Hello Bryden,
Here is the breakdown for your initial $10,000 investment. Please note that this may vary depending on the specific companies you choose trade options on, prices can differ. The key starting point is confidence it's crucial to believe in your strategy and set aside emotions to follow its guidance. Before risking real money, test your strategy using paper trading until you are confident in its effectiveness.
While $10,000 is a decent starting amount, it's important to recognize that you could potentially lose it all in just two trades. Therefore, having a solid plan in place is essential for long-term sustainability. Let's delve into it. Divide your $10,000 into three equal parts, creating portions of 3/3/3 and a remaining sum. The first portion should be further divided into three parts, leaving you with $1,000 to trade with. While there are more aggressive strategies available, this approach prioritizes safety over high-risk opportunities.
In trading, seek opportunities where the premium price is below $5.00, enabling you to purchase one or two contracts with your $1,000. While progress may be slower with a limited amount, it's essential to adhere to this guideline until you've doubled your initial investment. Achieving this milestone can boost your confidence and shift your mindset, as the funds being traded are no longer hard-earned money but profits from your trading endeavors.
Risk/Reward Ratio: Aim for a favorable risk/reward ratio on each trade. For example, target a minimum of 1:2 risk/reward ratio, where your potential reward is at least twice the amount you are risking. This helps ensure that your winning trades can offset potential losses.
This risk/reward ratio is effective for both swing trading and scalping. If your scalping strategy is proven to be successful, you may consider taking on higher risks, ensuring that you have a stop-loss threshold in place. The $10 run strategy is reliable method for trading, emphasizing the importance of setting support and resistance lines appropriately.