It’s Limiting Mistakes, Not Bad Trades


Manage episode 152573500 series 1063725
על ידי Joshua Belanger התגלה על ידי Player FM והקהילה שלנו - זכויות היוצרים שמורות למפרסם, לא ל-Player FM, והשמע מוזרם ישירות מהשרתים שלכם. הירשמו כדי לעקוב אחר עדכונים ב-Player FM, או הדביקו את כתובת העדכונים באפליקציות פודקאסט אחרות.
This past Saturday, I attended a trading event here in Chicago put on by TD Ameritrade. The event was about a mile away from where I live. One thing I've learned is that you need to be humble and willing to keep learning no matter what level you're at. While walking around the event, I heard one of the experts tell one of the investors, "it's about limiting your bad trades" in response to his question. It was tough to bite my tongue, but I did. While this may sound like good advice and something you've heard before, I don't think the guy explained it well enough. Of course, we would all love to erase our bad trades or investments. If we knew they would lose money after the fact, we would have avoided them. However, life doesn't work that way. So many teach investors to focus on eliminating the losing trades, which is entirely the wrong thing to focus on. It's like telling a professional basketball, don't miss the basket. No shit, Sherlock! I refer to this as playing not to lose instead of playing to win, which so many traders and investors do. As I said before, I can show you how you can have 90% winning options trades. I can also show you how to have high reward options trades with only 10% chance of success. However, that doesn't mean you'll be able to make money. Probabilities don't equal profitability. It's part of the equation, but it's about being strategic, disciplined and managing risk before and after entry. When you're not consistent with your approach, you will see inconsistent results which are due to mistakes. Losing trades are not avoidable; they should be embraced. That is why focusing on predetermined outcomes can provide context on expectations, which means you have an idea on the probability of success a trade could have and also an expectation of a possible loss. You manage your max loss before entry, not during. It's easy to have a high winning percentage trading options, but it's hard to keep your ego in check and stay consistent to avoid the mistakes that end up costing you big time. I wrote a book that focuses on this very topic with specifics on how you can start to become more consistent and predictable with results. If you haven't picked it up yet, what are you waiting for? To your wealth, freedom and options! Joshua Belanger

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