If you are using an options trading system that doesn't incorporate at least some basic technical analysis, you could be missing out on some very reliable signals for trade entries and exits. Understanding TA can also take a lot of the guess work out of trading the Options market.
It is very hard to argue which way the trend is heading if a bar chart is making a series of higher tops and bottoms. Positioning yourself with puts and calls during a trend is like getting carried up an escalator - all you are doing is going with the flow.
But if you are ignoring the trend, and your options trading system is giving you trades that fight the market, it makes it harder to make money consistently. Riding a trend can also give you places to enter additional positions as the price of the underlying security goes up or down. That means you can compound your profits with lower risk than if you ignore what the market is doing. As the old timers always say - the trend is your friend, so you should be going with it.
So does an options trading system that incorporates TA work all the time? Of course not, nothing does. You are going to lose on some trades because we can never know for sure what the market is going to do. Technical analysis points us towards probabilities and all we can do is make our decisions based on those.
The good thing about options is that we can always roll our contracts up, down or out in time if we need to, so if we are on the wrong side of a trade, we can change the strategy to suit. This is an important benefit, because it gives us more time to let the position become possible, rather than simply buying or selling a stock, where the profit or loss is locked in.
So what are your choices if you'd like to trade options, but you're not that confident about your technical analysis or trading ability? An easy way to remove most of the learning curve and become a profitable trader is to use a system that's been developed by a successful trader, and just copy their trades.
For many traders, it makes sense to let somebody else spend the hundreds of hours and thousands of dollars it takes to learn options an options trading system that makes money. Then all they have to do is follow the trades as they are announced and get on board.
It is very hard to argue which way the trend is heading if a bar chart is making a series of higher tops and bottoms. Positioning yourself with puts and calls during a trend is like getting carried up an escalator - all you are doing is going with the flow.
But if you are ignoring the trend, and your options trading system is giving you trades that fight the market, it makes it harder to make money consistently. Riding a trend can also give you places to enter additional positions as the price of the underlying security goes up or down. That means you can compound your profits with lower risk than if you ignore what the market is doing. As the old timers always say - the trend is your friend, so you should be going with it.
So does an options trading system that incorporates TA work all the time? Of course not, nothing does. You are going to lose on some trades because we can never know for sure what the market is going to do. Technical analysis points us towards probabilities and all we can do is make our decisions based on those.
The good thing about options is that we can always roll our contracts up, down or out in time if we need to, so if we are on the wrong side of a trade, we can change the strategy to suit. This is an important benefit, because it gives us more time to let the position become possible, rather than simply buying or selling a stock, where the profit or loss is locked in.
So what are your choices if you'd like to trade options, but you're not that confident about your technical analysis or trading ability? An easy way to remove most of the learning curve and become a profitable trader is to use a system that's been developed by a successful trader, and just copy their trades.
For many traders, it makes sense to let somebody else spend the hundreds of hours and thousands of dollars it takes to learn options an options trading system that makes money. Then all they have to do is follow the trades as they are announced and get on board.
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