When I first started trading complex options, I actually had great success. Eventually, of course, the market handed me my first loss which I dutifully reviewed with a senior trader. The response I got was that it was just a losing trade, that it happens, and I should keep doing what I’d been doing.
That answer wasn’t good enough for me. I didn’t mind losing a trade but I wanted to know WHY it lost. There had to be a reason and if I could figure it out, I could improve my plan or stay out of the market during those conditions.
After picking the trade apart, I realized that I had positioned it such that my upside adjustment point was at resistance. This caused me to adjust right at an inflection point and naturally the market then reversed. Feeling smug, I wrote this down in my trade plan. I was never going to do that again!
I spent a day walking around the house patting myself on the back for such a brilliant insight. At this rate, I was going to be the greatest trader ever! The next day I read John’s blog where he discussed how you should never put an adjustment point at support or resistance. On his FREE website. Because, you know, EVERYONE should know this and it’s hardly a secret.
And then I realized the truth – I’ll never have an edge over all of the other traders. There are people who have done this far longer, there are people who have far better tools and models available than I, and there are certainly people who spend many, many more hours at this than I do. I won’t be better than they and comparing myself to them is futile.
But I can learn from them. I don’t have to make all of the mistakes on my own and then figure out what went wrong. I can listen to top traders, I can read what the communities are saying and I can learn without having to stumble into each and every pothole myself.
Because what I do have on my side is time. I don’t have to make money each and every day, or even each and every month. I can lose one month and my career doesn’t depend on it. I’m not competing with the others around me to be top trader or I’ll lose my job. I can also trade a proven strategy, over and over, getting better each time.
I haven’t given up on the idea of being the best trader ever. I am still learning and improving. I’m meeting and sometimes exceeding my goals. And at the end of the day, that’s all that matters.
Written and contributed by Cynthia Sarver