Financial Trading is full of risks and inflicts a lot of psychological pain on those looking for quick money .
Risk-averse investment or even the concept of risk-free savings and free-of-cost banking services era is dead.
Financial trading is like preparing for a sport, or performing art or a practising profession.
Yet, highly motivated people have found a way with limited financial resources and determination to make it in financial trading.
No harm in sharing my experience here.
As a beginner I got into spot trading and soon started feeling that it is affecting my psychology.
On the suggestion of a friend (who later became my mentor), I moved to BUYING of options. Kept away from SELLING of options .
The friend told me you can learn trading by buying a lottery ticket or if you have deep pockets and mental agility to face loss of money or temporary loss (drawdown) then run a lottery business by selling options.
That happened more than 35 years ago.
Now I enjoy screen-based futures (spot) trading because I am able to assess the birth of momentum intuitively (using my brain signals) and exit within a few minutes most of the time or exit by day close. This took me years to input my brain with strongly filtered information and output was by way of practice and instant decision making.
It has taken a few decades of self-training to turn this kind of momentum trading into a habit.
It is exactly like turning a fitness or sports exercise into a habit that sticks.
The exercise revolves around just four rules embedded in the mind:
when to trade,
when not to trade,
when to enter and
when to exit.
Rest is made up of how to of executing transactions in a cost-efficient manner.
I have studied hundreds of Financial trading probability studies (with me knowing only the Excel basics) as part of the training to let my brain absorb unconsciously (be inputted with) the repeatable momentum patterns that occur. Outputs influence my discretionary momentum style of trading.
I shifted to trading spot after almost 7 years of BUYING options. 7 years in terms of 15 minutes a day. total 120 hours in 7 years.
Why buy options?
1. I enjoyed buying Options mainly for the reason that it was and is the only low-cost (in terms of investment and risk) self-training mode that helped me train by trial and error method and focussed on how to assess momentum and time the entry at a known defined risk cost.
2. Since I was quite busy with my profession/business, I did not want to go through psychological pain of seeing drawdown nor attract any margin calls which was another reason I liked the suggestion given by the friend.
I could easily trade even with US$500 capital by buying an EU futures options contract outright for one-time investment of maximum of 40 pips (one pip tick value is US$12.5). I used to buy out-of-the-money options for 15 to 20 pips for short term momentum burst target of 20 to 50 pips. Sometimes I could make 5 times of the money and much of the time lose most of it.
At the end of the day , you were a nett winner if you continued to trade regularly. I traded just one of the two symbols of currency futures options only at a time. EU or UJ.
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss) is what matters really. Not risk to reward kind of metric applies here.
In Buying of Options, start of Momentum is important. Going past the winning post is not that important.
3. Options trading is a like a horse race when stakes are raised by both buyers and sellers based on the start taken by a horse irrespective of when winning post is hit or not.
A buyer has to raise betting amount while a seller is more than willing to accept higher priced bets.
As a buyer you should never wait for the finish line and must get out as quickly as possible with a reward (to augment winning kitty) or without reward (to save money for next try)
Unlike spot trading, you can't afford to wait for more time even when the direction of the trade is totally in your favour. You are up by 20% in terms of direction, but if you wait for another day, without the trend changing any direction, you might see 40% down next day.
It is the TIME value or implied volatility (market sentiment ) that counts. Not continuation of the direction. You are aiming to get out with maximum time value and volatility favouring your trade.
Risk-averse investment or even the concept of risk-free savings and free-of-cost banking services era is dead.
Financial trading is like preparing for a sport, or performing art or a practising profession.
Yet, highly motivated people have found a way with limited financial resources and determination to make it in financial trading.
No harm in sharing my experience here.
As a beginner I got into spot trading and soon started feeling that it is affecting my psychology.
On the suggestion of a friend (who later became my mentor), I moved to BUYING of options. Kept away from SELLING of options .
The friend told me you can learn trading by buying a lottery ticket or if you have deep pockets and mental agility to face loss of money or temporary loss (drawdown) then run a lottery business by selling options.
That happened more than 35 years ago.
Now I enjoy screen-based futures (spot) trading because I am able to assess the birth of momentum intuitively (using my brain signals) and exit within a few minutes most of the time or exit by day close. This took me years to input my brain with strongly filtered information and output was by way of practice and instant decision making.
It has taken a few decades of self-training to turn this kind of momentum trading into a habit.
It is exactly like turning a fitness or sports exercise into a habit that sticks.
The exercise revolves around just four rules embedded in the mind:
when to trade,
when not to trade,
when to enter and
when to exit.
Rest is made up of how to of executing transactions in a cost-efficient manner.
I have studied hundreds of Financial trading probability studies (with me knowing only the Excel basics) as part of the training to let my brain absorb unconsciously (be inputted with) the repeatable momentum patterns that occur. Outputs influence my discretionary momentum style of trading.
I shifted to trading spot after almost 7 years of BUYING options. 7 years in terms of 15 minutes a day. total 120 hours in 7 years.
Why buy options?
1. I enjoyed buying Options mainly for the reason that it was and is the only low-cost (in terms of investment and risk) self-training mode that helped me train by trial and error method and focussed on how to assess momentum and time the entry at a known defined risk cost.
2. Since I was quite busy with my profession/business, I did not want to go through psychological pain of seeing drawdown nor attract any margin calls which was another reason I liked the suggestion given by the friend.
I could easily trade even with US$500 capital by buying an EU futures options contract outright for one-time investment of maximum of 40 pips (one pip tick value is US$12.5). I used to buy out-of-the-money options for 15 to 20 pips for short term momentum burst target of 20 to 50 pips. Sometimes I could make 5 times of the money and much of the time lose most of it.
At the end of the day , you were a nett winner if you continued to trade regularly. I traded just one of the two symbols of currency futures options only at a time. EU or UJ.
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss) is what matters really. Not risk to reward kind of metric applies here.
In Buying of Options, start of Momentum is important. Going past the winning post is not that important.
3. Options trading is a like a horse race when stakes are raised by both buyers and sellers based on the start taken by a horse irrespective of when winning post is hit or not.
A buyer has to raise betting amount while a seller is more than willing to accept higher priced bets.
As a buyer you should never wait for the finish line and must get out as quickly as possible with a reward (to augment winning kitty) or without reward (to save money for next try)
Unlike spot trading, you can't afford to wait for more time even when the direction of the trade is totally in your favour. You are up by 20% in terms of direction, but if you wait for another day, without the trend changing any direction, you might see 40% down next day.
It is the TIME value or implied volatility (market sentiment ) that counts. Not continuation of the direction. You are aiming to get out with maximum time value and volatility favouring your trade.
Practice makes a person perfect