If you have traded, and traded options specifically, you know how difficult it can be. You have probably heard statistics about how most traders never make money on a consistent basis. It can be a daunting task, for sure. Many option traders who have not been able to make money consistently come up with a lot of excuses as to why. They might blame the market, their broker or their system, just to name a few. But the real issue is right there in the mirror.
You Are the Obstacle
Instead of putting the blame on something or someone, option traders need to step up and acknowledge that they may be the problem. While this is really a psychological issue, it’s important for option traders to recognize. But it’s just one part of a bigger issue. What I have noticed about successful option traders is not the trades they take, but the ones they do not take.
Less Is More
Option traders are always looking for a better system, but what I find is that less is more. Try to talk yourself out of trades. Some of the best trades you will ever make are the ones you don’t make.
Let’s say, for example, the underlying has been moving lower and you are looking at a bearish trade as the underlying is right at potential support. Maybe wait until support is broken before entering that trade. Or another situation would be volatile market conditions. For a day trader that might be fantastic, but for an option trader who generally holds a position overnight it may be less so.
Ducks in a Row
I always like to say, have as many ducks in a row as possible before executing a trade. The more the better, of course. If they are not lined up, it might be to your advantage to sit out the trade. If you do, I promise you and your P&L will thank me.
John Kmiecik
Senior Options Instructor
Market Taker Mentoring, Inc.
One Response
John,
That comment, “Some of the best trades are the ones that you don’t make” is excellent advice. It makes no sense forge ahead without enough study. Miss the regular check-ins.
Don Pratl