Set Yourself Up for Options Trading Success in 2022

New year, new possibilities! Though trading is no walk in the park, there are a few things you can do to set yourself up for options trading success in 2022.

Do I know what the new year will bring? Of course not. The future is always uncertain. As traders, we are always straying into the unknown and trying not to step into a mess. We are focused on achieving a return on investment capital that can match or exceed our benchmark. For most of us, the SPX 500 is a good measuring stick.

Keeping that in mind, let’s review how to earn a nice ROI this year.

Options trading success starts here

Your success combines hours of learning with applying new skills. Because not every trade is a winner, train your mind to shake it off and keep moving forward. Make that next trade.

Leave your ego at the door. Remain humble but be aggressive when going after a promising trade.

Manage your risk. This is the most important of all of your skills; it keeps you in the game for the long-term.

Know when to sell. So many traders have difficulty parting with a trade, even if it’s a loser. If you can’t find the sell button, you’re doomed.

Size positions properly. I’ve come across many traders who think this one trade is the key to the kingdom. They go all in and wind up in the poor house. Never trade more than you can afford to lose. If you do lose, accept the result and move on.

Keep cash (or dry powder) on hand at all times. New opportunities will always arise, but you can’t take advantage of them if your cash levels are too low.

Learn, experiment, take chances, understand how risk affects you, practice and keep reading. Your growth curve will increase exponentially, and your account balance will likely do the same.

Remember that it’s okay to lose. Trading is not a game of perfect, and you’ll recover from a loss (if it’s not a devastating one).

Let the market tell you what to do. Don’t listen to outside influences; they don’t have your best intentions in mind. The markets and charts will never lie to you.

Play the market that is in front of you, not the one you want it to be.

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I credit my options trading success to my commitment to learning and growing as a trader. Every day, I learn something new from an article or my trader friends in the chat room. I also strictly adhere to the advice above; many reflect lessons that I learned the hard way.

I hope you find my advice useful, and I wish you great success this year and for years to come!

Bob Lang is a top technical analyst and expert options trader who teaches people how to successfully trade options for income. He is a sought-after mentor and teacher, published author, go-to chartist for Jim Cramer and popular speaker at industry conferences and tradeshows.

This post originally appeared on the Explosive Options website.