Let's face it...as options traders we are in the business of making money, growing capital and riding trends. However, what if there is a sea change in those trends? How capable are you of holding onto your funds, hence PPT (protecting precious capital)? There is a time for action, there is a time for inaction. As I have traded for many years there is a constant reminder to be rational and sensible in times of panic and euphoria. Don't get too greedy, don't get too fearful. We maneuver around markets to find the best setups and take advantage of the momentum that can move briskly in our favor. When that advantage is taken away, you have but ONE option for survival: C A S H.
Being in cash is a position, it's a decision and it keeps you around for another day. The whipsaws we've seen lately as the markets try and figure out Europe, Goldman and other issues have put us on the sidelines for now, as this is not an environment to be playing in. Some of you may enjoy this action; heck, you might have just as much fun dodging oncoming traffic. For me, I'll wait until there is some certainty and the fear subsides, or increases. This waiting will increase my confidence when we step into the game again, knowing full well that the market is accommodating to my trading system and will not be pushed around or running in place.
Being in cash is a position, it's a decision and it keeps you around for another day. The whipsaws we've seen lately as the markets try and figure out Europe, Goldman and other issues have put us on the sidelines for now, as this is not an environment to be playing in. Some of you may enjoy this action; heck, you might have just as much fun dodging oncoming traffic. For me, I'll wait until there is some certainty and the fear subsides, or increases. This waiting will increase my confidence when we step into the game again, knowing full well that the market is accommodating to my trading system and will not be pushed around or running in place.
Comments (1)
Subscribe to this comment's feed
Write comment
You must be logged in to post a comment. Please register if you do not have an account yet.
Very good point Bob, as protecting your capital and not getting over zealous is what can make profitable traders. These times also go to show that a trader needs to be diverse as well as disciplined. As for me and my "business"; if I were just trading directionally right now I would be hurting. At the same time going on and learning income trades with long and short vega strategies has allowed me to be diverse and also place trades in the closing half-hour and avoiding that intraday whipsawing that is going on. This also helps myself mentally as well as not seeing those huge swings in my capital.