Expert: Gina Boykin - 1/13/2008

Question
Me and my husband have never invested. We are thinking about buying options in silver and gold. Any advice, suggestions, warnings, or other would be greatly appreciated. Thank you for you time and expertise!
Crystal

Answer
Options is an advanced trading strategy (NOT for beginners), and one that should be only done with money that you can afford to lose because of the higher risk.  Futures (silver and gold) are also an advanced investing subject, so I'm not sure that combining these two things should be your first investment.

However, if you decide do go this route, I would suggest taking the following steps:
1. Learn as much as you can about investing through the web and/or books.  You need to learn the basics first, then about futures and options.  
2. Practice with a virtual account for at least a few months.  You can get one at OptionsXpress (www.optionsxpress.com).
3. Develop a strategy and stick to it.  A lot of people lose money because they don't stick to their strategy.  They get caught up in the emotion of the moment and stay in a trade too long or not long enough.  You will have to determine the point at which you'll take your losses or gains and close out.  Investing should not be emotional - it should be methodical.
4. Start small.
5. Only risk a certain percentage of your account on any one trade.  For example, if you have a $5,000 account, you might only put $500 in a trade (10 percent of your total account balance). That way you don't lose all of your money in one bad trade.
6. As you read through internet, you will definitely come across websites that have the "proven strategies" to help you get rich.  Watch out for anyone who says they made a bunch of money in the past year or two from a certain strategy. This means nothing.  You want a strategy that will work long-term, through all types of economic conditions.