I'll have an exciting announcement: Monday, Feb 1, 2010
From Dr. Brett Steenbarger @ TraderFeed:
Sometimes anxiety points to our growth.
all most comfortable with what lies within our comfort zones, of
course. Once we leave the comfort zone, we experience anxiety and
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
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 to timid traders (timid and conservative are not synonymous).
It does not 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 are a timid trader who never wants to lose money – or at least lose as little as possible as seldom as possible – then this advice is not for you either.
But if you are 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 does not mean 'full steam ahead' when you are not confident that you understand what you are 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 will 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 are interested in getting more involved with the markets (and its inherent risk), this advice is applicable to you.