Are You Trading in Derivatives?

If you are a derivatives trader, then one thing that you should ask yourself today

“AM I MAKING PROFITS IN DERIVATIVES”

I have come across lot of derivatives traders and have see that most of derivatives traders, that I come across, are in huge losses. Still people don’t want to withdraw, wondering that they will succeed one day and that day they will not only recover all their losses but spend time in riches after that.
Patience

Normally, decision taken in seconds are correct only if you have relevant and in depth knowledge about the the markets, regulations and other affecting factors.
Knowledge about derivatives concept

If you actually wish to make profits in derivatives, then it is important to have a in depth understanding of derivatives as a concept. Half baked knowledge is a big risk to your money and just help you in creating a big hole in your pocket. Do not shy away in taking a online course on derivatives or attend a workshop on basics principles. Even if you done that few years back, you must revise it every few years.

Derivatives is a subject where every time you read, you will learn new things and with past experience it is better as you will be able to relate concepts with real market situations. Apart from derivatives, it is also advisable to learn fundamental and technical analysis and use of excel for building strategies.

Knowledge about Exchange regulations

Exchange traded derivatives are well governed by exchanges through its contract specifications and margins. Sometimes these regulations have a strong bearing on prevailing prices. Some of such examples I have witnessed are additional margins, corporate actions, delisting of contracts, warehouse locations in commodities, etc. Generally these things come into picture when their is a high volatility and at that time searching for such things becomes a costly affairs due to maintaining a loss bearing position in the market.
Plan your Trade

Do not take positions. just because you have to. Evaluate your strategy and then only take positions. Trade without a strategy is just a gamble all of us know the chances of winning in a gamble. Do not plan only for profits but also plan for losses. No point of wiping off your capital in a single trade but keep reserves. Derivatives a two edged sword and your losses can be equally magnified just like your profits. If you get afraid of possible loss figure then do not get into a trade as most of the trades tend to take wrong decisions when they gets cornered.

Think about ROI not Profits