In today’s option trading blog I want relect back on my first days as a pro. I remember sitting in front of the screen and wondering – now what? Where do I start?
Successful traders have a systematic decision-making approach that they have refined. They follow the same steps time after time. Some have quantitative earnings models that end with a physical tour of the company. Others have software programs that identify pricing relationships and disparities. Others might have technical analysis filters that target inflection points. The list is endless, but ultimately, they all have a system. A standardized routine with a well defined beginning, middle and end exists.
Before you start your quest, take inventory and identify your trading style and expertise. Look closely at your successes and failures. What characteristics are common to all of the good trades? How about the bad trades? This process will help you recognize situations to seek and avoid. A trade log can help you with this step. At very least look at an end-of-month statement and try to recreate the scene. Once you “know” yourself the path will become clearer a sense of direction will result. You will be able to identify the required tools. Some may exist, some may need to be built. Here’s an example.