Hey Rookie Bloggers!

In this week’s blog, we are going to talk about something that every rookie looks for when starting down the path of trading.

When most people start trading they tend to look for a holy grail or perhaps a set of instructions that are going to bring them large bucks!  This is a completely natural human tendency.  Here comes the cold water!!!  This is not how trading works.  There is nothing out there in the ether that is going to shower oneself with benjamins without first putting in the hard work.  Some folks think that trading is similar to cooking.  Similar to cooking in the fact that if you have the right recipe that sooner or later you will become the master chef.    This is only a partial truth.  Successful trading does require the right recipe and it does require some cooking skills.  The caveat is that most folks think the right recipe is a new strategy or a better mousetrap.  As consumers, we sometimes get conned into thinking that the more complex the formula the better the design.  This is not always true and in trading is almost never true.  There was a philosopher named William of Ockham and he basically came to the conclusion that the simplest answer is often the most correct answer and this can be true of trading.  In trading there are a tonne of different types of trades that can be done, there are weighted iron butterflies and double diagonal calendars and all sorts of other trades that can be dreamed up and these are definitely useful trades but by the same token there are cashflow strategies like naked puts and covered calls that are simple and yet these trades can often bring in as good of results as those other types of complex trades.  This is often a message that is lost on budding traders because they believe that the more complex trade is going to bring them greater success.  Now sometimes those complex trades do bring riches but only if you have a clear understanding of when and where to use them and what market conditions that they thrive under.  It is the same for the simple trades they all have their time and place.  Knowing this alone will not bring those aforementioned riches we talked about, this is like having the ingredients for the recipe but not understanding what goes together and when. This is where the rest of the recipe for good trading comes in.  Trading is one part strategy and two parts discipline, dedication, and persistence.  It is not until we have all these things in our respective repertoires that we can truly become a master chef of trading.  You will notice that I said one part strategy and two parts discipline and I mentioned this because of the importance of the second part. If one wishes to become a truly successful trader then you need to spend twice as much time and energy developing good habits of discipline and dedication than you do looking for that holy grail or that different set of instructions to bring those big bucks!

Check out the video below for an update on our MRK trade,

Happy Trading!!

Happy Trading!