31 lines
1.9 KiB
Plaintext
31 lines
1.9 KiB
Plaintext
CHAPTER 17
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Putting the Greeks into Action
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This book was intended to arm the reader with the knowledge of the greeks
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needed to make better trading decisions. As the preface stated, this book is
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not so much a how-to guide as a how-come tutorial. It is step one in a three-
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step learning process:
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Step One: Study . First, aspiring option traders must learn as much as
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possible from books such as this one and from other sources, such as
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articles, both in print and online, and from classes both in person and
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online. After completing this book, the reader should have a solid base
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of knowledge of the greeks.
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Step Two: Paper Trade . A truly deep understanding requires practice,
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practice, and more practice! Fortunately, much of this practice can be
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done without having real money on the line. Paper trading—or
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simulated trading—in which one trades real markets but with fake
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money is step two in the learning process. I highly recommend paper
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trading to kick the tires on various types of strategies and to see how
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they might work differently in reality than you thought they would in
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theory.
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Step Three: Showtime ! Even the most comprehensive academic study
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or windfall success with paper profits doesn’t give one a true feel for
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how options work in the real world. There are some lessons that must
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be learned from the black and the blue. When there’s real money on the
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line, you will trade differently—at least in the beginning. It’s human
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nature to be cautious with wealth. This is not a bad thing. But emotions
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should not override sound judgment. Start small—one or two lots per
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trade—until you can make rational decisions based on what you have
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learned, keeping emotions in check.
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This simple three-step process can take years of diligent work to get it
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right. But relax. Getting rich quick is truly a poor motivation for trading
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options. Option trading is a beautiful thing! It’s about winning. It’s about |