What Does Commodity Option Trading Mean to Me?

pwohlstand — Sat, 02 Aug 2008 21:54:17 +0000

Here I’ve written some thoughts on commodity option trading, and what it means to me…I want to develop in the art of being a good trader; this means more than just making a bunch of money. I want to truly develop discipline and skill as a trader, and to constantly challenge myself to become a better trader. I believe that making a ton of money will naturally follow when you develop into being a good trader. Good trader=root; Tons of $$$=Fruit. I truly believe in the ”base hits” theory; enough base hits will eventually equal the home run. In other words, steady, consistent profit-taking when trading commodity options is more in line with sound trading principles (in my mind) than waiting on (and betting on) a “home run”. This helps me to avoid falling into the “jackpot mentality”, where you’re trying to play the markets like you would play the lottery. Any time a person approaches commodity options trading with a gambling, “fast-buck” mentality, they’ll see profits running in the opposite direction. Those who attempt to make a killing in the markets end up getting killed. I fully believe in being aware of (and respectful of) the power of leverage at all times. Leverage truly is a two-edged sword. You must treat it with respect, and never be presumptuous or arrogant about the markets, as if you can always predict their movements. I believe in maintaining the attitude of flexiblility, where even my most informed decisions about how I’m going to enter or exit a trade, could be wrong based on the market’s movements. I believe in using the widsom that God gave me to keep me from making a trading decision that would be thoroughly disatrous. I don’t think there’s any shame in (or even anything wrong with) taking a loss. I believe that taking a loss in trading commodity options can actually be part of a winning strategy. It’s stupid to commit to a trading idea once you realize you’re going the wrong direction. It’s like the guy who gets “pot committed” in poker; it’s hard for him to walk away because he has put so much money in already…so he continues betting (and bluffing) until the entire fantasy comes crashing down on him, when the final hand is played. No need to do any of that drama; you just have to be smart in commodity option trading, and know your risk levels, as well as know when to say “uncle” and throw in the towel. Live to trade commodity options another day.

Futures Options Trading » trade options

What Does Commodity Option Trading Mean to Me?