looking for solicited advice

Discussion in 'Options' started by thebubs, Jun 26, 2009.

  1. Keeping records is important for various statistical and psychological reasons. Ignore that for now:

    Here's how I think and it works for me. It may not work for you.

    I don't consider the results.

    I do not second guess myself - except to see if I made a bad decision: Bad is defined as: was the a better decision, not 'did the decision make or lose money.'

    My job as risk manager of my portfolio is to make the best decision I can at the time the decision must be made. I make that decision and move on.

    If I made an adjustment, I may have to make another later. But that is a separate decision and has zero to do with the first decision.

    I do not hang on to losing trades because I refuse to take a loss. Money is money and I want my money invested in positions I believe will work going forward.

    If I lose $$ in position one but earn an equal amount in position two, then I am even. I do not have to make the gain from position one. I do not marry a trade.

    Profits represent my money. I do not hold a winning position just because I am playing with house money. It is not house money - it's my money. I hold the position only if I like it's prospects going forward.

    #21     Jul 1, 2009
  2. spindr0


    >> That's a delicate balance I have to learn. Since it's hard to sit there and watch the price go down, but I believe (when I've been long the call) that it'll come back, and it has. But had I reacted I would have put myself in a more complicated position. <<

    There are times when acting is correct and others when it's not. You act because current price action is giving you a PITA. There's no way to know what will happen after you act.

    >> Any of the books I've read (granted they're geared towards value investing and long term horizon) preach 'you get killed when you trade often'. <<

    I disagree. You get killed when you trade poorly. I trade heavily (for a retail kinda guy). That's what I do and it's what works for me. It's not right or wrong.

    >> I was long a 45 ITM Call on CM, and it wasn't moving. So to reduce my exposure, I closed the position about a week ago. Had I waited until today, I could have closed with a small profit after commissions. <<

    It's non productive to do the woulda coulda shoulda routine. If it's not an issue that you trade regularly, when you close the position, delete the symbol. Look forward not back.

    >> My apologies for the hijack! <<

    No need to apologize. No one owns the chain.

    Now if everyone would get back from lunch and start moving things around, I could go back to ignoring all of ya! :)
    #22     Jul 1, 2009
  3. For the average retail trader (and that's not you, SPIN), studies show that the more often they trade, the worse they do.

    #23     Jul 1, 2009
  4. spindr0


    I don't disagree with the statistic since I have no stats to support or refute it.

    If one aspires to being the "average retail trader" then one should accept w/o question what the books and studies say. I'm just suggesting that one needs to figure out what works for you... not what someone else TELLS you is the best way

    #24     Jul 1, 2009
  5. Right on!
    #25     Jul 1, 2009
  6. erol


    thanks again Mark and spin, that really helpful advice.

    That's very true... something I have to work on.
    #26     Jul 1, 2009