90% of option traders lose money

by sabitha 2010-12-01 12:21:28

90% of option traders lose money

Even people who are highly knowledgeable about the financial markets and work in the industry do poorly. There is evidence all over the place that losing money in options is normal and "everyone in the know knows it".

I never got good at options trading, but I never encountered anyone else who was good at it, either. Some people admitted that they lost money overall, while others, although they spoke readily of their wins, were evasive about losses and totals. This was less surprising when I discovered, to my disappointment, that many of the people who traded options were also gamblers. They most likely viewed their options adventures as just another exciting form of gambling.

I've seen respected stock market analysts admit that they had been unable to profit from options trades and recommend staying away from them. Motley Fool, which has been around for years, has a web page that warns about options. Justin Mamis, an experienced professional trader, in his book, How to BuyAmazon.com, says, "We've rarely had any success in the options market."

I once asked my broker, at a large brokerage house, if she knew of any clients of theirs who consistently made money in options. She said, "A couple. Very few. Being in the business, I can't resist taking a flyer myself sometimes, but I've never done very well, either."

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