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how to trade options

Six Must-Ask Questions for Learning To Trade Stocks

Thinking about learning how to trade options? Great! Learning online options trading can be an effective way to generate an extra income stream. And judging by the record number of retail traders that have suddenly flooded the online stock trading market …you are not alone! 

But before you invest your time, trust and hard-earned money in just any stock trading course you should consider some important factors which can determine your stock options trading success-or not.

There is a big difference between following the crowd (Eg: MeMe traders, RobinHood, etc) and actually learning and understanding how to trade options based on market principles like why and what you are trading.  

A good options trading course should teach you those principles, but there are so many options training courses for the aspiring trader…it can be downright confusing.  Not every stock options trading course is created equal!

How do you discern one stock trading course from another? Where do you begin?

Here are six questions anyone considering an options trading course must ask before they sign-up:

How long has the stock options trading course provider been trading options?

Have they been actively trading options for say, more than a decade?  You want to be confident in knowing that your options trading trainer has navigated more than a just a few stock market corrections, bull runs, doldrums, and setbacks. If they’ve only learned how to trade stock options in the past say one to five years, they simply have not been in the options market long enough to prepare students for the many traps doors of pull back and seasonality.  They simply cannot know what an experienced options investor knows. They will be more likely to make mistakes, which more seasoned option trading trainers will have spotted and avoided…and even used as example in their teaching! Hint – If you want to know more about their options trading experience ask where they learned how to trade options and who trained them?

Is online trading options their passion, purpose, and main focus?

Or is it a side hustle targeting budding stock options traders which they have suddenly discovered as a lucrative to their bottom line?  We are living in interesting times with innovation and speed to market that is impressive.  There are many people preaching and teaching ‘stock trading for beginners’ on the side.  But trust yourself to see and sense the difference between selling an interesting side dish – versus the main plate.  When it comes to online option trading course instructors you must insist that the options trading providers be primary experts in options trading with a passion and focus on the skills you seek to acquire. If you sense that trading options is just another service they offer, then keep shopping.

Are the stock options strategies they’re teaching you based on solid options trading strategy and market evaluations?

According to Benjamin Graham landmark work on the stock market behaviour, In the short run, ‘the market is a voting machine, but in the long run it is a weighing machine’.  What is this quote really saying? It’s telling us that online stock trading prices can change quickly based on headlines, people chasing fads or pure manipulation. These changes don’t mean the underlying value of the stock has changed. In fact, over time the value of the real value of the company will be reflected in the stock price. 

When the market behaves more like a voting machine based on headlines or noise what are the fundamentals the trading training providers adhere to? Are they disciplined and emotionless or are they distracted by noise or the ‘popularity’ rating of the day?  A good way to tell the difference is whether the stock options trading provider chases the MEME stocks of the day or stick to their strategy, ignoring short term stock market noise for the longer-term weighing machine that reflects the real value of a stock? HintIf they bought GameStop or Kodak they are probably not options trading based on disciplined strategy.

Who does their stock options trading research?

Even better, do they have a designated stock options research function that reflects their strategy for options trading?  Ask and ensure that your stock options training provider values the research and systematic approach to options trading that they pass on higher risk trading stock options to students. Why?  Without it you may be exposed to higher risk from not being able to read market indicators that can help guide your options trading. Having external options trading research or stock market strategy experts in to speak to students is not the same as having it as part of the core of the stock options training offering. 

Do they offer a community of stock options trading learners like you?  

Many trading courses offer ongoing newsletters, e-bulletins, options training seminars etc. for continued engagement.  Those are good…but the beginner options trading student should not remain isolated with just those.  Options trading is a skill that requires an investment of time, effort and practice and there is constant learning to gather and share.  Only an engaged community of options traders can offer this.  Seek out a thriving community of like-minded and engaging students who share trading questions and support each others learning. In fact, the best environment for supporting beginner stock options traders is a four-pronged approach that includes: structured options trading learning, ongoing options trading training and coaching, engaged social community and expert resources for students to engage with. 

What do their options trading course reviews say? 

Read their Google, Facebook and Instagram reviews to see, and sense for yourself, about what others are saying.  There is assaying “the proof of the pudding is in the taste” What doe the reviews “taste like”?  Look for the essence of it all…what are the students say about the options trading course approach and motivation?  Is it to sell courses, make money and keep you dependant on them?   Or is it a greater mission of growing you, your financial literacy, your confidence, and your wealth?  Again, trust yourself to sense the tone and tenor of what is being offered because that is what you will be offered.