That is a question we’ve all had, and I receive
several times a week.
I remember asking myself this the first time after
seeing the calls I bought the day before drop to a
90% loss on my first trade.
It went to become a max loss that wiped out my
small $2,000.00 account at the time.
Forward to today after hundreds of thousands of
trades, research and experience, I can confidently
provide the right answer to you.
That answer is, doing nothing is better than doing
The reason why is because options allow you to
know your max loss and expectations before entering
a position, which is why it’s a better investing
instrument than stock.
Most people think they can control their risk
after opening a position.
That’s not true because anything can happen, such
as a flash crash.
Stop losses are your enemy because people don’t
let their position play out or understand the
probability getting stopped out before hitting
their ideal profit target.
The only way you can control risk is before entry.
All options expire, so you have an idea of what
the worst case scenario will be with a loss and in
what time frame.
It’s more important to provide the position as
much duration as possible to let the odds play
If you prepare for the worst case scenario with
position sizing, you’re prepared and can just
focus on putting new trades and managing winners.
Even if you have a max loser, the market will
clear the losing trades out.
Being consistent is the key to long-term success
and the more variables you need to decide on, the
more inconsistent you will become.
That is why keeping your position size small,
focus on high probability outcomes, adding as many
trades as market conditions allow for your
approach, use a mix of undefined and defined risk
trades, managing winning trades at 50% and letting
losers be losers are the key to success.
It’s that simple!
If you’re still struggling to be consistent
trading options and want a simple and easy weekly
approach, this course here will help you.
To your wealth, freedom and options!