How To Start And Do Options Trading In Stock Market

Posted by Abhishek katkar
How To Start And Do Options Trading In Stock Market

Options Trading : Starting Steps For Beginners

You think, starting options trading is very easy but it is not may be you start it immediately (because of your friend told you or by watching someone else or because of social media) but it’s very hard to make consistent profit and being a successful profitable trader. So here is, the practical process steps we (moneeasy) have concluded from live market researched data which you can follow to start and do profitable option trading.

1. Starting Options Trading : Decide Segment And Your Trading Instrument

This is the first step, you have to decide in which segment and instrument you are going to trade because there are different segments available and their trading instruments and they required different capital, knowledge and skills. Segments like: Index, stocks, currencies, commodities and ETF’s Instrument like: Nifty 50, Nifty bank, equity stock from index, small-cap, mid-cap or large-cap, USD/INR, Gold / Silver/wheat, crude oil, tradable funds. You have to decide this first because this will decide your future and option trading capital and its required knowledge, skills and practise.

If you have capital but not knowledge and skill you will lose money and if you have knowledge and skills but not capital you will lose opportunities.

2. Starting Options Trading :Focus On Single Segment and Instrument

When you decide select one and focus on that segments and instrument because every segment and instrument is different so most of things changes, from your trading capital to its strategy to trade them and make money from it like you can’t trade in stock option like index options otherwise you need face losses without reason so keep this in mind when starting options trading.

Focus on one instrument first and observe them carefully everyday like What is this instrument? What is the scale of this instrument? Which other things affects this instrument like, new, company reports and microeconomic factors. How you as trader trade this instrument by your way and develop the required skill and practise to make money in it. After few days you know what is this instrument and how it works then start taking notes on what you have known, understand and what not. Search that, clear your doubts and queries.

Once you learn about first instrument then follow below steps and when you are very good trader in that instrument and start making money in options then select next one and repeat the same process and try to cover all the instrument from different segments with theory and practical knowledge to be able to trade in all the instruments and make more money.

3. Starting Options Trading : Learn Every Single Thing In Details

Traders losing money in option market because of not learning things properly in details, they mostly rely on other’s research and strategies. If you start it directly or because of someone else, may be you make profit few times but definitely you lose more than that because this is market and changes regularly, so as a trader you should have also do changes in your trading plans and strategies because it’s not a plane game as market seem to us and what trader thinks and for this you need to know the market from depth and all its sides then and then only you can make money in options. So try to learn every side of that instrument from top to bottom, inside-outside, its plus minuses and mostly their limitation.

Once you know and practise it then you can trade effectively without losing money because this detailed learning teach you where to trade and not, where to control and how to control yourself, where to take risk and how to manage it and how to take advantages of different market situations.

What to do: Trading depends on charts and technical analysis, if you see the candle stick chart then there is lots of things you see so trader should master at least those things which are required for trading like: How to read candle stick chart How to see it for different time frames like 1m or 15m or 1hr. How and where to use indicators Basic drawing on charts like: Support line, resistance line, trend line, break out points, average low and high of the day, previous day’s data lines. You are not going to do intraday every day and all time sometimes you do intraday or you do scalping or you hold for two days or may take a position for week expiry trade so should have ready for this.

4. Starting Options Trading : Know The Limitations and Control

See every instrument has its own strength same like it has limitation also, so trader have study it like that you will know all its strength and limitations, so you can take full advantages of it by your knowledge, skills and developed trading mind set because this depend on what and how you use it, knowing limited things can’t help you to see the market from different point and trader can’t find the hidden opportunities in the same market to book big profits and that is sign of profitable trader. When you know limitations then you control yourself as per market condition but here other go to trade, this confirms and make you how to take risk, where to take risk and how much to take and hence you will learn risk management concept which is extremely important thing of trading other trader will lose their whole capital and end. So be careful about things and its impact on trading. For example: if you see market is uncertain and unpredictable they you stop and wait for some confirmation but other who want to trader try find opportunities there also even knowing the situation and lose money.

5. Starting Options Trading : Do paper Trading and Test your knowledge and strategy

When you start option trading then your real learning starts , before it what you learned that was only learning and learning trading is not effective until you don’t use it. What you learn and when you complete one section of lesson then go and do it practically and test yourself. Do analysis and find mistakes practise them again and go back and learn again and do practise again test it with paper trading. When you are very good in it then go for next lesson and repeat the same process every time for being profitable trader.

How to do it: You can use the sensibull platform and mobile app for paper trading and other trading related analysis. They are very good and it’s free of cost. so you can practise and test your trading knowledge, strategies and skills and develop yourself as per it. You can use any other paper trading software which you know but choose one which provides all the trading related data like chats, option chain, technical analysis, indicators and other tools so you can spend more and more time on practical’s and developing your skills.

6. Starting Options Trading : Don’t Directly Go To Trade Options Immediately

The root cause of traders losing money in option trading is starting option trading directly (without know what is it and how it works and how risky it is) either themself or because of someone else and this goes wrong and stop by losing money. So know this first and keep in mind all the time what is the root cause of traders losing money in options and work on it before starting trading. If you know some basic things and can’t stop yourself from doing trading then do paper trading which helps you to control yourself and saves your capitals. In paper trading you will see how you’re trading is going. What you were thinking and how it is actually when you do it live. If you are doing wrong and going in the wrong direction by thoughts then you can stop yourself without losing money because it’s not real money. This can build your wrong trading mind set and that will the cause of loss in options. So the best ways to test you is wrong or right then go and test it with live market in different market situations in paper trading mode. If you follow this process and steps then you will able to start real live option trading in market in few months and start making money instead of losing it at first like others.

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