72: Options Trade Adjustment - How To Unemotionally Adjust Trades That Don't Go Your Way

The Option Alpha Podcast

Kirk Du Plessis

Education, Options Trading, Trading, Investing, Stock Market, Business, Finance

4.8 • 1.2K Ratings

🗓️ 28 November 2016

⏱️ 25 minutes

🔗️ Recording | iTunes | RSS

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Summary

Show notes: http://optionalpha.com/show72 You've entered a new option trade with a high probability of success - but you also know that a 70% chance of success doesn't mean it's a sure thing. As soon as your order fills the stock starts to move against your position - just your luck right? And each subsequent day the stock continues to trend closer and closer to your strike prices, threatening your position. At this point, you're starting to get pretty emotional about the whole thing and don'...

Transcript

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0:00.0	You're listening to the Option Alpha Podcast from Option Alpha.com where we show you how to make
0:06.3	smarter trades learn how the stock market really works and generate consistent monthly
0:11.2	income. Now your host and head trader at
0:15.0	option alpha.com Kirk depluses.
0:17.0	Hey everyone this is Kirk here again at option alpha.com
0:22.0	working every single week to make this the most popular
0:24.9	investing podcast offered online because it's based on one thing and one thing only and that's helping
0:30.2	you guys make smarter trades. So again, thanks so much for tuning in today. Show number 72 today is going to be all about adjustment triggers.
0:38.8	Now one of the things that we often get a lot of questions on is how do I adjust my positions or more
0:45.2	specifically how do I know when to adjust positions because let's be honest it's
0:49.7	not as black and white as we all might think it is. There's a lot of different ways to adjust positions and we often talk about
0:58.0	being more patient than not patient and not being as aggressive in some cases and being really aggressive in other cases.
1:05.9	And so in today's show, I really want to try to lay the groundwork for how you can basically
1:11.3	set some triggers in advance in your trading platform and in your system
1:16.2	that you're developing for trading options to unemotionally adjust trades that don't go your way and develop a framework or a process that can help
1:25.5	give you clear guidelines on how to and when to adjust positions. Now the first
1:31.4	thing that I'll definitely say here as we get started is that you first have to remember two things about making adjustments to current positions.
1:40.0	The first point that I want to make even before I get into kind of like the rules and adjustment triggers is that most of your attention as a trader should be on the trade entry.
1:51.0	So most of your focus, your research, your analysis should be on trade entry,
1:57.9	meaning am I using the right strategy, am I setting it up for a high probability of success? Am I checking my position size?
2:06.0	Like those are the things that are really, really important.
2:09.0	It is more important to get that stuff right, meaning the trade entry, then it will ever be.
	...

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