The best way to minimize losses in options is by learning more about Options.
Options, unlike a futures contract is not a single dimensional, linear instrument. The biggest trap a rockie option trader falls for is the fact that he tends to believe in ‘limited loss, unlimited profit potential’ canonical.
While this is true theoretically, there is a big difference when you practice it. When you say your losses are limited and if you actually lose on an options trade, remember you are losing 100% of your capital on the trade.So options can really be a dangerous instrument!
Having said all this, Options is like the white canvas…with just calls and puts , buying and writing…you can paint an awesome trade! It gives you flexibility to explore and create trades thats unique and driven purely by intellect.
So go learn more and more about options…and implement what you have learnt. That according to me is the best way to minimize losses on Options.
Strategy 1: Divide caital into 40:30:30 ratio. Use one part for trading while the second part is left as reserve trade in case the existing trade to go wrong. The final part is a Capital Reserve. Keep loss ratio on ur invested capital. Plan your exit. Make sure to book ur profit. Strategy 2: Divide capital into 50:50 ratio. Enter the trade of ur choice. Book small profit. Wait ur turn. Calm ur emotions. Repeat the strategy. Caution adviced with overtrading. Probability is the mantra on this method. The above discussed strategies are developed for self trade & I have achieved success on most of my trades. I treat trading as just the game of numbers.
Options and Futures are sure way to loose money as these instruments are like gambling where in you place your bet.
The charts and indicators are forecasting tools for your wishful thinking.
In the end its the broker who is making money, not you.