How do I approach options and forex trading? – Part II By Jack Wong In the previous weeks, I discussed the importance of having the right trading psychology as part of the trading game. Some people view trading as a quick to be rich scheme. Are you one of them? Some people even think that they will be rich after paying a few thousand dollars for a trading seminar or course. Is this true? In my view, trading can never be a quick to be rich scheme because there is no short cut. Based on observation and discussion with many successful traders, the main reason why many people fail in trading is their attitude. To be precise, it is the trader’s attitude. Let me ask you this question. Imagine you are now running a new business. Do you need to have a comprehensive business plan before you commence the actual business operations? Most professional traders I know see trading as a business. Unfortunately, most of the retail traders don’t. Retail traders approach trading without any plan. They trade based on emotion, i.e. greed and fear. So, if you do not have a business plan, i.e. the trader’s attitude towards this business, it is almost impossible for you to succeed in trading. This is my fifth year in trading options. I acquired most of good trader’s habits and am able to control my emotion by having a trading plan before I place the trade. I drafted a business plan a few years ago and it provides me with a clear direction of what I must do. I can say that it is so far so good. I see this as a business. I spent many hours to learn this business and eventually, the effort pays off and now I can generate consistent returns from my options portfolio. A trading system I am currently teaching in the advanced options classes – the Big Mouth Iron Condor System (BMIC) SystemTM - has been able to give me a monthly return of more than 10% based on the amount of my risked capital. The outcome, i.e. my consistent result using this trading system, however did not come overnight. This is what actually happened. I studied via the internet from other people who have been successful in trading iron condor. I took the best of each of these iron condor trading systems and added some of my preferred filters. It then became my BMIC SystemTM. The next step I took was to ask a few of my trading buddies to backtest this system. We took three years of historical options data to run the system to make sure that the result was consistent. After this, we paper-traded this system for six months to experience the unknown future and things to watch out before we finally put it on live to trade with real money. As much as we would like to see, trading is never an easy game. Certainly, it is not a quick to be rich scheme. The result you have been dreaming, i.e., consistent profit is the result of hard work and effort. As I have illustrated above, it does not come overnight. Now, do you still think that trading is a quick to be rich scheme? You can find out more on Optionetics education by visiting our website at http://www.optionetics.com.sg. Jack Wong |