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#441 - The 4 Ways You Can Control Your Trading Emotions: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be covering the four ways you can control your trading emotions. Again, I believe that there's only four ways that you can control your...

#441 - The 4 Ways You Can Control Your Trading Emotions: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be covering the four ways you can control your trading emotions. Again, I believe that there's only four ways that you can control your...

A partire dalThe "Daily Call" From Option Alpha


#441 - The 4 Ways You Can Control Your Trading Emotions: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be covering the four ways you can control your trading emotions. Again, I believe that there's only four ways that you can control your...

A partire dalThe "Daily Call" From Option Alpha

valutazioni:
Lunghezza:
5 minuti
Pubblicato:
Dec 7, 2018
Formato:
Episodio podcast

Descrizione

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be covering the four ways you can control your trading emotions. Again, I believe that there's only four ways that you can control your trading emotions and those four ways include the following. Number one, experience. I can't argue with the fact that if you've been in the market for any set amount of time, it gives you a little bit of an edge up the longer that you survive and watch and experience different market environments. I’ve been doing this now for over 10 years and so, I have a lot more experience than most people who are starting though I know that there's other traders out there who have traded longer than me. But the idea is that I've seen a lot of different setups occur in very similar fashions, in very similar industries and I've seen implied volatility expand really fast and contract really fast. I’ve seen markets go down fast, markets go up fast and things just trade sideways. And so, experience to me is one thing that I think does help out because if I see a situation where a stock is maybe rallying too far, too fast, I’ve maybe witnessed that experience and experienced it before in the past and that helps maybe give me a little bit of a leg up on figuring out what might happen next or how I can control my emotions because I've seen that happen before. It's like parenting. When you have your first kid, everything is new, but after the second and third kid, then everything is pretty much the same. Obviously, each kid is a little bit different, but everything is pretty much the same. The same things generally happen at the same development period as they grow and learn and develop, so you get a little bit of experience and you help control how you react to those situations. Number two is data. Data is really important for me. I lean on back-testing data, historical data, implied volatility data, research data that we do, that other people do. I think this is critically important for options traders especially because if I know for a fact that using stop-losses creates more losing trades, then I won't use stop-losses. Even though emotionally, it might feel like I should use a stop-loss on a position because I want to cut my loss or I want to reduce the pain or stop the bleeding, if I know for a fact that during a given time period, using stop-losses is not something that creates more winning trades, then I won't use stop-losses. Using data and leaning on data is really, really important to me. Number three is having rules. I think rules are the framework for trading. Now, rules, I think people can get a little bit carried away with in the sense that you can't have a rule for everything. There have got to be a set of framework, guidance, rules that you should follow and everything else is more or less an art than a science. And so, for me, rules would be no position ever risking more than 5%, keeping 50% of my account in cash at all times, having a portfolio that is balanced to the S&P 500, having a good diversity of ticker symbols, usually about 10 different ticker symbols in various industries or sectors for every single month. Those are the kind of guidelines and framework rules that I use. And so, I use those as a backstop when I get into a situation that is not comfortable or it’s not usual or not typical. I might lean back on those rules to make sure that I'm following my plan. And number four is obviously, automation. As we start to progress and as we start to get closer to the rollout of our new auto-trading platform, one of the key things for us is going to be the use of automation technology. Right now, a lot of things are manual click trading and that means that we have to interact with the markets every single time that we want to make a decision and that unfortunately is not the best approach. It means that we’re exposed to our emotions, to our emotional swings, to this fight or flight,
Pubblicato:
Dec 7, 2018
Formato:
Episodio podcast