Posted by forex at 3:32 AM
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1. Educate yourself about options strategies and methods. Through the combination of puts and calls, a nearly endless number of strategies can be created. Be sure you understand when each strategy is appropriate, and how to properly manage risk. Your learning should come primarily from analytical textbooks in options trading, and only secondarily from Internet resources, which tend to not be as detailed or authoritative.
2. Find an online broker. There are a few important things to consider, including speed of execution, reliability, and commissions. Be aware of all fees before opening an account. Also, be aware that there is often an account minimum to trade options.
3. Know the difference between American options and European options. With an online broker, you have access to financial instruments from around the world, and these two in particular behave differently. You can exercise an American option at any time before or on the date of expiry. A European option, on the other hand, can only be exercised on the date of expiry.
4. Start trading, slowly at first if you're a beginner. No more than 5% of your capital should be at risk at any one time. If you find yourself needing to use more to make a profit, then you should wait until you've saved up enough money to be able to not risk so much at once.
5. Options trading is one of the more analytical areas of trading. Learn all the relevant mathematics you can, and always be on the lookout for statistical software to get yourself an edge in the competitive environment.