I strongly believe that
millions of individual investors can benefit by adopting conservative option
strategies. Yet we all know that options
are not for everyone. Thus, the obvious
If options are not for everyone, how can you
tell if you are well-suited to trade options?
Please understand that being
a trader and being an investor are not the same. But there are overlapping skills required to
be successful at either. For example, no
one should enter into a trade out of boredom. If a situation ‘almost’ meets your requirements for a trade, the winning
trader and investor know that’s not good enough. It’s important to enter a position when you
are comfortable with your prospects of earning a profit, and that means the
trade meets or exceeds your minimum requirements. Borderline trades are simply not good enough.
There are plenty of other
examples, such as willingness to admit a trade is not working as expected, and
taking a loss, rather than holding – and hoping for good luck.
The purpose of today’s blog
is to point you in the direction of two professionals who offer insight on who
should NOT be a trader.
Dr. Brett Steenbarger, psychologist
and trading coach offers
“[If] you don't like
taking risks and you're not especially disciplined in your work and lifestyle.
You probably shouldn't be a trader in the financial markets.”
Well, you've just touched the third rail of coaching. To even intimate the
above is to incur the wrath of every losing trader who seeks advice that would
justify a continuation of his ruinous path”
Dr. Bruce Hong is a
physician/trader. In a recent blog,
he introduced this topic with:
“Who should I try to
dissuade from trading?" This is the list that I came up with. It is not
exhaustive. And some of my conclusions may be controversial”
If it turns out that you don’t
have the personality or discipline to be an active trader/investor, you may
still want to consider using conservative
option strategies to hedge your investment portfolio. If not, it may be better to turn over your
portfolio to professional money managers, such as those who operate very low
fee funds (index funds or ETFs).