Hey All, we are back to the series of blogs on being prepared for trading. We are at the point where we are looking at specific types of trades and going over the checklist of items we need to take into account before we enter a trade. Trading is not as easy as pushing buttons, it takes patience and planning and dedication.
There is a saying on Wall Street…” any fool can enter a trade but it takes a real pro to exit a trade.” The pro exits a trade whether it is at a profit or a loss because that what their plan says to do. Consummate professionals ensure that all details are considered before placing their capital at risk because the cold hard reality of trading is that it is a game of risk management and only the ones who keep the most win!
Last week we did a video going over the nuances of the covered call, a very simple strategy but as you could see from the video there are many things that need to be thought through before jumping into the trade. I liken this process to that of a master chess player. The likes of Bobby Fischer and Garry Kasparov think so many moves ahead that they are literally ready for anything their opponents can throw at them. My hope for you is that you get to this stage in your trading, you have anticipated everything that can happen and you have made plans to address those very things in a manner that will give you the best possible chance of coming out on top!
This week I want to talk about another simple type trade that I am certain a lot of you have done or will be doing in the near future. I am talking about credit spreads. These theta positive trades are some of the most popular trade strategies out there, however, as easy as they are they can be frought with danger if you do not give them the attention they deserve.
So check out this weeks video and see if there is something that you can add to your credit spread game to increase your success rate and ultimately your zen-like happiness when doing these types of trades.
Remember planning is production and our jobs as traders is to be as productive as possible!