• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Locke In Your Success

Locke In Your Success

Learn how to create income from options trading

  • Home
    • About
    • Testimonials
    • Our Team
      • Sherri Locke
      • Stephen Hammit
      • John Locke
    • Contact
    • Privacy Policy
  • Coaching
    • Fundamentals In Trading Library
    • Options Trading for Income Weekly Webinar
    • GO Ask A Trader Sessions
    • Trading With The Pros
    • Trading Performance Sessions
    • Market Outlook Weekly Webinars
    • Personal Coaching Sessions
  • Become A Member
    • GO Membership
    • PRO Membership
    • Trading Performance Membership
    • Market Outlook Membership
    • Basic Membership
    • Membership Level Comparison
    • Trade Alert Services
  • Trading Courses
    • Options Trading Strategies
      • The Bull
      • Quick & Dirty Broken Wing Butterfly
      • The Super Bull
      • The Bear
      • Unbalanced Butterfly 1 and 2
      • M3.4u
      • V32
      • X4 System
      • Bearish Butterfly
      • M3
      • The ROCK
      • M21 System
    • Trading Performance Courses
      • Advanced Personal and Position Management
      • Broken Wing Butterfly Master Course
      • The Trading Triangle
      • Trader Transformation Workshop
      • Ultimate Income Trader Workshop
      • How To Best Utilize Calendar Spreads
    • Enriching Sessions
      • Performance Parking Portfolio
      • Boost Trading Results Through Proper Back Testing
      • Managing Risk When Entering, Exiting, or Rolling Positions
      • Far Out M3
      • How To Build Winning Trade Plans
      • Reading Your T+0 Line
      • Trading Lab – Design a Trade
      • Trading Lab – M3LT
      • ROCK’in 2018
      • Trading Lab – Roll Baby Roll Index
  • FREE Resources
    • Free Options Trading Consultation
    • Options Trading FAQ
    • Trading Performance Podcast
    • The Winning Trade
    • Successful Trader Presentations
    • TRADING SUCCESS BLUEPRINT
    • FREE Basic Membership
    • Calendar
    • Recommended Reading List
    • Brokerage Firm Selection Process
    • Fundamentals In Trading Definitions
    • Trader Inspiration
    • Financial Freedom Classroom
  • Blog
  • Log In

Under Pressure

February 9, 2016 by John Locke 1 Comment

We’ve had a significantly different market in 2016 than many people are accustomed to trading.  Overnight gaps, intraday reversals and huge ATR’s have made it a more challenging trading environment than the previous several years.

If you’re accustomed to nice, neat, well-behaved markets, this year has been an eye-opener.  Perhaps you’ve had some losses.  Perhaps you’ve just had more stomach acid.  Perhaps you’ve paid a LOT more in commissions for your adjustments.  Perhaps your trades have drawn down more than usual.  Combined, it can give you the blues.

But, to paraphrase the late, great David Bowie, “Let’s Trade!  Put on your red shoes and trade the blues.”

A pair of red women s heel shoes isolated over white with clipping path

All good mentors and teachers have said it in various ways – to be a trader, you have to trade!

Back-testing and paper trading are invaluable but nothing replaces live trading with real money.  In the last January Community Coaching session, John (with great enthusiasm) said what a fantastic environment this is for learning.   It is!

If you’re planning to become a long-term trader, you’ll have to trade through different types of markets.  There’s no avoiding it, so you might as well take advantage of this one and put another notch in your trading belt.  But’s important to recognize that it will be a learning experience (which builds character!) and that means that you need to be more careful.

The question then becomes, how to trade safely?  There are a number of techniques to help you get experience without getting hammered.

  1. The easiest is to reduce your number of contracts. If you’re trading something that allows for smaller lot sizes (Super Simple Spreads, Bearish Butterfly) now might be the time to dial back the trade size.  If you’re trading something that is typically a larger number of tranches, reduce the number of tranches or use capital control methods to keep it smaller.
  1. Try trading IWM or SPY instead of RUT or SPX. You can stay with your usual number of contracts but not have as much money in the market.  Yes, you’ll eat it on commissions but that’s better than eating it on a large loss, isn’t it?
  1. Don’t deviate from your plan. This is NOT the time to start getting frisky with your trading rules.  Ch-ch-ch-ch-ch-changes (get it?) may work in your favor (if you’re lucky) but more likely you’ll end up getting a very nasty surprise (if you’re not).

Besides, the whole point is to learn how YOUR trade works in this environment.  If the plan doesn’t handle it well, change the plan after the trade is closed and you’ve dissected it.

Just don’t change it mid-trade.

Blog 8_CS_swan_MySbJDtd

The real test for whether you’re trading safely is if you can Sleep Well At Night (SWAN).  But unless there’s a compelling reason, don’t stop trading.  As an income trader, you need to trade during all types of markets and the only way to gain that experience is to do it.

Let’s trade!

Buy Sell Buttons Shows Buying Or Selling

Written and contributed by Cynthia Sarver

Blog 8_CW_Let's Trade

 

Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Email this to someone
email

Filed Under: Bearish Butterfly, Cynthia Sarver, M3, Written blog post Tagged With: $rut, $spx, adjustments, atr, back-testing, bearish butterfly, capital control, Changes, commissions, Community Coaching, contracts, David Bowie, draw down, experience, gaps, intraday reversals, IWM, john locke, keep trading, Let's Dance, let's trade, live trading, long-term trader, losses, market, mentors, money, option trading, options education, options strategies, paper trading, SPY, Stock Market, super simple spreads, SWAN, teachers, trade plan, trade safely, trade size, trading environment, tranches

Reader Interactions

Comments

  1. Venkat Yerubandi says

    February 9, 2016 at 7:07 pm

    Excellent article, Cindy! I specifically liked your tips of reducing trade size and not-changing the plan in the middle Good job 🙂

    Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.

Primary Sidebar

Recent Posts

  • The Winning Trade Episode 84
  • Stock Market Emotions!
  • The Winning Trade Episode 83
  • Trading Reality Distortion
  • The Winning Trade Episode 82

Categories

Search

Copyright © 2022 · Locke In Your Success, LLC. All rights reserved worldwide · Site Maintained by Nustart Solutions