It’s time to talk about an essential options trading strategy I’m afraid some people are forgetting. Because there’s so much uncertainty in the markets right now, a lot of noise is clogging the airwaves, and it’s driving me nuts. The media is not your friend, nor is it a reliable source of information.
The media isn’t there to help you make money
If you turn on the TV during the trading day, you’ll hear pundits, analysts, hedge fund managers and other investment experts talking about the market’s next move. Sometimes they are helpful, but most of the time they are not. Oftentimes their appearance in the media is just free advertising for the expert and his or her firm. I tend to view these appearances as entertainment. They’re not there to make you money.
So what do we learn from these experts? Not much beyond their opinion about how a stock or the SPX 500 is going to behave. If I had a dollar for every wild guess that I heard on TV, I’d be a millionaire.
Most of these experts claim to have special information. “Apple is going to rise; we have seen it before.” Note how general this statement is and that no timeframe is mentioned. How do I know if Apple won’t go down first? And when might it go up? How high will it go up?
There is an old saying, “Give ’em a number or give ’em a date, but don’t give ’em both.” It’s so much easier to be right if you conveniently leave out some details.
When you are putting your capital at risk, take a more rigorous approach.
Don’t forget this essential options trading strategy
The best place to start is by turning off the TV and studying the charts and technicals. Charts and technical indicators don’t lie. Since behavior rarely changes, use these tools to identify which patterns are repeating and can potentially make money for you. That’s it! No short cuts.
