MarketHeist's Jeffrey Lin interviews Pablo Navarro, Options Strategist for Hamzei Analytics' HFT Stocks & Options. Pablo Navarro gives a checklist of what successful option traders do. How well you do these things? It's the difference between success and failure. Pablo explains the things to do to learn options trading, all you have to do is follow.
Pablo: I think most people just try to jump into market, and that's the first error they make when they just come in there because when you look at a chart, everything looks so common sense. You just buy in the low, sell in the high, and it looks pretty easy. Looking back, all the indicators work, and then you start trading, and nothing starts working on real time. And then you don't have the decision where you're getting in, when you're getting out. Most people lack the discipline to know what the plan is before they get into trade, and they start to plan while they're in the trade, so that's a huge error, because you get some pressure, you're losing money. You don't know what to do. You don't have a plan, and then you're starting to panic at the same time that the market's going against you.
So I think the first thing someone needs to do is have a plan for each trade before they actually place on the trade. Even if they don't know anything about the market, they know how much they're risking, where they're adding, where they're taking it off for them to be comfortable even with the market move, because that's what happens. The market starts moving in and out, and it's against you or in favor of you, but you need to know what to do and keep your account, follow the plan. That I think is very important for a trader to do.
The next thing, what I think, you need to, at least, I've read most 80% of the trading books that are out there, I just read all the time, because I think you need to see what other traders did wrong and try to learn from their mistakes instead of just trying and jumping in the market, and learning from the mistakes that you're doing, because all the traders are going to make, more or less, the same mistake, and they were able to take advantage at least of 80% of the mistakes others made. That's how you're going to start being profitable, little by little. And they'll try to make best rate 100% day trade. Just take it calm. Go for a 10% in the first six months or something. Don't try to be a billionaire on the next day, because you're not going to make it.
Jeffrey: Do you think you could've been a profitable trader, and being an options strategist, without having taking these courses with Options Animal, and taking the webinars with watching Farid, do you think you could be where you are now without having that training?
Pablo: Well, no. The best thing, I would be profitable, I was profitable before I entered the Options Animal course, before I met Farid. I was not as profitable, but the most important thing that you learn is how to have a plan, how to see things forward, because things are not going to go the way you want always in the market. It's more like a structural part that you learn more than how options actually work, because you could read that book about options and learn if you are patient, continue learning. You'll learn eventually how options work, how Delta, Theta, all of them work. But the important thing to see for me was to see that you do not have to win all the time. You're going to take losers. It's fine with that. Just have your plan, follow the plan, and be disciplined.
Jeffrey: I think an interesting question I want to ask you right now is a lot of people think trading is gambling, but when you have a plan, you have the odds in your favor. What do you think?
Jeffrey: Is trading gambling?
Pablo: Trading is not gambling. But basically you are going to have to do so much work, and most people that gamble, lose. Also people that trade in the market lose. That's the same way, because nobody is going to be prepared. Everybody wants to have free money. They just want to go in and buy something and sell it the next day for a profit, which usually it doesn't happen. But that's why you see almost everybody in the market losing, because they just want free money, easy money, and the market is probably going to be one of the hardest things you could ever try. So that's why you have to be prepared and you have to be doing some analysis, reading all the time, and like you said, trying to turn the odds in your favor before you get in to trade, so you can eventually end up in the long run, up.
Jeffrey: So a lot of people are gambling, but not the professionals, and not the people who want to make money, right?
Pablo: Right. That's why the professionals take money away from the people that try to gamble and try to win easy money, because they are doing the work and the other ones are not. That's pretty much how it works.
Jeffrey: OK. Thanks, Pablo.
Pablo: You're welcome, Jeff.
I'm Paulo Navarro for HamzeiAnalytics HFT Stocks and Options. You can find me at HamzeiAnalytics.com or follow me at @pnavarro88. Thanks for watching MarketHeist.com.
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ABOUT PABLO NAVARRO
Majored in Economics and Communications with a minor in business from Texas Christian University. Pablo graduated from OptionsAnimal and completed all levels that the CBOE Options Institute offers. Pablo actively manages his own accounts trading options, futures, and stocks for over 3 years. He is always pushing beyond the limits to achieve his goals. He is convinced that its all about going that extra mile and always having a plan for each scenario.