Yes, we are already well into the new year, but there is really never a right or wrong time to start making improvements in your personal or professional life. Want to make resolutions in April? What about August or October? Why not? You just have to be in the right frame of mind.
No matter when you are ready, here are 10 options trading resolutions that will help up your game:
Are you ready for the unknown? They say the definition of luck is where preparation meets opportunity. In financial markets, you definitely need some luck to swing your way, and if you’re not ready for it, then you’ll miss the chance to take advantage.
Use a trading journal
This is one of the best tools you can use to track your trading results. None of us can remember every detail every day, but a daily journal allows us to put down our thoughts during and after the day and get us ready for the next day. I write down many things in my journal that affect my trading: distractions, my health, what I see on the screens, trading mistakes, victories, etc.
Work with others
At Explosive Options, we have a fantastic chat room where like-minded traders gather each day with the same goals in mind – to make money and learn. Trading is not an easy game, and it is certainly tougher going it alone. Make it easier and more fun – join us!
Losses are part of the game. Accept them and realize you will win far more often than you lose. That may sound like “pie in the sky” stuff, but if you don’t realize failure happens then your ego will run out of control and that will be the end of you as a trader. There are things out of your control, and it may hit your positions negatively. “It” happens. Deal with it and move on.
The number ONE reason why people get wiped out in trading is by exercising little control over their account. The art of good risk management and position sizing is the most fundamental rule of trading: Before you place a trade, understand how much you can afford to lose, and don’t exceed it.
Take profits when you have a winner
This might sound like an obvious strategy to always adhere to, but 2013 turned into a great trading year with a lot of us booking great profits – don’t let that make you greedy. Take profits when you have a winner. Don’t hold out for it to go higher. If you can’t book consistent gains, you’ll soon be separated from your wealth.
Learn new strategies
It’s easy to forget that we have a lot of different choices as traders, especially when we get comfortable using the same two or three strategies over and over. Learn some new ones this year to give yourself extra flexibility. Sell an upside call, buy some protection via puts, create spreads, roll profits out to future months/strikes, or take partial profits while still riding out trends.
Set aside reading time
Because the market changes constantly, it’s important to find sources of news that you can trust (hint: not the talking heads who are more interested in creating noise than saying anything useful). Set aside time each week to read blogs and articles. I like to read economic blogs, investor’s business daily, technical analysis articles and sentiment indicators .
If you’re feeling frustrated, it’s OK to get up from your desk, walk away, and take a break. Don’t move to the other room and sit down in front of the TV, though. Do something that re-energizes and re-focuses you. Go for a run, hit the gym, swim some laps, practice yoga, or play a game of racquetball. You’ll return to trading with a fresh outlook, ready to go.
I recently wrote a blog post on how managing distractions is the easiest way to up your options trading game. Because trading requires intense concentration and focus, getting side-tracked can quickly compromise your positions. The best traders learn to manage distractions through discipline and highly structured days. Think about your own situation and how you can minimize interruptions during the trading day.