This interesting article addresses some of the key issues regarding option trading. A careful reading of this material could make a big difference in how you think about option trading.
Lets discuss time frames. One, there is the long-term time frame which one considers a time period months to years. Buy and hold investing or trend following typically looks at this time frame for their trades.
Second, there is the intermediate term time frame. This is the type of time frame that I mostly participate in and you consider the price action from weeks to months. Traders and option traders typically participate in this time frame.
Lastly, there is the short term time frame. This type of time frame is where you consider the price action from days to weeks. Daytraders will often operate in this time frame on a daily basis while swing traders and option traders may also participate in this time frame for 1-7 day positions. I also operate in this time frame.
Understanding the three time frames will help you determine what type of trading works for you and what you are comfortable with. For example, if you like the idea of being involved with the market everyday and your currently working at a job where you are on the night shift or the evening shift then this may be a time frame you would want to trade in.
If you don't have accurate details regarding option trading, then you might make a bad choice on the subject. Don't let that happen: keep reading.
If, on the other hand, you have a profession where you are on call or your hours are irregular like being a policeman, a salesman, or a doctor then you may want to consider an intermediate or long term time frame.
I have had success at daytrading, option trading, stocks for the long term, and swing trading but for my life as it is today, intermediate time frames work best for me. If you're a trading junkie and you want to learn all the techniques to trade the different time frames, more power to you. That's what I have done but I have found out that it is impossible for me to trade every time frame and stay profitable with all that I have going on in my life.
Many aspiring traders have tons of enthusiasm for this game and when they begin they soak up everything thing that they can on the subject of trading. But its better to look at your trading preferences and, more importantly, take a realistic view of your life to see which time frame will better support you. Remember, trading is to support our lives, development, and provide a better life for ourselves and families. If you try to do it all then you'll never accomplish any of these things.
Knowing enough about option trading to make solid, informed choices cuts down on the fear factor. If you apply what you've just learned about using larger time frames to capture trends on small time frames, you should have nothing to worry about.
