Options trading is a risky venture that nevertheless has the potential for high reward. Success depends on some common factors, for instance, understanding historical and implied volatility.
However, one factor that most traders, especially those who are just starting out ignore is setting their goals before the start of trading. Tony Robbins said, “setting goals is the first step in turning the invisible into visible.” This statement holds particularly true when talking about options trading.
Trading in Singapore—either in the US market via online brokers or in the Singapore market— is quite popular. As a result, it is important that traders learn to set their goals to ensure they are not frustrated. Here are five goals that any successful aspiring trader ought to set.
Learn First, Then Let the Dollar Amount Come Second.
Learning is particularly important for a beginner to note. There is no magic formula; veteran traders will tell you that their success largely depends on instincts honed over a long period. Therefore, setting a number like 40% per year is unrealistic and will probably lead to frustrations when not achieved.
The trick is in learning the strategies and picking one that works for you, learning the market and learning how to make informed decisions that will yield good returns.
Just imagine for a second, that an individual dared venture into the Singapore Forex exchange without first understanding Structured Warrants. That is a recipe for disaster for sure.
Take Your Time to Formulate a Good Trading Plan.
Once you have gained a bit of experience in the world of forex exchange; learned the basics, the lingo and most important your instincts, it is now time to take a minute and come up with a trading plan.
A trading plan is akin to a business plan—more important than the actual business. A trading plan is an individualized method of assessing risk, evaluating stocks, and coming up with investment objectives.
A list of guidelines that will determine how you trade.
No matter what you do, never deviate from your trading plan once devised. Sticking to a plan is what will stop you from making wrong emotional decisions and mitigate future loss.
Define Your Investment Goals
What is your buying power?
This should be the first question you ought to answer when thinking about investment goals. Your buying power will ultimately determine the kind of trades you can make, and how much you can make.
In Singapore, this is crucial because of the disparity between the Singapore market and the US market. Try to set different investment goals for each market for optimum results. And always take into account your risk exposure.
Determine to Continually Monitor and Record Your Progress.
At the end of a determined period, it is advisable to review your progress.
-Analyze which trades worked.
-Analyze which trades did not work.
-For the trades that did not work is it because you deviated from your trading plan or was it something else altogether.
- Is there a particular strategy that keeps working against you.
After a comprehensive analysis, you can now go back to your trading plan and alter it accordingly. A static trading plan will eventually disappoint, the market is always changing and therefore so should your trading plan.
Set Aside Time for Trading.
Anything anyone ever perfected required a lot of time investment. Trading cannot be a once in a while affair. It requires that time is set aside, time that will allow you to develop good instincts, and figure out trades worth investing in.
Last word
I have heard it said that options trading is a game of luck. I disagree. If one was to prepare thoroughly before venturing into options trading, chances are you will end up being successful. Luck might be a factor, yes, but I tend to think that luck is simply instincts developed over time.
