The Iron Condor has two faces (and I thank the good lord above that neither one of these faces belongs to Barbara Streisand – but then again, perhaps it’s even worse)
The first face is the one most new traders are introduced to. When the iron condor and the rookie option trader first meet – usually the picture that is painted of the iron condor is one of magnificence – grandeur – a wonderful, little known, very difficult to lose from investment secret that has been hidden from the general public by market makers who didn’t want to let the cat out of the bag. A trade that requires just a few minutes per month to manage – that can kick off incredible returns of over ten percent per month, and on and on and on.
Well, of course the rookie option trader instantly falls head over heels in love with the iron condor – and why shouldn’t they? it’s almost too good to be true!
And sadly, sooner or later (mostly sooner) they discover that it IS too good to be true.
But it doesn’t have to be that way.
You see – in actuality, the iron condor really is a pretty amazing trade. One that can take a very small amount of time to manage – and yes, one that can spit out some pretty incredible returns.
BUT – and a big but here – what the gaga eyed option trader who is so head over heels in love with this trade doesn’t yet realize – is that this strategy can get a nasty streak every now and then that if not properly handled can completely annihilate all those amazing returns our unsuspecting trader manage to rack up. And then some…
It all boils down to the risk to reward ratio of these trades. They have a high probability of winning many small trades – but just ONE loss can completely DESTROY a trading account. And if the one trading these birds don’t realize and fully understand this – and more importantly how to properly manage these trades and how to make effective iron condor adjustments – before long they will get creamed and blasted out of the market possibly with a huge, unrecoverable loss.
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.
Want to learn how to make iron condor adjustments, then visit Ted Nino’s site on how to effectively manage and adjust the iron condor for reliable monthly income.