Create Consistent Profits
Would your portfolio grow by incidental winners or by setting up trades which can have Consistent Profits? A consistent track record can take you places. If your trading account is somewhere in the range of $2,500 and $50.000, we consider this a small trading account.
You have to focus on creating as many winning trades as possible. Choose trades with decent profits and manageable risk.
You need to build a consistent track record and build your confidence as a trader. Then, as you grow and progress as a trader you can proceed to trade larger sums of money.
If you buy stocks you only have 50% chance to make a profit in the future. With options you can select your strikes so that you have a much higher probability of profit. When selling options you receive option premium, and you can define the trade risk. Important is that you don’t take on too much risk with each trade you make. Therefore we trade Small and trade often to get Consistent Profits. Start with trading defined risk trades. These are low risk strategies which have still enough premium to collect.
So, your primary goals is to trade it successfully. You have to do the following things:
• Forget about the money and instead become “engrossed” in mastering an effective yet simple trading strategy like selling premium. The more focus you put into the process of trading instead of making money and getting rich, the sooner the money that you desire will find its way into your trading account.
• A Option Trading Plan is essential for succeeding long-term in the markets. It gives you an objective daily guide to follow and will lay out all your entry, exit, and money management strategies. With a trading plan you learn to trade with confidence.
• Once you build your trading plan you are going to need to track your progress in a Option trading journal so that you can stay disciplined and accountable. If you don’t maintain a trading journal you are probably going to lose your discipline and focus because you will not have a tangible piece of evidence that reflects all your trades.
• Manage Winners. If a trade has reached a profit of 25% or more of its maximum profit than you should take it off. Many small winners will make a big return. If you close the position before it reaches 50% of its maximum profits, you will increase the number of winners, and you lock in a profit before the market turns.
Managing your money in a small account is no different from how you would manage your money on a larger account, except that you will obviously be trading smaller position sizes per trade. Whatever you do, do not get greedy and trade too large or over-leverage on a smaller account, this is a common emotional trading mistake and it will kill your trading account faster than you think and greatly inhibit your chances of becoming a successful trader.
If you slow down and focus on trading like a sniper and not a machine gunner by learning to select the right kind of strategy and choose the risk you like at order entry.
You will be able to trade much more relaxed and care-free, this will help you greatly in your money management. You should never risk more money per trade than you are TRULY OK with losing, because you COULD lose on ANY trade.
What to do next
If you want a chance to take your trading to the next level, you will need to apply the insight provided on this website. Make a shift in the way you think about trading. It is all about Trading Small, have enough occurrences and Manage your Trade early. This will help you to get Consistent Profits.
I cannot force you to manage your money correctly, or remain disciplined. You can set up and close a trade in every way you possibly can think of. You might make some money. But if you are truly serious about having a career in trading, you will have to trade mechanically. You need to remain disciplined over a long period of time.
You better use a Trading Plan and muster up the motivation to do these things and forge the proper trading habits. You can succeed at anything if you want it enough. Option trading is no different. Right now you should ask yourself “How much do I want to be a successful Option trader”. Then go back and re-read how to increase a small trading account successfully. Start implementing the points discussed here immediately. So that you can make consistent profits and have a regular income.