Options trading is not an easy task; every trader needs to have the skills for Options Trading. FnO trading, especially options trading, is one of the favourite topics of all traders. Everyone wants to trade in FnO and generate enormous returns. However, FnO trading is not child’s play. Trading FnO is far more difficult as compared to other trading instruments.
Many new traders often get confused about options buying and option selling. Some traders think that only option buying is the best way to trade; on the other hand, some think that money can only be made in option selling, and this confusion goes on for a long time.
In order to give you a clear idea about the reality of option buying and the skills required for option buying as well as option selling, we have come up with this article.
Option Buying is one of the popular trading styles amongst traders. Everyone wants to do option buying and wants to make quick money; however, this is not an easy task.
In order to make money in option buying, one needs strong technical analysis skills as well as risk management principles. One of the hard realities of Option Buying is, through option buying, you can not make money every day because the market will not give you the move every day, but when it does, you have to make sure that you need to win big in order to compensate for small losses and come out profitable.
Also, whenever the market is not in your favour, you have to cut your losses short. Often, many new option traders try to average their losing trades, and they end up losing a lot of capital. Cutting your losses short is a must for any options buyer; without it, you will not be able to make profits.
Option buyers need to have the courage to hold their position and book big profits instead of booking small profits. Your edge as an option buyer comes from holding your winning trades long and cutting down your losing trades because, most of the time, the market trends sideways, but whenever the market gives you the move, make sure to encash it.
As option buying and Option Selling are totally opposite things, the skills required for both trading styles are totally different. As an option seller, you will win most of the time and sometimes lose, as most of the time, the market trades sideways, but whenever you lose, you have to make sure that you don’t lose more than what you can afford to lose.
Generally, option sellers make money 10 out of 7 to 8 times, but when they lose, they may lose big if they do not exit at the right time.
As an option seller, you should always keep a stop loss in your system, or also you should always hedge your position to eliminate the possibility of unlimited loss. In this way, you can make consistent profits from option selling.
Irrespective of how you trade, skills for Options Trading are required, and without them, you can not make money; it doesn’t matter how good your trading strategy is. To summarise this article, I would say that money can be made through option buying as well as option selling, but you need to have the right mindset and proper risk management for it.
I hope that through this article, you were able to understand the different skill sets required for option buying as well as option selling.
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