Options traders have the opportunity to make substantial profits, the flexibility to trade in up, down, and sideways markets, and the capacity to hedge against future losses in an existing position. It’s true that not everyone is a good fit for this type of trading, though. First off, even while there may be significant potential benefits, the financial instrument may carry a very high risk. To master this extremely speculative instrument, an options trader needs the proper training, skill set, and attitude.
So, what characteristics define a successful options trader? Today, Hasan Marafi will have his say on the qualities of a successful option traders.
Entrepreneur Hasan Marafi is a well-known options trader who makes profit by purchasing and selling stock options. Stock options represent the investor’s choice to sell or buy the stock on a specific future date. He is the founder of Rippy Global, a trading community that helps traders achieve their financial goals. There are no pre-requisites for their training in trading. They cover everything from the basics to the advanced.
Coming back to the topic, here are the characteristics of a successful trader according to Hasan Marafi.
“Being a disciplined investor means that you have thoroughly researched the market, have a good understanding of your goals and are capable of forming and religiously following your strategy,” says Hasan. According to him, a disciplined investor prefers his research to believing the hype created by others. This approach also ensures that the results of the strategy can be linked to a personal thought process and not just to a trend in the market.
Says Hasan, “Being disciplined also means to be systematic in your approach. If you lack the knowledge to invest properly, then the first step for you should be to learn about the market and to get your feet wet before you go all in.”
Understanding the Risk to Reward Balance
According to Hasan Marafi, option traders need to have a deep understanding of the risks involved with various strategies. They should understand how volatility can work in their favour and also go against them in a bad way at times. “Based on their knowledge of market behaviour and of risk, they should choose which strategy will be able to give them the best return on investment,” says he.
Finding the Right Trading Strategy
“As you learn about the concepts of risk, volatility, uncovered and covered calls, also work on your investment strategies,” says Hasan. According to him, there is plenty of room to specialize. Depending on your style and preferences, you may be comfortable with short term trading, where you make several trades every day. Or, throw your practice, you may develop a preference for contracts with longer expiration dates. Similarly, you should experiment with alternative strategies, such as time decay.
Keeping Emotions in Control
Nowhere is the age-old cliché of not mixing business with emotions truer than the options trading market. “The speculative nature of the instrument demands that you keep your emotions in control and wait for opportunities,” says Hasan. According to him, elite options traders know when to enter and exit a trade. “Instead of relying on instinct, they to plan their moves. They are good at differentiating between reality and hype, which helps them to avoid distractions and identify potentially profitable trends,” he adds.
“Options trading is a high-risk business, but if you have the personality and passion required for the job, then it’s definitely something worth exploring — good traders’ possess the discipline, knowledge, and patience to profit from trading options,” says Hasan.
To ensure successful investment transactions, businessman Hasan Marafi has a thorough awareness of the stock market, market operations, and market trends. He also performs buy-and-sell transactions for fund managers and private clients at larger financial and investment institutions.
Options are high-risk financial instruments, therefore it’s critical for traders to understand how much risk they are taking at any one moment. Hasan controls risk by taking the necessary precautions. For instance, if someone keeps a position overnight, bad news could lead his bet to lose money. As a result, Hasan is always able to reduce the risk associated with his positions. He accomplishes this by diversifying his trades and restricting the size of each trade so that all of their eggs are not in one basket.
It’s understandable why he was able to gain 24.2K Instagram followers so quickly. He typically gains the trust of his audience by developing more intimate relationships with them through immersive and entertaining posts, while also motivating his followers and serving as a conduit between them and his company.