I still wonder why my friend is so overly confident about making money from trading options. I mean he’s never even traded shares before. Where does he get his confidence from? Is it by reading 2 option books, going to seminars and subscribing to an option report? He is thinking of quitting his day job and do trading full time.
But the problems are:n1. Lack of experience, as mentioned he never traded before. He’s got some theories of course, he keeps on repeating that it’s all just about employing risk minimisation strategy, I thought to myself if it were that simple a lot of people would have quit their day job and trading from home. n2. Options trading is a zero sum game, for every option traded, there’s will be a wi
er and a loser. Now what makes him think that he’s a better trader than the rest?n3. Under capitalised. The biggest factor whey amateur traders crashed and burned. Especially when you HAVE to trade for a living. Also given that options is a leveraged instrument, it’s just becoming worse.
Common sense would suggest that he keeps his day job, build some capital, try some paper trades, give a reasonable time frame to get a hang of it (I would say few years), keep the possibility that he might not be suitable for trading open. But as someone said common sense is not so common.
I really concerned about my friend, I don’t want to come across as being too negative.. I mean he might be able to succeed in his trading endevour, who knows? But my judgement told me that he’s not going to especially when he HAS to make money out of the market. That’s a terribly huge task to ask the market to supply you with an income. But if he did end up failing with this trading endevour, how will it be.. I better start praying for him.
Which leads me to another thought, I guess the underlying desire to trade for him is to be able to be his own boss and make lots of money. Isn’t this greed talking? I really can’t understand why he thinks he NEEDS to be rich. Why? He doesn’t need to. He’s a christian too, shouldn’t he know that he’s already rich in God’s eyes?
This is what happened when people read Kiyosaki books and take all of the rubbish (among the good things) in the books without questioning.