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... You NEVER want the adrenaline to flow when trading ...
Dear TXGolpher130,
Thank you for your reply.
However, I have to disagree. Years ago, as CEO of a start-up global company, which achieved revenues of $100 million in less than 5 years, I performed much better under extreme pressure.
However, I have to disagree. Years ago, as CEO of a start-up global company, which achieved revenues of $100 million in less than 5 years, I performed much better under extreme pressure.
Doctor TR
Doctor,
performing under pressure as a CEO & a trader are two VERY different things. As CEO you can stand at 1000 feet view the entire landscape, make a determination about a direction for the company and roadmap the future. As a trader you are doing the same exact things, however you're also the middle management as well as the direct reports who have to execute where the rubber meets the road. Not only are you under pressure constantly, but you have peer reviews every second that the market is open, and the market is an honest and harsh reviewer. Remember the business world you can aim for 90% market share of your niche, and if you hit 70% you can still improve and benchmark. As a trader especially with options, you have to be right 100% of the time or you get zapped. The market is a zero sum game. 1 winner, 1 loser for each interaction. You can hedge, but attempting to reap max profit from every interaction is the end goal. That is where the "juice" comes from. THAT is where institutional traders will make retail traders pay every single time.
Institutional and professional traders (which I count for this purpose as such), have more knowledge, more skill, more information, more ammo ($$$$), more time, and most importantly MORE DISCIPLINE.
Mapping out your trades, having a plan in place for your entry, time, and exit strategy before you even get near a P/L calculation levels the playing field. The tick of the market can make you see a trade in a very micro and much more pressure packed environment, where if you get yourself into a margin call, they are not very nice. For the most part they start off nice, and if you still find yourself in a call your broker will simply close your position, cementing your loss, and debiting your account, and possibly stopping your from trading. Period. The market gets you. Your broker gets you. And the only person who really got you, was you.
No one wants to be put under pressure with their money. That's why a good salesmen talk fast & make you make a decision right there. That is the market. Trust me, you want a boring, non emotional, as non pressure packed as it can get.
... As CEO you can stand at 1000 feet view the entire landscape, make a determination about a direction for the company and roadmap the future ...
Dear TxGolpher130,
Thank you for your response.
Being the CEO of a global firm who faced annual contracts and corrupt local officials and who dealt with the unpredictability of airline managers and the ongoing challenges of cut throat competitors was no cake walk.
Start watching HalfTime Report at 12 p.m. ET and FastMoney at 5 p.m. ET - both on CNBC - every day. The traders are very smart, and very mentally nimble. If you can only fit one, opt for FastMoney at 5.
Yes, the traders do financial (your background an asset) and technical analysis before determining an options strategy. They all chart. Technical analysis has the edge over financial analysis when playing options.
All of the traders go long and short on certain positions, use options as a hedge, or just outright play options to make money. Last half hour on Friday, can be particularly mindbending. I can't follow the most complicated strategies, but one thing I've learned over the years is how risk averse they all are and how carefully they analyze any position they take.
I'll never forget the face of Mike Khouw one Friday afternoon during a particularly volatile period of the market - he looked like he'd been hit by a truck. Clearly, something went awry on one of his bets that day - in a big way.
So - be careful.
Najarian brothers have written a couple of books. You might consider their writings in your education, as well.
Being the CEO of a global firm who faced annual contracts and corrupt local officials and who dealt with the unpredictability of airline managers and the ongoing challenges of cut throat competitors was no cake walk.
Doctor TR
Fair enough. I think you've been warned enough and good luck. Just know, when you're out there playing in the actual market, there will not be any learning "allocations". You'll be playing in my back yard. If you over extend or place an incorrect trade type, I or the market maker will take advantage. I do it every day, and as I mentioned it's a zero sum game, and I'm the freight train on the tracks coming. Please don't be in the intersection.
The only problem with simulations is that the adrenaline doesn't flow.
Doctor TR
Honestly, I'm the same way. Simulations don't really teach me well because it's not my money on the line and I know it. I don't act the same way. What I did when I first started out with options was watched a couple youtube videos. I then called my brokerage and asked if this is the correct way to enter the trade, I found out it was. I then a BAC call option, worth about $100 something dollars. I figured even if I lost all of it, I would think of it as a $100 whatever it was lesson. The best way is to just dive in and you'll come up with better questions to ask during the process. Just view it as paying for a lesson, make sure you are okay with losing it all.
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