Is it Easy to Make Money Trading Options?

By on 04/28/2011

Twitterfest

Today:1:30pm EST Twittercast. I’ll be answering all of your options questions via #smartoptions

Many claim it’s a cinch to earn money by trading options – practically guaranteed.
Are they telling the truth?



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4 Responses to Is it Easy to Make Money Trading Options?

  1. Vince 04/28/2011 at 7:06 AM #

    Your post reminded of two quotes on easy money. I think it was Damon Runyon who said that “The worst thing that can happen to a young man is to have him win his first bet”.

    The other quote that applies is something my dad always said to me if I tried to take a short-cut: “The only place where success comes before work is in the dictionary”.

    • Mark D Wolfinger 04/28/2011 at 7:40 AM #

      Hi Vince,

      As much as I hate to see traders lose, getting off to a great start often leads to portfolio-killing overconfidence.

      Thanks for sharing.

  2. dave Appel 04/28/2011 at 9:04 PM #

    HI Mark,

    great post and it is a great reminder that there is no free lunch on wall st and if it looks to good to be true it is. These hypsters never get into position sizing , money management , and capital traded. I have read on the internet and even on your blog where traders with 5k to trade are trading 5 lots in the rut or spx and getting completely decimated. I think often position sizing is the most overlooked tool for money management. There is this “swing big ” mentality that often gets traders crushed instead of managing risk with position size over time. I have found that to be invaluable.

    dave

    • Mark D Wolfinger 04/28/2011 at 9:36 PM #

      Dave,

      I’ve been saying that position sizing is the easiest and most important part of risk management.

      However, when it’s going well, the idea of sustaining a loss does not occur to the beginning trader, who frequently goes ‘all in’ – probably without realizing the potential loss.