Category: InvestFools

Good Morning Traders,

For me the day after a loss is the hardest. Not in the moment, shortly after, or even the remainder of that day. Generally during those times I have an acceptance of what has happened and an understanding that it is all part of trading. However the next day it really seems to set in for me and makes me more skittish on trades going forward. I find myself doubting myself and the numbers. I sometimes skip safe and winning trades because i feel like the market is out to get me or seems to do something irrational.

I have to remember in those moments to set my emotions aside and get back to the basics of math. Some times we will lose, but that doesn’t mean that our system or rules or plans are wrong, it just means that sometimes outliers happen. And we have to make sure that it doesn’t cause us to make more mistakes because of what has happened.

The mentality surrounding the day after losing money can vary widely depending on the individual, their financial situation, and their outlook on life. For some, it may be a time of deep introspection and regret, where they analyze what went wrong and vow to make better financial decisions in the future. This mindset often involves feelings of frustration, disappointment, and perhaps even a sense of shame or embarrassment.

On the other hand, there are those who approach the aftermath of financial loss with resilience and a determination to bounce back stronger. They see setbacks as temporary obstacles rather than permanent failures, viewing them as valuable learning experiences that can ultimately lead to growth and success. This mentality is characterized by optimism, perseverance, and a willingness to adapt and evolve in the face of adversity.

In either case, the day after losing money can be a critical moment for reflection and reassessment. It’s a time to evaluate one’s financial goals, priorities, and strategies, and to consider whether any adjustments need to be made. It can also be an opportunity to seek support from friends, family, or financial advisors, who can offer guidance and perspective during challenging times.

Ultimately, how one approaches the day after losing money can have a significant impact on their long-term financial well-being. By cultivating a mindset of resilience, resourcefulness, and a willingness to learn from mistakes, individuals can turn setbacks into opportunities for personal and financial growth.

Hello fellow traders,

One fascinating aspect of 0 DTE options is the daily opportunity they provide for initiating new trades. Unlike other systems or strategies, which often rely on specific days within weeks or months to make strategic decisions, 0 DTE trading offers a more immediate approach. While this approach may suit those managing large portfolios where economies of scale come into play, traders with more modest accounts require better opportunities.

That’s why I have truly come to appreciate the viability of 0 DTE trading. Currently, it’s primarily with SPX (S&P 500), but hopefully, in the future, we will see more stocks with similar liquidity become available, allowing for greater diversification.

However, 0 DTE trading has its drawbacks in that it only allows for one-day consideration of market movement and news. This is why working with Terry and developing our system, which sifts through historical SPX data to generate statistical information for informed trading decisions, has been invaluable.

Mathematics is like the invisible force that permeates every aspect of our lives, even when we don’t consciously notice it. It influences our daily activities, from counting money to planning our day or measuring ingredients for a recipe. Yet, it goes beyond mere numbers; it’s also behind the functionality of our phones, the structural integrity of buildings, and even the behavior of the weather. It’s the secret ingredient in everything we do, quietly facilitating processes in the background, whether we realize it or not.

Therefore, by analyzing historical data and identifying high-probability trading opportunities, we can make informed decisions about which trades to execute each day. The best part is that we can do this practically as soon as the market opens. This allows me to enter trades swiftly and comfortably go about my day without being tethered to the screen, constantly monitoring every market tick. While I do glance occasionally, perhaps every hour or two, I can sleep peacefully knowing that the odds are in my favor, especially when I’m in a time zone that would otherwise have me awake through the night until the early hours to monitor market closure.

So, I will continue to engage in 0 DTE trading on the SPX for as long as it remains feasible. I take comfort in knowing that I am making the most informed decisions possible about my daily trades.

Good Day Traders,

Actually, as I’m tying this, it is currently evening for me here. One of the many reasons I cherish trading, and for which I’m thankful to Terry for opening my eyes to re-entering the stock market, is that it allows me to pursue my passion for traveling and immersing myself in unique cultures worldwide. As I jot down these words, I find myself in the vibrant city of Chiang Mai, Thailand, visiting a work friend who tipped me off about a fascinating festival the country hosts annually.

Over the past several years, my work travels have introduced me to diverse people from various corners of the globe. I often fretted that when the time came to transition away from that profession, I’d have to bid farewell to my passion for exploring new destinations. That’s why meeting and learning from Terry felt like stumbling upon a new doorway that would enable me to sustain my way of life.

Admittedly, it hasn’t been a walk in the park. I carried a lot of baggage from a significant financial loss I suffered some 20 years ago while saving up for college. After investing and losing that money during a tough market year, I became disillusioned with stock market ventures. Much of it stemmed from my lack of understanding of how the market functions. However, Terry guided me in understanding how to harness the market to my advantage, how to generate a steady income to ensure financial comfort. From those initial steps, I’ve continued to enhance my comprehension of the stock market and option trading to meet my income goals.

And this is precisely why I’ve developed a fondness for option trading. I can engage in it from virtually anywhere. I’ve traded while aboard planes, trains, and automobiles, in cozy cafes and bustling bars, at friends’ homes and restaurants, lounging by the pool or on the beach (if I can find some shade to see my phone screen!). As long as I have access to reliable internet, I can make trading decisions on the go.

It’s been quite the journey, filled with challenges and setbacks. I still have my share of rough days with losses and exhilarating days with major trading successes. What use to be an emotional roller coaster, has become an exhilarating endeavor. And by collaborating with Terry and constructing a system rooted more in statistics and math than emotions and gut feelings (though I still heed those occasionally), I’ve managed to keep chasing and living my dream. I’ve set clear goals that keep me focused and grounded in my trading endeavors, ensuring I know what needs to be done and what I aim to achieve.

To those yearning for more freedom in their lives, I urge you to embark on your educational journey. Cultivate curiosity and begin unraveling the mysteries of the stock market and option trading. Start by familiarizing yourself with the terminology, so when you hear others, or Terry and I, discussing various concepts, you have a foundation of understanding. Once you demystify the process and take those initial steps, you’ll realize, as I did, that you wish you had started sooner.

“Failure will be a constant as no trader can sustain a 100% win rate. Learning to control the impact of that failure will be a large sticking point in many traders’ careers. The one thing that can be guaranteed to the trader is that there will be times when they must take a loss. And if that one loss wipes away the gain from ten winners or, perhaps worse, destroys that trader’s confidence, the problem from that single item of failure can have large repercussions. This points to the importance or perhaps even the necessity of risk management.”

Greetings, fellow traders! An important topic to explore is the significance of setting personal rules in options trading and why adopting a mechanical approach is essential for long-term success. In the dynamic and often emotional world of trading, establishing clear, predefined rules can serve as a guiding light, helping us navigate through the highs and lows of the market with confidence and discipline. Let’s delve into why personal rule-setting should be a mechanical choice rather than an emotional one.

Establishing Clear Guidelines

Personal rule-setting in options trading involves establishing clear guidelines and parameters for our trading activities. These rules encompass various aspects, including entry and exit criteria, position sizing, risk management, and portfolio allocation. By defining our rules in advance, we create a structured framework that guides our decision-making process and helps us stay focused on our objectives. The rules we establish are going to be different for different people. Some being peculiar, or strange, some that could seem like something that should just be common sense. I for one don’t like setting up new trades after 12:30, I always feel like I’m trying to force it, and most of my losses have happened in late afternoon for 0 DTE trades.

Removing Emotional Bias

Emotions can cloud our judgment and lead to impulsive decision-making in trading. By adopting a mechanical approach to rule-setting, we mitigate the influence of emotions on our trading decisions. Instead of reacting to market fluctuations based on fear or greed, we rely on predefined rules and objective criteria to execute our trades with discipline and consistency.

Promoting Consistency and Accountability

Consistency is key to success in trading. By adhering to a set of predefined rules, we promote consistency in our trading approach and minimize variability in our results. Additionally, having clear rules in place holds us accountable for our actions and helps us evaluate our performance objectively. This allows us to identify areas for improvement and make adjustments to our strategy as needed. Terry would also tell everyone to write down your rules. When you have a loss, look at your rules and you’ve probably broken them. And I find this to be true for most all of my losses. The others one were just the days where probability went against us. Not every trade will be successful, and that’s just part of trading. But reducing those down by having those consistent accountable trades based on your personal established rules and define a successful trading system and a losing one.

Enhancing Risk Management

Risk management is a critical aspect of trading that can significantly impact our long-term success. Personal rules help us manage risk by setting limits on position sizes, defining stop-loss levels, and establishing guidelines for portfolio diversification. By adhering to these rules, we protect ourselves from excessive losses and preserve our capital for future trading opportunities. This goes hand in hand with goal setting and why we will only ever speak of P/L in terms of premium or capital percentages.

Building Confidence and Discipline

Confidence and discipline are essential traits for successful traders. By following a set of predefined rules, we gain confidence in our trading strategy and approach. This confidence, coupled with disciplined execution, allows us to navigate through challenging market conditions with resilience and composure, ultimately leading to improved performance and results. By removing as much emotion as we can from trading we build this confidence as well. Rules help to make it more structured and understandable. When we understand something we can comfortably interact with it.

Conclusion: The Path to Success

Personal rule-setting in options trading is a cornerstone of long-term success. By adopting a mechanical approach to rule-setting, we remove emotional bias, promote consistency and accountability, enhance risk management, and build confidence and discipline in our trading endeavors. So, let’s commit to establishing clear, predefined rules and embracing them as our guiding principles in the dynamic world of options trading. With a solid foundation of personal rules in place, we can navigate through the market’s twists and turns with clarity, purpose, and unwavering resolve. Here’s to your success as disciplined and mechanical traders!

Good Morning, fellow traders! Today, take a look into the realm of psychology – specifically, how to effectively cope with losses in options trading. Losses are an inevitable part of the trading journey, but how we respond to them can make all the difference in our long-term success.

Understanding Loss Aversion

Loss aversion is a psychological phenomenon where individuals experience the pain of losses more intensely than the pleasure of gains. In options trading, this can lead to emotional decision-making, such as holding onto losing positions for too long or taking excessive risks to recoup losses. Recognizing and understanding loss aversion is the first step toward managing it effectively.

Embracing the Reality of Losses

Accepting that losses are an inherent part of trading is crucial for maintaining a healthy mindset. No trader, no matter how skilled, is immune to losses. By acknowledging this reality and reframing losses as learning opportunities rather than personal failures, we can cultivate resilience and emotional strength in the face of adversity. My first day of trading was a loss, with my second following a week later. So experienced these emotions much faster than anticipated.

Setting Realistic Expectations

Setting realistic expectations is essential for managing emotions and maintaining mental well-being in options trading. It’s crucial to understand that not every trade will be a winner and that losses are a natural part of the trading process. By setting achievable goals and focusing on long-term success rather than short-term outcomes, we can avoid the emotional rollercoaster of trading.

Focusing on Long-Term Goals

While short-term losses may sting, it’s essential to keep our eyes on the prize – our long-term financial goals. Sometimes we have to step back and look at the profit and loss as a whole, instead of focusing on one trade. This allows us to refocus on the long term, as this is not a get rich quick endeavor. By aligning our trading activities with our long-term objectives, we can stay focused and motivated, even in the face of temporary setbacks.

Practicing Self-Compassion

When faced with losses, it’s easy to be self-critical and blame ourselves for our mistakes. However, practicing self-compassion is essential for maintaining mental well-being and resilience in trading. Instead of berating ourselves for losses, we should treat ourselves with kindness and understanding, recognizing that we are human and prone to errors. This one of the reason we are big on setting rules to hold ourselves accountable to. Most of my losses have happened when I break my rules in the desire, and drive, to make a trade happen.

Learning from Mistakes

Every loss in options trading presents an opportunity for growth and learning. Instead of dwelling on past mistakes, we should focus on analyzing what went wrong and how we can improve in the future. By adopting a growth mindset and embracing failure as a stepping stone to success, we can turn losses into valuable lessons that propel us forward on our trading journey.

Seeking Support

Navigating the emotional ups and downs of options trading can be challenging, but we don’t have to do it alone. Seeking support from fellow traders, or mentors, can provide valuable perspective, guidance, and encouragement during difficult times. Finances are the number one reason for stress in people these days. Remember, it’s okay to ask for help when needed.

Conclusion: Cultivating Resilience

In conclusion, mastering the psychology of dealing with losses in options trading requires a combination of self-awareness, emotional regulation, and self-compassion. By understanding loss aversion, setting realistic expectations, practicing self-compassion, learning from mistakes, and seeking support, we can cultivate resilience and emotional strength to navigate the inevitable challenges of trading. Remember, it’s not about avoiding losses altogether but about how we respond to them that ultimately determines our success as traders. So, let’s embrace the journey, learn from our experiences, and emerge stronger and wiser with each loss we encounter. Happy trading!

Alright everyone, let’s talk about 0 DTE (zero days to expiration) options trading. Now, I know it might sound exciting – the idea of making quick trades and potentially pocketing some cash in a single day. But here’s the thing: 0 DTE options trading isn’t about getting rich quick, and it definitely shouldn’t be treated like a thrill ride at an amusement park.

Why the Hype?

You might have heard stories of people making big bucks in a short amount of time with 0 DTE options. And sure, it’s true that there’s potential for profit. But let’s not get carried away by the hype. The reality is, trading options – especially with such a short time frame – comes with its fair share of risks.

Keeping It Real

So, why am I raining on the parade? Because it’s important to approach 0 DTE options trading with a realistic mindset. This isn’t a get-rich-quick scheme or a game of chance. It’s a serious financial endeavor that requires careful planning, discipline, and risk management.

The Importance of Tracking Progress

When it comes to 0 DTE options trading, keeping track of your progress is crucial. Since you’re making trades with such a short time horizon, there’s little room for error. You need to be on top of your game and constantly monitoring your trades to ensure you’re staying on track with your goals.

The Rote and Boring Phase

Once you’ve established your rules and trading strategy, the process should become rote and, dare we say, boring. This may sound uninspiring, but it’s a sign that you’re sticking to your plan and not letting emotions dictate your decisions. Successful traders understand that consistency and discipline are key to long-term success, even if it means sacrificing excitement in the short term.

Staying Grounded

Now, don’t get me wrong – I’m not saying you can’t make money with 0 DTE options trading. Plenty of people do. But it’s essential to approach it with the right mindset. Treat it like any other investment strategy – with caution, diligence, and a healthy dose of skepticism.

Ultimately, staying grounded in 0 DTE options trading is about building consistency and resilience. It’s about recognizing that success in trading isn’t about hitting home runs with every trade but rather about making disciplined decisions over the long term. By staying true to your trading plan, managing risk effectively, and maintaining a realistic outlook, you can increase your chances of achieving consistent and sustainable success in the dynamic world of options trading.

Conclusion

So, let’s wrap this up. 0 DTE options trading can be a viable strategy for those who understand the risks and are willing to put in the work. But it’s not a ticket to overnight riches, and it’s definitely not something to be taken lightly. So, if you’re thinking about diving into the world of 0 DTE options, just remember to keep it real, stay grounded, and approach it with a healthy dose of caution. Trust me, your wallet will thank you in the long run.

If you’re diving into the world of 0 DTE (zero days to expiration) options trading, keeping track of your progress is more critical than ever. With these ultra-short-term options, every move counts, and staying on top of your trades can make a big difference in your success. Let’s explore why tracking progress is essential and how it’s even more crucial in 0 DTE options trading.

Why Track Progress?

1. Stay Informed: Tracking your progress helps you stay informed about how your trades are performing. It’s like keeping score in a game – you need to know where you stand to make smart decisions.
2. Identify Patterns: By keeping track of your trades over time, you can identify patterns and trends in your trading behavior. You might notice that certain strategies work better than others or that you tend to make certain mistakes repeatedly.
3. Learn and Improve: Tracking progress allows you to learn from your experiences and improve as a trader. If you can see what’s working and what’s not, you can adjust your approach and make better decisions in the future.

Why It’s Extra Important in 0 DTE Options Trading

1. Fast-Paced Nature: With 0 DTE options, time is of the essence. These options expire at the end of the trading day, so you need to act fast and make quick decisions. Tracking your progress helps you stay on top of your trades and make timely adjustments as needed.
2. Limited Timeframe: Unlike longer-term options, where you have more time to wait for a trade to play out, 0 DTE options require immediate action. If a trade isn’t going your way, you need to know when to cut your losses and move on.
3. Risk Management: With the short lifespan of 0 DTE options, effective risk management is crucial. Tracking your progress helps you assess the risk of each trade and make informed decisions about position sizing and trade management.

How to Track Progress

1. Keep a Trading Journal: Write down details about each trade you make, including entry and exit points, reasons for the trade, and any lessons learned. Review your journal regularly to identify patterns and areas for improvement.
2. Use Trading Platforms: Many online brokerage platforms offer tools for tracking your trades and analyzing performance. Take advantage of these features to monitor your progress and make data-driven decisions.
3. Stay Organized: Keep track of your trades in a systematic way, whether it’s through spreadsheets, software, or other tools. The more organized you are, the easier it will be to track your progress and make adjustments as needed.

Conclusion

In conclusion, tracking progress is essential for success in 0 DTE options trading. By staying informed, identifying patterns, and learning from your experiences, you can improve as a trader and increase your chances of achieving profitable outcomes. With the fast-paced nature of 0 DTE options, keeping track of your trades is more critical than ever. So start tracking today and watch your trading skills improve over time!

If you’re thinking about getting into options trading, it’s crucial to have a plan in mind. Setting goals can make a big difference in how successful you are. Whether you’re looking to make some extra money each month, replace your current income, or grow your investment stash, having clear goals helps you stay focused and on track.

Why Set Goals?

1. Know Where You’re Headed: Setting goals gives you a direction to aim for. It’s like having a map to guide you on your trading journey. Whether you want to earn extra cash or build long-term wealth, having a goal helps you know what steps to take next.
2. Stay Motivated: Goals keep you motivated and give you something to work towards. When you have a clear target in mind, you’re more likely to stay disciplined and keep pushing forward, even when things get tough.
3. Track Your Progress: Goals help you measure how far you’ve come and see if you’re moving in the right direction. By checking in on your goals regularly, you can see what’s working and what needs adjusting to stay on course.

Types of Goals

1. Making Extra Money: If you’re looking to earn some additional income, to help with bills, pay off the car, or plan a yearly trip. Or starting with a small portfolio that you want to slowly grow.
2. Replacing Your Income: For those aiming to make trading their full-time gig, you might need to take a more aggressive approach. Taking on more contacts, or scraping profits from a many trades through the day.
3. Growing Your Investments: If your goal is to build wealth over time, consider strategies that offer the potential for big returns while managing risk. This could mean investing in long-term options on solid stocks or using more complex strategies like vertical spreads to make your money work harder for you.

Tailoring Your Strategy

Once you’ve got your goals in place, it’s time to tailor your trading strategy to fit. Think about factors like how much risk you’re comfortable with, how long you plan to invest for, and how much money you have to work with. Diversify your investments to spread out risk and increase your chances of hitting your goals.

Conclusion

Setting goals is a key part of success in options trading. Whether you’re aiming to make a little extra cash or completely change your financial future, having clear objectives gives you a roadmap to follow. By aligning your trading strategy with your goals and staying disciplined along the way, you can increase your chances of reaching financial success through options trading.

In the fast-paced arena of 0 DTE (zero days to expiration) options trading, sellers hold a powerful advantage, rooted in the concept of time decay. Understanding this phenomenon is crucial for traders aiming to navigate the market with precision and profitability.

Time decay, also known as theta, refers to the gradual erosion of an option’s value as time passes. This erosion occurs because options have a limited lifespan, and as each moment ticks by, the likelihood of the option expiring profitably diminishes. For sellers of options, time decay works in their favor, steadily reducing the premium paid by buyers.

In the context of 0 DTE options, time decay accelerates to an even greater extent. With these contracts expiring at the end of the trading day, every passing minute has a significant impact on their value. This means that sellers stand to benefit immensely as expiration approaches, regardless of whether the market moves in their anticipated direction or not.

To illustrate, consider a scenario where a trader sells a put option on a stock with zero days until expiration. If the stock price remains stable or increases slightly, the option’s value decreases rapidly as each moment passes. This erosion of value directly translates into profits for the seller, as they can buy back the option at a lower price than they initially sold it for, pocketing the difference as profit.

However, it’s essential to note that time decay is not a linear process. Instead, it accelerates exponentially as expiration draws near. This means that the closer an option gets to its expiration time, the faster its value diminishes. As such, sellers of 0 DTE options must be vigilant and ready to act swiftly to capitalize on the rapidly diminishing value of their positions.

Moreover, the impact of time decay is not uniform across all options. Factors such as volatility, interest rates, and the proximity of the option’s strike price to the current market price can influence the rate at which an option loses value due to time decay. Sellers must consider these factors when crafting their trading strategies to maximize their profitability.

In summary, time decay is a critical concept for sellers of 0 DTE options to understand and exploit. By recognizing the accelerating nature of time decay and its impact on option values, traders can position themselves to capitalize on fleeting market opportunities, potentially reaping substantial rewards in the process.