Yup, this one’s about me!
It was January, 2017 when someone in the Trading Room suggested we run with the Trading Plan, which is a spreadsheet based program designed to take $1,000 to $100,000 within one year. It’s a rather simple, ‘one trade a day’ approach, an effective system that has been done by various people in the past and is quite doable, assuming the trader remains in disciplined control. In fact, this is the plan that was inspired by Mujahid. The trader systematically trades up, using DayTradeSPY’s Bread and Butter methodology while withdrawing nominal profits along the way. It is easy to measure and monitor with specific targets.
We executed this strategy as a group, or should I say a little more accurately, I executed this strategy with a group watching. There was moderate successes for the most part but there were several moments where I could have and should have averted some tragic losses. I pulled back and analyzed what went wrong. Instead of boring you with details on specific trades, I will present you with the all important lessons learned:
Always, always buy insurance.
In the options world, this means time. No matter how much you believe in the move, it is imperative to buy time. If a trade is not worth insuring, it is not worth buying. Simple as that. With time, the trade has opportunity to mend itself should it go south, or if necessary, you have time to correct it.
Take ownership of your own trades.
Trading is not a democracy. There were situations when I asked the group what they would do. I went with the majority decision… bad move on my part. Had I taken full control, we would have achieved our ultimate goal, and much sooner. When you decide to buy an option, it should be you who decides when and how to manage/sell it, not anyone else.
Never allow yourself to be distracted.
Always focus on the trade at hand. Entering too many positions simply means your attention is split, often ending in disaster for all trades. Sometimes it takes patience to rule; other times discipline to let your emotions cool. Either way, be it another trade, a knock on the door or a family member, keep your focus and distractions to a minimum.
If you find yourself repairing too many trades, pull back and assess why.
You may need to prioritize or reorganize your indicators, perhaps putting more weight on other factors. Only trade when you have clarity. Use my Probability of Profit (Prop) checklist to achieve likelier gains. Repairs should actually be done on occasion, not as a regular course of your trading.
Never trade if you are unwell.
Reflect on your own feelings and refrain from trading if you are not 100% ‘with it’. I was taking pain killers from dental implant surgery when I placed a trade. Unbeknownst at the time, not only was my pain gone but so was my ability to think clearly; hence a loss. If you wouldn’t drive under the influence, don’t trade either.
Never force a trade feeling obliged.
Fortunately, this will likely never affect you. I was always under a microscope and felt pressured in having to perform. Whereas my personal risk tolerance may have been greater, that was not the case in this strategy. I needed to exercise more safety, yet I let security slide for the sake of demonstrating trades to my audience. Above all else, this was the killer.