Lose the Loser's Mentality
Not every day will go your way. This wasn't a great earnings morning in terms of trades, but not a complete disaster. I figure on a day like today, the best thing to do is step away from the trades, take the overall net losses on closing out all four trades and look forward while the net impact is not much more than where the market is in the red.
Some of those trades may have been hard to visualize psychologically. When someone sees an option trade or combination position that totals $7, $8 or even $12, the first thought is usually, "Man, that is an expensive trade." This is usually followed by, "I don't want to do that. I could get crushed and lose a ton of money." Yes, you could lose a ton of money, but only if your position involves a ton of money. If you can't get past the psychological barrier of price, it will always be a glaring weakness for your trading and investing. The $8 or $10 premium is no different than the $0.50 premium. What matters is how much you risk on a position. Buying 20 calls at $0.50 is risking the same amount of money as buying one call with a $10 premium. Ironically, sometimes those 20 calls could come with a significantly higher risk of losing money....237 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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