Show notes: http://optionalpha.com/show47
One of the key elements of becoming a more successful trader is the ability to absolutely master options trading risk management. And, contrary to what you might assume, it comes down to a couple simple things. Namely, determining and sticking to an optimal position sizing range for each trade and never allocating your the full value of your account at one time.\xa0
In simple terms; don\u2019t invest too much money in each trade and always have money left over.
My goal today is simply to help you trade with more confidence. The type of unwavering confidence to go out and start placing trades without the fear of losing or the fear of blowing up your account. For me, confidence comes from understanding the underlying math and reasoning behind optimal position sizes. Too often you\u2019ll hear or see other traders spout off allocation ranges without any clear direction on WHY they chose that range.\xa0
If someone told me that I should allocated just 10% of my account towards each trade I\u2019d ask them why? Why this range and not something higher or lower? What\u2019s the reasoning behind 10%? Rarely will you get a straight answer.\xa0
The reality is that if you consistently enter high probability trades and stick to the optimal position sizing range we reveal, the odds of completely blowing up your account at any point is 1 in 28 trillion.
In today\u2019s show, I'll walk you through the math behind why I\u2019ve said, for 8 years now, that you should never allocate more than 1-5% of risk per trade. It\u2019s not just some cool numbers I pulled out of thin air. There\u2019s a mathematical and logical approach and I\u2019ll break it all down in today\u2019s latest show.