Importance of Research in Trading
Before we discuss the options strategies, I felt we must learn the importance of a good research.
Research here means the homework required to know if we need to buy or sell a stock. The reasons to buy or sell a stock could be technical, fundamental, supply/demand etc.
You need not be an expert analyst to do the research, the idea is to do some homework before actually buying or selling. Most often people buy or sell impulsively and then look up the chart or valuations.
People spend more time researching their next smartphone versus the stock they should buy. Most likely the stock you buy will be of a higher value than the smartphone and may stay with you for a longer time.
Even if you wish to trade the stocks, good research will save you lots of money. It is always better to have a max of 5 to 8 stocks in your watchlist rather than 50 to 80. These 5 to 8 stocks should be close to your heart and you should be thorough about its fundamentals and chart.
Over this week we will discuss the 3 options strategies ie. Bullish, Bearish & Flat. Each of these strategies will come with a max win amount, max loss amount, and a timeframe.
One thing is guaranteed — there are no option strategies invented to make money if you get the research wrong. To make money, you need to have an edge.