Images for options traders

I had just started reading David L. Caplan’s book The New Option Secret: Volatility. But today I merely want to share two powerful images from the book that might make it easier for beginning option traders to understand the impact of time on their position. More experienced traders can empathize.

Let me quote Caplan.

“The short premium trader thinks like a troubled adolescent who cannot wait for the time to pass, and move on to the next stage of life. . . . Each day presents the possibility of a major tragedy. The adolescent thinks, ‘When will it be over?’

“The long premium trader worries like an old man who has not yet left his mark on life, but is still trying to. He knows his days are numbered. . . . He says to himself, ‘If I only had more time.’”

A Trading Journal Is Like Sex

So why is keeping a trading journal like sex? Well it’s because…

     “When it’s good, it’s really really really good!… and when it’s bad, well, it’s better than nothing.”

     Now, we’re not just saying this to get some laughs – this is trading, we take trading seriously, and we take the above statement seriously.

     There is information out there on keeping a trading journal – but not nearly enough as there should be. 

    We won’t go on about the merits of keeping a trading journal – it should be obvious how important a journal is to your trading success. 
    Most people start one but don’t keep it going – which is a tragedy really as you only get the benefit of keeping a trading journal over time. 
 If you’ve tried and failed to keep a trading journal going; perhaps start again even in a small way, and keep it going through the good days and bad. You will find that not only does it get easier – it becomes a habit when you see how much it helps your trading. 
 Most importantly – remember that a bad trading journal is still better than no journal at all.

Trading Experiences

A major key to success as a Trader and Investor lies in your mind.  Actually, it lies in your ability to use your mind optimally and creatively.

Please remember – there is NOTHING WRONG WITH YOU.  You don’t need to change YOU.  What you most likely need to change is the “software” that you are running in your mind.  When we are born we do not get a user’s manual on how best to use our mental abilities.  So we learn by soaking up what we see and hear around us as we grow up.  And often times what we learn is not conducive to being a successful trader and investor.

One of the key mental approaches is to “Welcome Every Experience.”  Welcome every experience that comes to you.  It may be an expectation, or it may be a surprise.  It may be ‘good’, or it may be ‘bad’ based on your first assessment of it.  It may involve someone getting hurt, someone getting promoted, a tragedy, a triumph, a windfall, a bankruptcy, an ‘aha’ moment….anything.  The most useful way to approach experiences we receive (which are mostly experiences we can’t control as they are outside of us) is to welcome them and learn from them.  Realize that they are exactly what we need in that moment, at that point in our lives.  And since we don’t have a time machine, once something has happened, there’s no changing it. (more…)

Go to top