Your Questions About Successful Trading Plans

Sandra asks…

I need help with options trading?

I have been trading options for 2 years. One trade I make money, the other trade I lose money. I have been trying to develop a trading plan that works but obviously need advise from somebody who is actually successful at it. I trade basic call and put options and recently vertical spread trades. I need something like a 10 or 20 step plan of action for picking trades, knowing when to get into one and when to get out. I’ve done a lot of studying through TradeKing, my options broker which has been helpful. I need to speak with someone who is successful with their plan of action and see if any of it can work for me. Would be so grateful for any help you could give. Thanks,

John answers:

I think that you are making a mistake to focus so much on technical analysis in the options market and attempting to time entries and exits.

The main advantages of options are the asymmetry that they introduce to the returns of the underlying security and the fact that they do expire thereby giving you a definite timeframe for convergence with intrinsic value. Also ever since the Black Scholes equation was popularized, options trading are based on calculated fair values so the mass psychology inherrent to technical analysis is kept on a very short leash just as they are with dividend paying stocks due to the dividend growth model of discounting expected cash flows to derive a fair price. Basically there’s an accepted fair price and people are using that as a reference point in their trades.

You need to come up with plays that have more based on money management then you do on timing via technical analysis with an eye to ensuring the ability to exercise the option rather than relying on being able to buy and sell before expiration. Use options to mitigate risk not leverage risk, structure strategies involving the underlying security where the option limits the downside but still allows for the upside.

An option is a derivative of an underlying security and any trading based purely on the technical analysis of the options alone would be fool hardy and unnecessary to say the least, you’re assuming too much risk by limiting the information that you are considering and limiting scenarios strictly to trading.

Ken asks…

US suggested carbon trade scheme in Kyoto protocol and then the carbon trading was invented. right or wrong?

some articles said, per the successful experience in acid rain plan, US suggested the UNFCCC to implement emission trading scheme (per Coase Theorem) in the Kyoto Protocol. And US succeed.
I just can’t find the related documents on THIs. anyone can help?

John answers:

Carbon trading was “invented” just like global warming was.

James asks…

I want to be successful??? plan for life?

So i hail from Russia. Growing up in America for whatever reason has made me very ambitious in the past 5 years im turning 20 in December. I dropped out of high school because when i went to another school and returned my GPA dropped despite me having straight A’s in the other school. It was my senior year and i just said screw it ill get my GED. Well im starting community college in January. My plan in to maintain a 3.5GPA or higher as a full time student. I want to join the Phi Tetta Kappa chapter in my school. Then after 2 years I want to transfer toa university. A top 50 would be great i want to double major in finance/economics. I dont have ANY money right now. My parents spend all their money on bills and eventhough my EFC is high i still have to pay for school myself. I dont qualify for financial aid how am i suppost to afford 8K a year at CC then 2 years at a university for 40 – 50K a year. I need to go to DePaul in chicago its my Main Top Choice. Location location location its the trading MEGA of the US. i love to trade commodities and stocks its my thing i do it well. I eventually want to work at ahedge fund but im starting as a proprietary trader. Right now im reLearning Russian (language attrition) and ill be taking french in college. Im doing parkour and weight lifting to keep myself healthy and im reading like crazy im reading GReat trading books like ari kiev/ alexander elder/ the great traders stuff that can be used in trading to profit im learning great things. Ive been reading/studing/trading the markets for 6 years now ive enjoyed every minute of it and did well every year. So i just want to be successful.. btw i know my grammer is bad but i literally typed this verrrry fast.

John answers:

It sounds like you are well on your way to being successful, however, YOU define success. Some people define it as simply being happy like the Maharishi Yogi. DR. WILLIAM

George asks…

Can your life change when you become successful?

I don’t want to go too into detail but recently I was offered a great position working under an excellent chef in the Miami area, one of the most glamourous cities in America. He knows a lot of influential people, and im getting paid nicely because of it. My new apartment is bigger than the house I once grew up in. This also comes with working 12-14 hour days and a lot of commitment.

My current girlfriend is already fearing that im going to leave her. And my old high school friends have stopped including me in their plans. So my question is when a person becomes successful do I have to trade in my old friends for new ones that are at the new level that I just rose to? Or is their anyway that I could stay the same person that I was? I always hear songs of this happening to rappers that are doing well, is it a real possibility?

John answers:

Uh,what do you think?Ur life is going to change,maybe for the better.You had your old friends there when you needed them.Now it’s a new chapter in you new life.Sort of like(out w/the old & in w/the new!)You may not want your old friends nor need them anymore,but can check back with them from time to time.You will know who really was your friends when they LET you go without incident and harsh words or and feelings.THOSE WHO WISH YOU WELL WITH NO TIES ARE PROBABLY YOUR TRUE FRIENDS.SRY CAP LOCKS.It’s about you and your life,don’t hold back because another is worried about themselves and their stake in your future,Go and have your life so you can have all it offers you.Your the one who did all the work,not someone else.Your gf will support you if she truly understands and knows true love.Congrats and best wish to your new chapter in life~
Why would you want to stay the same?Don’t you want to grow?Of course you do,so the more you grow,the more you grow.I would not want to be small and have no personal growth.I would want all life has to offer.When you get there,you will look back with fond memories.That’s all we have as a reference to keep as a stepping stone.Stop worrying & move on your path.That’s what all your hard work was preparing you for.Don’t take backward steps.Ok?

Joseph asks…

FOREX TRADING ADVICE (please): I am an absolute “newbie’ to Forex trading, but I would like to become…

successful at it (of course). I understand that it requires sufficient education, and that over 90% of traders actually never make any money. My question is this; is anybody who is reading this actually making money through Forex trading, and if so, where did you get started/ educated on it? Is there any relevenat advice you can give me about trading, finding/ learning about trends, mentorship programs, etc.? Also, what are your feelings towards those websites who claim to be “trend locator’s” with signalling telling you when to buy and sell?
In short, I want to start trading and making a profit A.S.A.P, with the most minimal investment (aside from the $ I plan to use to begin trading). I am not a fool, and I realize that I need to be well educated first, so are there any books, or courses that can be recomended aswell?


John answers:

I trade outside my normal business and I do quite well for a part time thing. I didn’t start with much capital but I also didn’t make a lot. I was kind of risk conscious all the time.

However a few months ago, I started going a bit more aggressive with my profit and I started buying a few software to help me. That made a lot of difference especially Forex Killer.

Forex Killer helped me to confirm my going into and out of trades. I don’t depend on Forex Killer alone as some people do but it was a big help.

Now this week alone, I saw the Forex Assasin and Automated Forex Cash being launched. They look very convenient for a new comer.

But whatever, the most important thing is you must understand the basics of the trade itself. Read as much as you can. Use the forex systems and play with them on paper trades until you are comfortable. Remember Forex can be risky.

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