Progress, Not Perfection
Let’s be clear. Actively buying and selling
stocks, options, or futures without a strategy
is a great way to run up commission costs
and drive your account value to zero. So, the
goal is not blanket buying and selling. The
goal is thinking about how to become more
engaged with the market. It’s about implementing an investment strategy consistently,
Say you want to become a better golfer.
You could read magazines, watch videos, or
try out those cool electronic simulators. But
still, there’s no substitute for feeling the texture of a course, driving and putting in the
TAKE AC TION:
To learn more about
the Position Statement
in thinkorswim, watch
the video at
DID YOU PUT UP A TRADE TODAY?
If not, did you at least know how your positions were doing? The term “trading” doesn’t just refer to placing an
order. Think of a market maker who “trades” on the floor.
She may have spent most of the day waiting for an order
to come in. But while she’s waiting, she’s well aware of her
open positions and how key futures like /ES, /NQ, and
/ZB are performing. She’s fully engaged, and that’s also
what trading is about. The more you’re aware of the various moving parts, the sharper and more focused you’ll be.
sun and rain, dealing with messy sand traps,
and the other influences that will shape and
deepen your game. Ultimately, you can only
get great in real time.
If you’re active in the market, it doesn’t
mean you’re guaranteed profit. You must
still deal with risk and loss no matter how
much time you have on the trading “course.”
The point is, you start to build critical habits.
You deal with the ups and downs the market
throws at you. You swing at a few trades.
Some you hit. Some you miss.
Renegotiating Market Sand Traps
Say you’re hitting your engagement marks—
monitoring your positions, your P/L, current
prices, account value, and more. You may
even understand and employ certain strategies like verticals, covered calls, iron condors,
and so on. You know how these strategies
make and lose money. But maybe your account isn’t generating the returns you’d like
to see. How do you improve your results?
Consider four scenarios that may relate to
your lower returns and how they can be
rectified with active engagement.
A WINNING TRADE TURNS INTO A LOSER
ANALYSIS. We’ve all been there, and it’s
discouraging. It’s like shooting a great 16 holes
and beating your handicap, only to shank and
slice right into the water traps in the last two.
Of course, there’s no foolproof strategy to
make sure a winning trade never loses. But un-
like those water traps, in the market you may
be able to free yourself from those pitfalls.
AC TIONS. Make it a habit to log into
your account through the TD Ameritrade
thinkorswim® platform and check your
positions every day. Look at the daily P/L of
your positions by going to the Monitor tab
in the Position Statement section. Above
all, know which positions are winning and
losing. If you have a trade on with a profit,
consider using a stop market or stop limit
order with a trigger
price that may help
protect some of
that profit if the
trade falters. A stop
order is no absolute
guarantee of profit,
and you can incur
commissions. But it
could unwind some
of the position and prevent a winner from
becoming a loser.
LET A SMALL LOSING TRADE TURN BIGGER
ANALYSIS. Think deer in the headlights. A
losing trade in your Position Statement will
surely get your attention, but it could make
you freeze—just like how you stare at the golf
ball you just hit as it drifts away from where
you want it to go. Helpless. But engagement
makes a difference.
AC TIONS. For starters, acknowledge the
loss. It’s real. It’s happening. Can you think
of something that’ll reduce the loss without adding to the risk? If you are an options
trader, is there a call you can sell against long
stock to reduce the stock’s breakeven point?
If it’s an iron condor that’s losing because the
stock has dropped below its short put strike,
could you roll the short call vertical side
to lower strikes to collect more credit, and
potentially reduce the iron
Be creative. You don’t
necessarily want to add to a
losing position. Check out the
Trade page on the thinkor-
swim® platform and look at
the options available for that
stock or index. Is there an options strategy in
the same expiration as the position, or even