Expanding Your Comfort Zone in Trading
If you're timid due to a lack of confidence, read on.
Dr. Brett Steenbarger at TraderFeed explains that sometimes anxiety points to our growth:
We're all most comfortable with what lies within our comfort zones, of course. Once we leave the comfort zone, we experience anxiety and uncertainty.
But we cannot grow if we forever stay in comfort. We need a high enough coefficient of experience to ensure that we'll be anxious...always stretching ourselves a bit farther than comes easily or naturally.
So often traders look to me to reduce their anxiety.
But sometimes the best strategy is to follow your anxiety and take that ride beyond the comfort zone.
Dr. Brett's advice is sound, and it's directed at timid traders (timid and conservative aren't synonymous).
It doesn't apply to option traders who are holding risky positions. The discomfort that results from too much risk is a warning to be heeded. If your position has moved beyond the boundaries of your zone, please take prudent action and re-enter the zone.
If you're a timid trader who never wants to lose money -- or at least lose as little as possible as seldom as possible -- then this advice isn't for you either.
But if you're timid due to a lack of confidence, pay attention. No one is suggesting that you move from trading one-lots to trading 20, but you can move to 2-lots.
Please understand: This assumes you have the education and experience to become a bit more aggressive. It doesn't mean "full steam ahead" when you're not confident that you understand what you're doing.
If you sell put spreads that are very FOTM (delta of short is 3-4) that's not only timid, it's a poor strategy when the premium is very small. Consider taking baby steps (delta 6). If you manage that position well, you'll earn more money. If that baby step makes you uncomfortable, then try a smaller baby step.
One more reminder: The good doctor's advice is for traders, not investors. It's directly targeted to day traders. But if you're interested in getting more involved with the markets (and its inherent risk), this advice is applicable to you.
If you're looking to invest with ETFs, take a FREE 14 day trial to Minyanville's Grail ETF & Equity Investor newsletter by Ron Coby & Denny Lamson as they provide strategies across numerous sectors using ETFs and find early trend changes. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter