Few weeks ago I got an email from one of my readers. He told me that he is a big fan of my articles and asked how he can learn more. Then he said that he is new to trading options, he set aside a small amount of money in hopes of doubling it at least yearly.
I told him that for someone who just starts options trading, preserving your capital during your first year of trading would be a great achievement.
I didn't hear from him since then. Maybe he went to one of those charlatans who promise to double your account in one month and charge you few thousand dollars for a week of "one on one consulting". Many people will tell you what you want to hear to get your hard earned money.
Education does cost money. When I see unrealistic expectations, I like to quote OptionPundit, who had a major impact on my trading style. OptionPundit wrote:
"Before one get to a earn say $5-$7k/month an engineer need to go through 4 years of professional education including one or two summer projects before he is allowed to be even called an Engineer Trainee. Medical professional is required even much more rigorous training before one is allowed to even touch knives for first surgery. Then why do people think trading is any different if it were to give you $5-7k/month to start? It doesn't take long before one starts to realize that trading is not easy as it seems on the surface (sadly after either account is wiped out or suffered a major loss ."
So how do you begin your journey into trading?
Reading some trading books can be a good start. Getting a formal education can be a good idea. There are some good mentors out there; Dan Sheridan is one of them. There are also a lot of charlatans. Before you give your hard earned money to anyone, ask for references. Be aware of false and unrealistic promises. If someone claims that you can double your account in one month after spending a week with him, stay away. If someone sounds too confident and "guarantees" that all your trades are going to make you money, or doesn't disclose the risks, be careful.
Setting realistic expectations is very important. I'm a big fan of the "slow and steady" approach. Aim for many singles instead of few homeruns. Be patient. Be prepared to lose for a while - set your goal as capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come.