Hi Trader,
Any questions about the class so far?
The feedback from my test (giving it away for free) has been very positive and I'm hoping you're experiencing the same thing!
I also wanted to make sure you downloaded your slide deck to go along with the class...and actually it's the FULL Slide Deck for all the classes.
Better to have you in early as a preview of the classes in case you wanted to subscribe, or what you can expect from TotalTheo if you want to be part of that with us.
Ok here's your FULL Slide Deck Download
Let's talk about playing successful DEFENSE during times of high volatility.
Identifying personal breaking points and risks is one of the most overlooked and often most important aspects of asset protection.
Since my class covered the importance of understanding the "expected move", I'm going to pick up from there and put the rubber to the road.
The first part of defense if primarily an internalized one. The mental game is the key as trading, and especially trading options, is a game of masters chess. There are seemingly endless moves and counters, but in the end there are right moves and wrong moves. And going into a volatile market recklessly will end in financial pain and possibly ruin.
So get your head straight knowing it's going to be a focused task to win.
Next, you need to know what you're willing and able to lose. Because we studied the expected move, we can determine what is the actual financial pain you can or cannot tolerate. Knowing this information for yourself will help you play successful defense against volatile markets in a way that keeps you from blowing out, and ensures you'll always be able to stay 'in the game'.
Because if you're out of the game (financially) then you're out of the game totally. Playing defense wins games.
In class I shared my exact 5 step financial discovery plan that each student has to go through in order to determine their (or your) particular level of risk you're willing to take with each trade. Step one is measuring your risk on a product of interest like a stock or eft that offers you options. Second is for you to solve for the 30 day expected move on the product you're about to engage with. Next you'll want to multiply the number of shares you're looking to trade on the expected move calculation (again fully explained in class).
Next you'll want to do the fun part...calculating the extremes of a move! This is where you envision what you'll do with your earnings from a well placed trade. But this is also where the downside is also calculated so you can physically see what the worst possible outcome would be if the trade went against you. During this time of calculations you'll want to throw in another 'number'...how much you're willing to put into a trade, the position size. While you 'calculate' consider that it's more of a test of 'are you ok to risk this much'?
As I discussed in class (your membership details are in my first email to you), there's a reason they call it puking. It's that feeling that you're in too deep...you've gone too far...and now you're ill.
But by knowing your personal threshold for pain will ensure you rarely puke and more often than not stay in the black.
Now, it's not all defense...tomorrow let's talk about making money in a volatile market!
Because that's where we are, and that's what we're focused on.
Warm Regards,
Don Kaufman
Chief Market Strategist
TheoTRADE
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