I grew up in the Northwest corner of Wyoming and as such loved the outdoors. One of my favorite activities was fishing, especially fly fishing. I used to fly fish in Yellowstone park quite regularly and loved the challenge of landing a huge fish with the small hook disguised as a fly. The problem I had though was that I could go through 30 different flies trying to find the one that would work. Fly fishing was not an easy skill to learn and at times was very frustrating. Over the years, I learned patience from this process because I knew if I found the right fly and performed each cast skillfully that I’d land the big one.
When I first started trading I had a similar frustration at times as I moved from one strategy to another trying to land the big one. After several failed attempts, I found what works for me and haven’t ventured far from that. I still have to exercise patience though as sometimes I feel like getting in the market, even though, my system tells me not to.
As a premium seller I am an oddsmaker of sorts and when you have to pay out it hurts, financially and mentally. Every option cycle I’m in the market selling that low probability chance that the market will make it to a certain level by expiration. At times, it’s gut wrenching while at other times I find myself extremely bored. I find myself wanting to trade something, anything, and then I remember to exercise patience and move on. At times, I have to remove myself physically from the office and go do something else.
Yes, cash is a position, and you can keep out of the markets if you’re not comfortable shorting (buy a put for heaven’s sake) or don’t know how. My point is that if you are trading to trade, your odds of success are low. Stop! It’s been rather easy lately to make a decent return trading as it seemed that every dip was bought and stocks didn’t know how to make a lower low. The market has changed recently, and it may be some time before solid opportunities present themselves again. Protect your trading capital so when a highly probable trade comes along you can act upon it.