Options Trading For Beginners

mirriam macwilliams options trading

 

 

 

 

 

 

Today I like to share an interview which I did with Share Investor. This will give you a good insight about my favourite trading instrument – options trading.

Mirriam MacWilliams, Chief Trainer at Wealth Mentors shares her experiences on gaining financial independence through options trading.

Unlike most other companies which sell proprietary trading software to enhance trading strategies, Mirriam MacWilliams, Chief Trainer at Wealth Mentors believes that all that you require to trade well is a set of effective strategies. “There are different strategies or systems that can be implemented over a few weeks of time, over a few days of time or a few hours of time,” she said.

According to MacWilliams, the strategies that she teaches at seminars do not take up much of people’s time contrary to the common perception of traders who spend 24/7 glued to their monitors. “We actually discourage people from feeling the need to be fixated on what is happening from minute to minute or second to second in the market,” she said. “It’s not healthy. I think it causes us to overtrade and become a little emotionally attached thus clouding our thought processes. We encourage individuals to do all of their research when the market is closed.”

In order to trade effectively, MacWilliams teaches her students to make some decisions before the market is open and then systematically go in and place their trades all while setting their profit targets and loss potential. All that is left to do is to ensure that the order is fully automated and the trader can leave it to go do something else.

The Chief Trainer at Wealth Mentors sees options trading gaining the same critical mass as what warrants trading have in the region. “The reason why they are becoming more popular is because they are becoming more electronic in nature,” she said. “A lot of players creates a very competitive market.” All this translates into a smaller and hence better spread price for options being traded. An electronic matching system will remove the need for market makers and enable the capture the smallest spreads possible.

Comparing warrant trading strategies to options trading strategies, McWilliams thinks that there aren’t any real differences. “They are just different vehicles that are used to get the same results and that is to capture a magnified movement on a position by the power of leverage,” she said. In the United States, where options trading is more popular, an individual can pay one dollar to buy one option contract which controls 100 shares. “That way people are not relegated to going to the banks or going to the companies when seeking out the warrant of that company.”

A piece of advice that MacWilliams has for people looking to start trading options is that they need to be fully informed and aware of the risks associated with options and not to simply buy an option because it is inexpensive. “A lot of reasons why people lose money in the market are because they’re uninformed. They end up buying the wrong option or the wrong type of option,” she said. Volatility is something which most option traders fail to take into account.

Ultimately though, she feels it all comes down to being able to manage risk regardless of the amount of money involved. “It you can’t trade and with small amounts, you can’t trade with big amounts,” said MacWilliams. “People who look at trading as a serious business have the longest staying power.”