If
you begin looking for an
options trading
system online you will face several big challenges:
-
Searching �Options Trading System� as an exact phrase in
Google you will receive over 40,000 search results - a
big number to start sifting through...
-
Figuring out if an online service is not a scam.
-
Correctly evaluating an online
trading
system.
The options market provides great leverage and as a result
this market is one of the most popular among speculative
investors. Not surprisingly many online services were
developed around options trading by offering advice -
automatic trading systems, options signals, auto trading
buy/sell alerts, trading newsletters, options market
overview, etc...
The typical question each online options trader searching
for a trading system faces is how to choose the right system
from such vast number of services available.
We
have summarized four simple questions that should be
answered before subscribing and dedicating your money to a
particular online options trading system. These will help
you narrow your search:
-
How much does it cost?
We do not recommend wasting time on the free services,
unless used for educational purposes only. If the
service is free, you may ask why it's free. Especially
if the service provides options trading signals / advice
... who sponsors this service? Who profits on providing
you with free trading advice?
-
Is an online options trading system auto-tradable?
As a rule an online broker does some background research
on the company that provides options trading system for
auto-trading. If the trading system you choose is not on
the list of the major online brokers you should question
WHY? Is it because online brokers refuse to auto-trade
signals that are not clear, or because they received
complaints from the traders that the service trade
history does not match the real signals, or perhaps
refuse to do so because the alerts are not executable,
or they found something questionable in the company
background, or the system provider has a bad
reputation... Many traders would say: �The online
brokers already conducted their research and if there is
no broker who trusts them, I would not risk trusting my
money with this trading system.� There is no reason to
analyze or evaluate a service that is suspicious from
the get go.
By going directly to the online broker you will always
find a list of online services approved for
auto-trading. We would recommend sticking with this list
first rather than analyzing 40,000 results from the
Google search.
-
Is the history of the past trades available for
performance analysis?
A history of the past trades should be easily accessible
for review and analysis. If it's not then again the same
question arises, WHY? There is no 100% successful
trading system and you will always see negative and
positive trades, however some trading system providers
prefer to hide the history behind several doors or
present it in a format that is not suitable for analysis
and tells basically nothing - WHY? Is there something to
hide?
Without access to a trading history it becomes very
difficult to evaluate any trading system correctly. It
is simply impossible to answer the general questions,
such as how long the system stays in the position, what
is the average price of the used options, what options
expiration is used, how many trades were opened at the
time, what min amount could be invested, what is the
system's performance, how many trades per month does the
system generate, what are the commissions and much more�
The history of the past options trades should be
accessible and easily located on the home page. The
options trading history should be represented in a
format suitable for analysis. It could become especially
useful if the service already provides statistics based
on the history as well as calculated semiannual and
annual returns in addition to the list of the past
options signals.
-
Are options trading systems monitored by an
independent third party?
You may find several well known online independent third
party services that provide you with detailed historical
track record of the different online options trading
systems and advisory services. You may simply go and
compare their results with the results represented by
the system providers. You may find that some of these
services not only track the trades but may provide you
with detailed statistic numbers for each particular
trading system. It may save you time on additional
system research. Once an online trading system provider
makes an agreement with third party monitoring services,
it becomes almost impossible to manipulate and change
the history, hide lost trades, polish results... Again,
if you do not find the name of the online advisory
service you are interested in on the list, you may ask �
WHY?
Those are four basic questions that should be answered
before subscribing to any online options advisory trading
service or options trading system. It does not mean that if
you find an online options advisory service that satisfies
all these four points you can jump into the options system
right away and start to move all your savings toward it.
These four questions are only the first steps to help you
narrow your search to 30-50 online services. After that you
still have to continue your evaluation and research of the
service you choose. |