Our focus this episode is on expectations and ambitions, your trading routine and its consistency, and some current market updates, including the situation with Netflix.
Autotrading expectations
- One of the most fundamental tenets of successful options trading is to consistently place high probability trades.
- We are not saying you will make profits on every trade, but you can become a better trader and a better investor.
- Each investor's timeline is different and should be evaluated individually. It's always hard to gauge a strategy's success in the short term and with limited information.
- Automating your trading is not a foolproof recipe for improvement. A bad strategy that is automated will still bring weak results. You have to maintain accountability within the automation, and use automation as a tool to safeguard against human inconsistency.
Trading routine and consistency
- In general, and especially early on, it is all about the process and not the results. You want to be more consistent and be sure that you repeat the correct process.
- Many investors need to adjust their expectations in the early stages of options trading; most often, progress does not occur in a linear fashion.
- If you zoom out, you'll see that there are drawdowns and valleys that you can will it through without too much anxiety.
- Another potential hazard to new investors is to exclusively focus on one strategy. This puts stress on the success of a single position, rather than sharing the load across a robust selection.
- The paradox of your trading routine is that it should not take a long time to perform. However, it is the accumulated experience of a trader that allows this process to be quick.
- If you can prioritize your process and stick to it consistently, you will be able to withstand the long-term fluctuations of portfolio performance.
Market update
- We are in a significant inflection point in the market and we are experiencing some unique circumstances.
- Your timeline is the only one that should matter you. Do not be coerced into following others' actions: stick to your plan!
- It is part of the work of an options trader to fight the FOMO and stay strong in one's strategy, as we are most often more at war with our own psyche than the markets. This is foundation of what makes automation a powerful trading tool.
- Absolutes are not the answer to uncertainty. You do not have to be all in or all out. Find a good balance that keeps with your process and goals.
SPY iron condor backtest:
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