Most of the People wanted to start Option Trading but they are aware of the Basics things about Option Trading. Many are asking about it daily and I am keep on explaining to them. So, based on this experience I understand That, it's very important to educate the Beginners who are interested to start Option Trading in India. Let's get Started.
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| Option Trading Guide |
When we talk about the Must known Things before starting trading is that as given below.
Must known Things Before Starting Option Trading 2024
Difference between Option Buying and Option Selling
This is the first thing you should learn about option Trading. The Major Difference you must know is the Risk involved in both of them.
In Option Buying The Risk will be Limited and Profits may be Unlimited based on the Market Movement. But in Options selling the Risk is Unlimited and the Profits will be limited. There are many ways to reduce the risks in Both of them, will explain later. Every New Option Traders must know about this and without understanding this never trade in Options.
Next thing You must Know about the option buying and selling is that, Capital Required for each. For option Buying traders required only less capital but Option sellers required More capital. For example for buying one lot of Bank nifty requires 7 thousand same option for selling requires around 80 thousands. Even though you can reduce it with hedged positions, which will be explained in another Blog Post.
Volume of the Option Strike and Type of order
This is the second thing you must know before starting options trading. In this you need to know about the Volume of that Particular option strike. For this you need to check the difference between the Ask price and Bid Price. If this difference is more then avoid that particular strike.
Also always place the limit Order, Because of this this Difference. If we place the order using limit order, then you can buy at the lover bid price, which will maximize the profits and minimize the Risk. Most of the Trading Platforms only allow the Limit order for the protection for the Traders.
Always keep Stop Loss for Option trades
This is the another important point you need to keep in in your Mind. Always after placing the order keep a stoploss for that particular order. No stop loss, No trade. When you are planning for a trade, find the stoploss which you can afford for that particular order.
You can use New GTT facility where you can place buy price, Stoploss and Target all in one place. This will help the new traders to become more decipline.
Never Overtrade
For Intraday Option traders, what I will suggest never Overtrade. If you hit 1 or 2 stoploss, stop for the Day and look for trade setup for next Day. Some of the Beginners are not ready to accept Loss. They will try to recover the loss on Revenge Trades. This may take you to Huge Losses and blow your full Capital. So this should be strictly follow. Also position sizing also important for the calculation of your stoploss.
Wait for The Trade Levels to Activate
This is the Final point to be know for Option Traders. Always we should have a plan before entering to a trade. If you find Entry setup using your strategy, wait for the levels to activate. If not active or not reaching to your Entry Levels, then avoid that trade. Breaking this will increase your losses on Option trading.
Conclusion
So we have seen the Major Points you Must know before starting Option Trading in India For Beginners. Follow these Points to make the Option Trading much more profitable and to Reduce the Risk. Always understand that Option trading are Risky but only way to make it profitable by following these points mentioned in above blog Post. You Many Follow our Telegram Channel for More Options Trade Tips.