Options Trading Hacks Every Trader Must Know


There have been countless books written about options trading offering smart strategies that promise quick results. But as any seasoned trader who has overcome numerous obstacles along the way will tell you, there is nothing better than a set of fundamental recommendations to guide your options trading. Here are some of these time-tested rules relevant to both aspiring and professional traders alike that guarantee to reduce risk and increase your chances of success.

Make use of a trading simulator

A trading simulator is a software program that allows you to practice trading options without risking any real money. It provides a safe and controlled environment where you can experiment with different strategies, learn how to read market trends, and develop a trading plan. By using a trading simulator, you can get a sense of how the market works and how options trading operates, without the stress of losing your hard-earned cash. Although it is primarily well-suited for novice traders, it can be equally beneficial for experienced individuals who want to test their new strategies without putting their finances at risk. Investopedia’s Stock Market Simulator is an excellent example of such a tool.

Keep it tight

When it comes to trading in general, maintaining a small portfolio of stocks always yields better results. This is especially true if you're a beginner. Don't try to trade too many options at once, as this can lead to costly mistakes. Instead, work with a modest number of stocks and focus on understanding their behavior and key factors affecting their price. This will allow you to gain experience and confidence without risking too much capital. Since options trading can be highly unpredictable, this can help you limit your exposure and be more comfortable with trading.

Consider risks

A solid understanding of the risks is what distinguishes a professional trader from an unskilled one. To be able to assess risks correctly, you must make sure you have a solid grasp of the assets you want to trade and the market conditions before placing any trades. Take the time to research and analyze the market, and consider seeking the advice of other traders. By being cautious and informed, you can minimize your risks and increase your chances of success in the options market.

Setting stop-losses must be another critical part of your risk management routine. A stop-loss is an order that automatically closes out your position if the stock price reaches a certain level. This considerably helps you limit your losses if the market moves against you.

Leave emotions out of it

Emotions, such as fear and greed, can easily get the better of you when you engage in trading options. On top of that, a heightened level of stress can cloud your judgment and lead to impulsive and irrational decisions. For this reason, it's crucial to leave emotions out of the equation when trading options. Instead of making decisions based on impulses, you should rely on a well-thought-out strategy and stick to your plan. Staying calm and objective is essential to successful options trading.

Conduct proper research

Before you even consider making a trade, it’s important to fully understand the underlying asset and test different strategies. This might involve researching the company behind the stock, or delving into the details of a commodity or currency. Understanding the factors that affect the price of the asset is key to making informed decisions about when to buy or sell an option. Another important consideration is the strike price. This is the predetermined price at which the asset can be bought or sold if the option is exercised. It’s important to carefully consider the strike price when trading options, as it can greatly affect the potential profit or loss of the trade. 


Ultimately, options trading is a complex and dynamic field, but by using the tips outlined above and being mindful of your decisions, you can become a successful options trader and achieve your financial goals. 

Igor Shafran Voronkovski vast knowledge and skills have made him a respected figure in the trading industry