My life is starting to return to normalcy... but don't get your hopes up. For those of you that registered for my advanced options open house, you have probably received an e-mail apologizing for the technical difficulties. I have received more e-mails, business/personal/marketcast than I think I have ever received in my entire life. If you haven't gotten a response, don't take it personal. Normally I delete all my e-mails, but lately I am trying my best to reply. If you get a rather short quick response from me, and you think "what a jerk" remember that it was one of hundreds I had received on the day.
As I have warned, earnings season has taken us all over the map. Technical Analysis takes a back seat during times like this. However, it impacts you and I when you see the VIX in the mid 20's. Make sure you put that on your radar, I will be talking about it a lot more at these levels.
Today I felt like I should talk about trading style. The other day I talked about creating an investing style and creating a foundation that consists of at least 7 basic principles
. But once you've done this, you need to focus on what vehicles you are going to use to take you to where you want to go.
I have often mentioned that I think every individual looking to get started in the market should take an online exam. Similar to what you would go through over at eHarmony.com.
If you not familiar with eHarmony, they have constructing a very intense, intrusive, complicated but yet effective personality profile to offer help to those getting into the relationship market. They help you to find someone just as crazy, emotionally inept, and unreliable as you are. In my opinion, it was a great way to corner the market. I tip my hat to them.
I know none of this from experience, but have concluded my results from 3 minutes of research. Anyway, my point was... wouldn't it be just as effective to have a questionnaire ready when you send in your check to fund your new account with an online broker dealer? This would make sure that you have access to the only tools that are compatible with your goals, level of risk
tolerance and emotional instability? Over the years, broker dealers have become very laid back in the options approval process. When you notice that the nice older lady that has been retired for 30+ years has the ability to trade naked options with no former trading experience, you know the registered options principles at these firms are going to wind up in hell.
Consider what strategies are suitable for you. I normally ask someone who is in the process of deciding on their trading style these few questions...
- Are you generally a risk taker, or are you conservative in your decision making processes?
- Are you comfortable being wrong? If so, how often?
- Are you patient?
- What is your time frame with trading/investing?
- What are your financial goals?
- How emotional are you when it comes to money? Are you trading with money you can lose?
There are plenty more, but you get the point. I think most traders have to take one of two roads in trading options. High probability or high performance. I chose high performance. This style of trading seemed to fit well since I am a risk taker, I am comfortable being wrong a lot, I am very impatient, my time frame is forever, my financial goals are to be able to print my own money and make the Forbes 400, I am naturally emotional, but can afford to lose everything.
Many of you have already determined your trading style, but many others have looked at the fact that there are so many strategies and don't know where to begin. If you are going to be a high probability trader (non-directional), consider covered calls, spreads, naked puts and owning stock. This method is more conservative, fairly consistent, and offers lower returns. If you are the high performance trader (directional), consider buying calls and puts, stock, and maybe occasionally legging onto spreads. This method is more aggressive, less consistent, but offers much better returns when you are right.
Sometimes we get too carried away with so many details, we forget the answers to the easy questionsRecommendation:
Get started on this process immediately, if you haven't alreadyLong:
Defined trading stylesShort:
Jacks of all "trades"Disclaimer:
I don't really delete e-mails, but don't test me.PS-
On a serious note, for those of you in the So Cal area, you are in my thoughts. I hope everyone is safe and doing well. Take care.