Almost every trading books and trading seminars that I have come across failed to emphasize which is the most powerful of them all is Money Management.

What is money management? In short, it is about preserving your capital and keeping you in the market for long. You can know the strategy that make you the highest percentage return in the shortest time but if you do not have an excellent money management system, it will not be for long that you got kick out of the market.

In my first few years in trading, I was chasing after trading books, seminars, workshop to find the fastest way to profit in the market. It was until one day when I had nothing to do when the market was not open for trading; I found out that the most important strategy in trading is your money management.

Some may be asking, how did I conclude that the most important is money management?

I did a calculation to prove to myself.  

Let’s assume that I start trading using $10, 000. And my money management system is 10-10-30.  Meaning to say, the first “10” represent that I will not put more than 10% of my capital into one trade. The second “10” represents the maximum I am willing to risk from my investment. In other words, my stop loss is at 10%.

The “30” is the profit target I set for myself. So what is means is I will exit my trade once I hit my profit target of 30%.

I try to put the system on a 60/40 accuracy trading method (60% losing trades/40% winning trades). And guess what? If just based on this money management system and stick to it strictly, I am able to make a 6% net portfolio growth based on 10 trades.

Based on the assumed starting capital of $10, 000, the example shows that I lost $600 in those 6 trades but I profit $1, 200 in that 4 trades. Over net profit is $600 or 6%.

This is when people always ask me, “Which is the most powerful strategy that you use to trade?”, I will always answer, it is money management.

Different people have different risk tolerance. So there is no money management system that will suit everyone. I suggest you take some time to review your money management system and if you don’t have one, you MUST start one!

If you are in search for a real options strategy to add into your arsenal, then I recommend you my book, Huge Profits Options Trading with Simple Analysis.

This is a no nonsense or textbook strategy book. All the information presented in this book is about sharing with you how to study the market, when to enter and when to exit and take profits. Whether you are into stock or stock options trading, this book is for you.

Go to my website, www.BuyLowSellHighTips.com to witness the extraordinary stock options trading ebook that was personally written by me.

There is indeed a very BIG difference. I used to search for options strategies all the time as I thought it will make me a better trader. But does it really help a trader to trade better?

My answer is Yes (30%) and No (70%). Most “options strategies” searches (both online or offline) normally lead to what I call the textbook strategies. Textbook strategies are those that you can find in the books from any bookstores or even FREE online. In case you do not know, there are more than 50 types of textbook options strategies in the market. They are like the “straddles, strangles, butterfly spread, calendar spreads, iron condor and whatsoever”.

The answer was a 30% Yes because it may help you adjust your trades at times and 70% No because in most cases, you don’t need them.

In the past, I used to want to know all the strategies but after mastering the 26th, I stopped. Because I start to realise that I use less than 5 of them to profit from the market. And the best part is, most of my trades are purely based on buying calls and puts contracts.

Whenever people ask, “if you are only trading calls and puts, why don’t you just stick to stocks?” And the questions usually come from the people who know many textbook strategies. But my answer is always simple. “Options trading offer me the leverage and flexibility that stocks cannot provide.”

And for me, I chose not to focus on all these textbook strategies and instead focus on real options strategies.

What are real options strategies? In another words, it is analysis. I prefer to just stick to the simple buy call and put contracts rather than to perform a complicated trade and end up paying more commission (although it is cheap).

I focus on studying the market movement, when to enter and when to exit. And once I have identify when to enter, I will just buy a call if I believe the market will continue going up or buy a put otherwise.

This way, I keep my trading as simple as possible so that I can use the rest of my time to accompany my loved ones. Isn’t that why you picked up or plan to pick up trading for? If yes, then keep things simple!

However, I am not asking you to just know how to buy calls and puts. There are some textbook strategies that will be useful for you and you may want to read on and understand. Those that I believe are useful are the spreads.

If you do not know what they are, go grab any options trading book and study debit and credit spreads. It will be useful for you if you wish to be on the road of options trading.

Remember; keep trading as simple as possible.

If you are in search for a real options strategy to add into your arsenal, then I recommend you my book, Huge Profits Options Trading with Simple Analysis.

This is a no nonsense or textbook strategy book. All the information presented in this book is about sharing with you how to study the market, when to enter and when to exit and take profits. Whether you are into stock or stock options trading, this book is for you.

Go to my website, www.BuyLowSellHighTips.com to witness the extraordinary stock options trading ebook that was personally written by me.