We have all heard the axiom "90% of all traders fail."
Failure means many things. For me, it means that one has had unrealistic expectations and as a result lost everything they put into the markets. Then they gave up.
When I first started trading more than ten years ago, my expectations were that I was going to become financially independent (get rich quick). It didn't happen. I was initially "lucky" but very quickly became "cocky" and lost most of what I had gained.
Why? I didn't have a clue of what I was doing. My true luck came when I realized that I needed to get some trading education outside of books and invested what little profit I had remaining in a series of live on-line trading courses. I spent $10 k. It paid for itself 100 times over the years...
Taking formal classes developed a foundation of knowledge to draw upon as I entered the real school of trading education: the markets. Over the years since then, I have learned the following (aside from trading is not a get rich quick scheme):
1) If you don't understand the trade and its structure, you will lose money. Period.
2) Good traders know what they know; great traders also know what they don't know.
3) When trading options, as in life in general, you will make many errors. Each mistake contains a lesson. Study your mistakes and learn the lesson each teaches. You already paid for the instruction.
4) Trading for bread and butter is more profitable than trading for steak and lobster. Take profit as often as you can and cut your losers short.
5) Never, ever, go into a trade based on a "gut" feel. Always have a written plan that clearly defines the reason for entering the trade, where and when you are going to take profit, and most important - defines where you are wrong.
6) Every time you enter into a trade, kiss your money goodbye because it may not be coming back. Position size so that a loss is bearable. I like to give myself 20 chances to be wrong and am willing to lose 5% of my capital.
7) Trading options takes hard work. I spend more time researching opportunities and strategies than actually being in the market.
Have a great week and I hope to see you enjoy this blog going forward.