options has the skills, experience, or time to dedicate to full time trading. Those of us who have “day jobs” aside from options trading do not have the time and often not the inclination spend much of the day watching the market or checking in with contacts across the world. What a person can do is work with someone, like at Top Gun Options, who does fit this description and has a proven track record of success. If you are going this route, make sure that you get to see what these folks are doing in live trading. Make sure you see how they are doing in the current market. Never watch a bunch of PowerPoint presentations about trading that allegedly happened a decade ago and then make up your mind. Never, let someone show you an Excel spreadsheet of trading results with years of projected returns based on a few weeks or months of trading. Come to Top Gun Options where we let you see us in live trading and show you current trading results. Otherwise, remember than when not to trade options is when you are not absolutely certain how to proceed.
Newsletter: Our Less-Than-10-Minute Video Overview of Today’s Market Activity
Originally published at https://topgunoptions.com on August 25, 2023.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
