Trading the options market is much more challenging than it seems. You have to be cautious about the timing or else you might lose too much money even though your prediction was perfect. The expiry period is more like the stop loss and take profit. It ensures the profit factor in trading and allows you to make some big profit. Thousands of entrepreneur traders in the United Kingdom are trading options to make their lives better. They have managed to create the perfect trading environment with some simple strategies.
In the options market, we use the term call and put to refer to the buying and selling actions of traders. If you find a buying position, you have gone for the call option. By contast, when you find a selling position, you have to go for the put option. But for that, you have to use a strategic method or else it will become a hectic process to find the good trades. Let’s explore some of the key steps you can follow to find the perfect setups.
Selection of the time frame
The selection of the time frame is the most important part of trading. If you look at the professional trader’s portfolio, you will notice that they are very precise with their time frame. If the analysis is done in the 1-hour time frame, the expiry period should not exceed 1 hour. Similarly, if you take the trades based on the daily chart, the expiry period must not exceed 24 hours.
Finding the support and resistance levels.
To become a professional trader, you have to find the support and resistance level. For that, you must use the best fx options offered by Saxo so that the price data are accurate. You don’t have to take things to the next level by using a complicated method. Use the swing highs and lows of the market to find your desired trading zone and take the trades.
Learning to use the price action signals
The elite option traders love to use the price action method. Price strategy allows the retail investors to take the trade with low risk. As a currency trader, you should be very careful about the trade execution process, especially when you are dealing with the options market. Rookies should try to trade the market in the demo environment to get the feel of this industry. Once they become skilled at analyzing the market dynamics, you will learn how to take the call and put options like a pro trader.
The news factors
The options market is very sensitive to time. If you are not concerned about the timing issue, it will be a challenging task to make some big profit from this market. The elite traders are losing many trades, but due to their strong risk assessment skills, they can cover the loss. To develop your skills to such a level, you have to analyze the news data. Analyzing news data is the most efficient way to make big profits.
Those who think analyzing the news is a hard task is making a big mistake. News analysis is very easy and you can do so by taking data from a popular news website. When you do so, be very careful about the pair you are trading. Avoid taking the call and put options during the press conference. Skilled traders know very well that the market becomes unstable in such a state. For them, the only way to protect their trading capital is to stay on the sidelines.
Useful advice for the new option traders
If you are new to the option trading industry, be careful with the risk exposure. As an entrepreneur, taking a high risk and trying to win most of the trades will make you frustrated. Trade this market in a safe manner so that you can make a big profit without taking too much risk. Focus on long term goals and educate yourself properly.