In this excerpt from George Fontanills excellent starter book, Options Trading For Dummies, an important concept is discussed which is about your options trading training. In fact, we will all need some training to an extent so your budget should incorporate these costs as well.

These are some important aspects about options trading training.

Excerpt by George Fontanills – Managing your costs in options trading.

There are a variety of costs to consider with your trading – some are higher when you first start and many continue throughout your career. You need to think of trading as a business and manage these expenses so you can minimize them as your business matures. The expense categories included in the following list will all continue throughout your trading career, but some will begin higher than others:

Education: Education expenses include materials, courses, and learning curve costs for new markets and strategies. These costs will decrease as time progresses but will remain on-going to stay current with market conditions (books, periodicals) and continue to develop new strategies.

One of the largest education costs is your learning curve. These decline as you figure out how to:

Trade under best conditions for the strategy

Use options with the appropriate liquidity

Develop paper-trading skills

Allocate the appropriate amount to the trade

Effectively enter orders for the best exit

Take profits

I think what the author means here in regards to options trading training

is that you need to make adjustments for mistakes, i.e. your learning curve. Trust me there is a lot to know, even about the most simple of option trading strategies and you will make mistakes as a new trader.

Analysis Costs: As you skills process and your trading generates regular profits, you may add analytical tools to your business costs. Talking to fellow traders that use such tools and finding out which ones you may be able to take for a spin using free trials are good places to start. Such costs represent one of the few that may increase over time. Be sure to only subscribe to a limited number of services so you can make the most out of them.

Trading Costs: You have to not only have to account for commission but also for slippage. Slippage is the cost associated with the market spread – the difference between the bid and the ask. A good exercise is to calculate commission and slippage percentages for different size option positions (i.e. 1, 5, 10 contracts) established at different price points (i.e. $1, $5, $10).

If you want to know more about options trading training by George Fontanills then

Check out his book here >

George Fontanills makes options trading training rather easy to understand, but more importantly how to put together a solid action plan.