Stock and Option Trading: A Beginner's Perspective

A frequent question asked by novice stock or option traders can be summed up as “Where do I start?”

This common question often results from new stock option traders being overwhelmed by a deluge of information concerning various forms of analysis, trading system design, and trading vehicles. Should I trade stocks or options? Is FOREX better? What about futures? The ever-present marketing barrage from trading schools, advisory services, and outright charlatans touting the next great trading system guaranteed to turn your paltry sum of capital into $1,000,000 only adds to the confusion.

There is little wonder why so many become lost on their way.

Learn To Ignore The Trading System Hype

A skill that we all must develop, if we hope to survive, is separating marketing hype from fact. Even reputable companies will market their product or service by telling you about how much money you can make using it.

Advisory services routinely select a handful of profitable trades as anecdotal examples meant to impress you with their +100% winners. Software vendors extol the virtues of their system and invariably tell you that it will make you rich.

Let’s cut through the hype, or at least recognize it so that we can ignore it. Our "North Star" in finding our direction is the knowledge that no one has invented the magic system or found the "holy grail."

So, where does one begin? Starting Your Search For Truth...

In The Beginning, It's All About Education

I have been down the road... I have asked the questions... Having done so, I can candidly report that you can begin your journey right where you are. You do not have to run out and buy software. You do not need to subscribe to a service. 

Eventually, you may want to purchase these things, or at least some of them, but there is no need to rush out and part with your money at the beginning of your journey.

What you can and should do is map out a course of study for your education. When I attended college and law school, the curriculum was largely laid out for me. I was presented with a list of required courses and other offerings that I might select from to satisfy overall learning requirements. Building a curriculum for learning how to trade should be no different, so let’s lay it out.

Develop A Stock Option Trading Curriculum

In order to be an effective options trader, there are some basic skill areas that need to be addressed. There is no order of importance here. All of the areas are equally important. Think of options trading as a three-legged stool, with each discipline acting as one leg. Miss a leg and you risk toppling over.

An effective options trader will possess 1.) a solid understanding of stock options pricing and strategies, 2.) an understanding of markets and securities analysis, and 3.) will have a good grasp on money management and trading system design. Those are the three primary areas of your study. You may also want to add trading psychology and business planning to your curriculum.

TheOptionClub.com can assist you in developing such a curriculum through our newsletter service, our website content, and our third party vendor relationships.  One of the most important assets available to you here is our discussion board.

To start your education off on the "right foot" be sure to subscribe yourself to our free newsletter and register an account for our discussion forum on the Yahoo! Group network.

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