The Second Deadly Option Spread Trading Sin: Laziness
By Ultimate Trading
Laziness Could Be The End Of Your Option Spread Trading Career
People who are lazy in their option spread trading are certain to
become losing traders. If you neglect to research and monitor your
positions and markets when option spread trading, you wont have a
good sense of what strategy to employ. Lazy traders often dont have
a concrete plan because of the effort it takes to create a plan
tailored to their interests and abilities. Yet
option spread trading without a plan is the surest way to lose
in any market.
The person who is considered lazy in option spread trading might buy
a stock because he sees that it's been going up steadily for a week
and a half. He doesn't know why, but he does know the experts say
its a "strong" stock. He buys it in the morning, it goes up a few
percentage points, and he assumes hes made a winning trade.
To his surprise, the stock does a falls in the afternoon and starts
going down as steadily as it went up in the morning. This trader
can't figure out what went wrong. Why did it fall? If he had made
the effort to check the earnings calendar, he'd have seen that the
company was scheduled to report earnings that day after the market
closed. The steady run-up was in anticipation of the earnings
announcement, and now traders were taking profits and getting out of
the stock in case of a negative reaction to the earnings results.
Its not difficult to avoid being lazy at option spread trading, but
it does require more effort than many traders want to make. You need
to spend time getting to know your option spread trading market, and
to know the stocks that are on your watch list. Research. Know why a
position is moving, and always remember to check basic information
of the position.
Once youre in a position, be alert. Watch the market, check for
news, and monitor the positions behaviour during the day. If you
know events that are coming for the company, you can anticipate
changes in your positions direction, and be prepared to act
according to your option spread trading system. Always, always trade
with a option spread trading system. If you dont have an option
spread trading system, there is no way that you can be consistent
enough to reap the rewards of the market.
If you find yourself not taking these actions regularly, you need to
seriously reconsider how you approach option spread trading.
However, if you find you simply cant focus on your trades on a
specific day, consider whether you are being influenced by outside
If you're sick, emotional, or cant properly focus due to outside
events, you shouldnt trade. The reason is simple. If you trade when
you're not feeling well, physically or emotionally, you won't be
able to trade well, and you will lose money. At the very least,
you'll be too distracted to trade successfully. Knowing when not to
get involved in option spread trading is an important form of
discipline you must learn. This discipline is also necessary on days
when the market is so directionless and choppy that no amount of
option spread trading is going to go anywhere.
You should try to be in good enough touch with your emotions that
you can recognize when youll be unable to focus properly. It's also
healthy to get away from the market for a day or two, or even a few
weeks occasionally. The time away can help you regain any energy and
enthusiasm for option spread trading that may have been worn down by
the demands of trading over time, and may also provide you with a
reminder of why you started
option spread trading in the first place.
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