Safe Options Investing

Description: stock market, options trading system, safe investing, qqq and spy index derivatives signals from the options trading system

The key strategy to protecting your profits is always allocating a predetermined and fixed amount (principal) of your trading capital to options trading. There is no trading system in the world that can guarantee a 100% success rate. You will likely experience a negative trade, i.e., a trade where you lose all the money you invested sooner or later.

Reinvest only the original trade principal, following a winning options trade, never the principal plus the profit! If your trade allocation for options is $1000 for instance, and a previous trade provided you with a $500 profit, we strongly advise against reinvesting the full $1500 into your next options trade. We suggest applying only the original $1000. Should you have a (total) loss due to an option expiring worthless, this way you would still have $500, your profit from the previous trade.

Particularly tempting market situations can arise, periodically, which may entice you to commit more of you trading capital to options than originally allocated. A few situations that might persuade you to abandon discipline are:

• your indicators show an extremely strong market;
• you have just had 5 successful trades in a row and are highly confident that the next one next one will be yet another winner;
• the price of the option you are considering is very low;
• you are considering buying additional contracts for the purpose of averaging down on an already established position.

Don't be tempted to break the rules under these or similar circumstances! Never exceed the predetermined amount you allocated to options trading.