I’m a serial tinkerer with trading strategies, particularly in index options trading. In most cases, I’ll start with a simple concept and iterate from lessons learned along the way.
Each iteration is done with good intentions as I’m finding holes in the process and trying to fill them as I go along. I’m like a deckhand moving around the boat, patching small leaks with spackle.
This goes on for a while. And it happens slowly. But like compound interest, it grows stealthily… then mightily.
Unfortunately, I too often find myself in a situation where my PnL is going the wrong way and I’m suddenly handcuffed because I’ve created too many patchwork rules that are doing nothing now but causing confusion and slowing me down.
Then, frustration sets in.
The only thing that breaks this cycle is hitting the reset button: Going to cash and finding a clean slate.
It might not always be the optimal solution. And it certainly doesn’t always feel good – especially when locking in a loss of my trading capital.
But once the smoke has cleared, serenity and clarity set in. I can then get back to basics and try again. This time better, thanks to the lessons learned.
I need to remind myself it’s ok to hit the reset button – even multiple times, if needed.
When in doubt, get out. The sooner the better.
There’s no better way to have the best opportunity to make smarter decisions. I might not win the latest sprint, but I’ll be in a better position for winning the marathon.
Trade ’em Well,
Chief Options Strategist
All Star Charts, Technical Analysis Research