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A Word from the Author
My personal trading story and some words of encouragement for those just getting started
Reality Check: Risk Means Risk
Losses happen
As I learned more about options it was easy to fool myself into thinking I couldn't lose. It's tempting to believe, even when you know better, that a 70-80% probability of success is guaranteed profit. The reality is that options do NOT eliminate risk, they only change it. Losing is a part of investing, whether you're trading options or in plain old stocks. How losses are handled makes the difference between profitable and unprofitable investors. I discovered that learning to defend and recover from loss quickly and independently of price change is what enables the greatest profit potential. Winners are easy – there's nothing to do but take the money. Dealing with losers, on the other hand... That's real trading; that's where only skill and calculated decisions can save you.
Learning From My Mistakes
Learning to trade has been fun, fascinating, and challenging in all the best ways. The vocab and basic concepts did not take terribly long to learn but putting them into practice took real effort and self-confidence. I certainly made my fair share of costly mistakes along the way.
Today, I see those mistakes as necessary growing pains that I will value for the rest of my career – not just as a trader, but as an entrepreneur. They've lead me to a point where I feel comfortable navigating any market condition and were essential to building skills I will use for the rest of my life. It took hard work, but I eventually managed to develop a set of trading mechanics that accommodate my personal risk tolerance and account size. Mistakes and challenges will never cease, but I no longer stress about them. I've seen and done what it takes to learn, recover, and grow from them, and embrace them as opportunities rather than road blocks.
Today, I see those mistakes as necessary growing pains that I will value for the rest of my career – not just as a trader, but as an entrepreneur. They've lead me to a point where I feel comfortable navigating any market condition and were essential to building skills I will use for the rest of my life. It took hard work, but I eventually managed to develop a set of trading mechanics that accommodate my personal risk tolerance and account size. Mistakes and challenges will never cease, but I no longer stress about them. I've seen and done what it takes to learn, recover, and grow from them, and embrace them as opportunities rather than road blocks.
Number One Lesson: STAY SMALL
The only way to survive the learning process is to learn proper sizing as early as possible. If your risks are too large, it will be impossible to make strong, logical decisions when things go wrong.
Trades that keep you up at night are too large. Trades that make you panic on every tick are too large. Trades you feel forced to close due to the size of your loss are TOO LARGE. The only true defense against a bad position is appropriate sizing. Stay small, stay in business.
Trades that keep you up at night are too large. Trades that make you panic on every tick are too large. Trades you feel forced to close due to the size of your loss are TOO LARGE. The only true defense against a bad position is appropriate sizing. Stay small, stay in business.