Iron Condor Adjustments - Scary, Scary Stuff
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The Iron Condor Spread has two faces - and thankfully for us option traders, neither face belongs to Barbara Streisand. But then again, it's almost just as bad (almost)
Usually when the iron condor and the new option trader meet, the iron condor comes across as this amazing beautiful trade - a holy grail type of method that almost guarantees success with every single trade. A spread that only takes a few minutes every month to put on and manage - and one that spits out consistent cash like a broken Las Vegas slot machine.
And so it goes with most new option traders who discover the iron condor. They fall completely in love with it - and having been there once myself, I certainly can't blame them. It's a magical trade that seems way too good to be true.
The problem - is that it is too good to be true.
But it doesn't have to be that way.
See here's the deal: The iron condor actually IS a pretty incredible trade. It CAN take very little time to manage. And it CAN produce some very consistent and truly outstanding and impressive returns.
It's that most new option traders don't take the time to really learn and understand this strategy. If they did, they would become aware that the trade has two faces - or two sides if you will - and one of those sides can be quite dangerous - that if is not managed and handled correctly can deliver some pretty ugly losses to a trading account.
It all has to do with the iron condors risk to reward ratio - which can give off small win after small win after small win - hypnotizing us traders into complacency - then suddenly out of the blue (again, if you don't know how to make proper iron condor adjustments) smash us over the head with one huge loss utterly destroying our account.
The key to winning with this strategy is to understand that the the iron condor does have a dark side - but as long as a trader has the proper knowledge to manage those tantrums and fits that are occasionally thrown by the iron condor - and know how to make effective iron condor adjustments , this trade really can turn out to be all that it's cracked up to be.
Article Source: Articlelogy.com
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