New and small investors alike can easily get involved in stock options trading. Nevertheless there are many pitfalls and questions that need to be asked regarding options trading. If you are just getting started with options trading, you might at this point feel a bit overwhelmed. This is especially so since there are many choices with options and a multitude of ways to trade these same options.
To start trading it is advised that you have at least a minimum capital of US$5,000 to trade options. Then it is essential that you practice good money management with this capital.
For instance, if you allocate only 5% of your trading capital on every trade and you happen to lose 3 trades in a row, you would have lost 15% of your capital & still have 85% of your capital left.
The lower you traded down your capital, the higher the percentage of gain you have to achieve in order to recover your trading capital.
Here is a stock options trading tip. As stocks near the ends of their quiet periods, they tend to steadily rise in price in anticipation of the `strong buy` recommendations most will receive from their underwriters after the quiet period ends.
When learning about options trading, it is important to familiarize yourself with all the different types of options contracts that are available.
Stock and option traders that take the time to learn and apply a few simple strategies that are available through options put themselves in a better position to assess risks in the markets and potentially put themselves into positions to profit substantially
more info : tradingoptions.optionsebook.com
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