Iron Condor – Get Ready To Lose It All Unless You Do This

For all the investors out there who can’t pick market direction to save their lives, here is a good trading strategy worth considering: it’s called the iron condor option strategy. This trade is ideally suited for non trending markets, however it can also product great results in a moving market just as long as the investor who is trading this strategy understands it thouroughly and has been properly educated on how to work the trade and most importantly how to correctly adjust.

Options are a decaying asset and the Iron Condor strategy takes advantage of this. Iron condor traders sell options that are outside the expected range of movement and as long as the underlying being traded does remain contained within this predetermined range this strategy can produce fantastic returns in short order.

Iron Condors are actually constructed from 2 separate credit spreads – one on either end from where the underlying be used is currently trading at. Positioned above the underlying current trading price is a bear call spread. Positioned below the current trading price is a bull put spread. Depending on the broker being used, these can be placed separately as individual vertical spreads- or together as one iron condor trade.

As long as the vehicle being traded remains within the range created by the iron condor, the position should wind up being profitable. If the trade was set up correctly, there should be ample room on the chart for the underlying to move around. However, if the underlying makes a larger then expected move in either direction, the iron condor position will most likely need to be managed and adjusted in order to prevent losses.

This type of trading strategy provides a very high probability of success – and can be profitable most of the time. However, it is important to note that the risk to reward ratio of these trades are NOT ideal – as one losing month, if not properly managed, can wipe out an entire years worth of gains. Learning how to set correct profit targets, exit and stop loss points, as well as gaining the appropriate knowledge on how to properly manage and adjust an iron condor position that is getting into trouble is vital to long term success with this trade.

When I first began trading this strategy, I found myself winning month after month – UNTIL – suddenly I hit a bad month and wound up giving everything back and then some – simply because I didn’t take the time up front to properly learn how to manage and adjust.

Had I first learned just a few of the simple Iron Condor adjusting tips, tricks, and simple management techniques found at this iron condors website, I could have remained profitable even with the rest of the market crashing all around me.

Learn more about iron condors. Stop by Ten Nino’s site where you can find out all about how to trade the iron condor strategy for consistent monthly cashflow.