Hi option traders. I hope you are doing well today and that you find your portfolio growing. This article is part two of a series of six, and each article is accompanied by a video. I highly recommend you to watch all six videos if you’re interested in learning how to trade options as a business.

One very important step in becoming a better options trader is to spend ample time back testing. Currently there are just a few option software programs on the market that can help you achieve this task, but back testing is worth your time. I personally learned a lot by using Optionvue as well a Think or Swim to back test my option strategies. Although, the previously mentioned software’s are very good, San Jose Options has just released a new type of back testing tool called the Options Toolkit. This back tester saves you a lot of time when compared to any other options that testing software.

For instance, I used to spend several hours using other options analytical software to back tests stocks over earnings release dates. I was able to find some winning trades; however, the work was so tedious and boring that I did not have the patience to back test 4000 stocks. Now, with the new San Jose Options back tester, I can turn days in into seconds with the single click of a mouse.

Another step that each option trader must take before finding success is simply trading for many years. Experience is what we call it. The reason that an option trader needs to trade for so long is because the stock market is constantly changing, and in order to see the many faces of the market, we need to trade for many years.

Trading with paper money is another great way to become a better options trader. Most option brokers on the market offer a paper trading account. I personally like what Thinkorswim has to offer. I find their software very robust for trading options, and their paper trading accounts uses the same software as the real account, so it’s a great way to learn. Obviously, it’s a good idea to make consistent returns in your paper trading account for several months before entering option trades with real money. As stated before experience is very important because the stock market changes rapidly and wears many faces.

Finally I would like to say that is very important to keep about 25% of your money in cash. This money will be used to make adjustments, to lock in profits and to put on key trades that will make a huge difference in your trading performance at the end of the year. It’s very risky to use up all of your trading capital, so remember to leave plenty of money free if you want to become a good options trader.

To Become Successful with Option Trading go to the San Jose Options Course at www.sjoptions.com