What if there was a way to reduce the pressures of trading?
It’s a question that I’ve been asking myself a lot lately…
Trying to find balance between work, family, and trading isn’t easy.
Even for a successful trader like myself, I find myself overwhelmed at times.
However, I make it a point to try to shake off those feelings as soon as I sense them.
In fact, when I decided to focus on these five stress reducers…my decision making improved 10-fold.
Here’s what I zero’d in on.
- Limiting the stocks I trade
- Picking option contracts with less directional risk
- Employing more credit spreads
- Creating a weekly trading plan
- Taking less trades per week (If you want to learn how to trade less and make more, make sure to join tomorrow live at 2 PM ET for an exclusive live training)
Some of these I’ve talked about before. Others are new to me.
As I walk through each of these concepts, think about whether they work for you and how to apply them to your trading.
Believe it or not, some months I only trade a dozen companies.
Even on the same stock, I might find setups on multiple timeframes or pullbacks.
As an options trader, there are maybe a few hundred stocks even worth my time. The rest either don’t have options or they’re too illiquid.
My TPS Setups work best with charts near all-time highs, high short floats, and strong uptrends.
The number of companies this applies to at any time is maybe 30-50.
From there, I simply pick the ones that I like best.
You might think that would cost me trade opportunities.
Yet, I found that I’m more likely to find setups and better ones when I narrow my focus.
Take Stitch Fix for example.
With one stock, I entered multiple plays that gave me one of my best trades ever.
*See disclaimer below
2) Picking option contracts with less extrinsic risk
When I trade in my LottoX service, I go with contracts that expire the current week or the following one.
Because my setups are on lower time-frames like the 15-minute or 30-minute chart.
And as you probably know, the closer I get to expiration, the faster the extrinsic value decays from an option’s price.
One way I combat this is by picking up options that are further in-the-money.
You see, an option that is in-the-money has both intrinsic and extrinsic value, wheres at or out-of-the-money options have only extrinsic value.
As a quick reminder, intrinsic value is how much an option is in-the-money based on the current stock price. Extrinsic value is whatever is left over.
For example, if I own a $100 call on Apple and the stock trades at $110, there is $10 of intrinsic value built into the price of that option. Everything else is extrinsic value.
While picking options that are further in-the-moeny reduces the extrinsic value, they will cost more.
So, it’s a tradeoff I have to balance.
3) Employing more credit spreads
Another way I can make my life easier is with credit spreads.
Credit spreads are option plays that have both a defined risk and reward, unlike long options that have defined risk and unlimited reward.
The main difference is I become an option seller when I do credit spreads.
As an option seller, every day that passes puts money in my pocket, whereas owning options costs me money.
4) Creating a weekly trading plan
Trading plans are a must for any successful trader.
I not only put together one for the week but also each day.
Every morning, I lay out my trading plans, which stocks I’m looking at, why, how I plan to play them…everything I need to cut down on my decision making in real-time.
Here’s a snippet from one of my morning trading plans that I send out to LottoX members.
You can see how I review the positions I have, what I expect for the day and the week, as well as how I plan to structure my trades going forward.
Do yourself a favor – Take 20 minutes before the next trading day and write down what you see in the market and what you expect. Try to plan out one trade before the day starts.
You might be surprised how much easier it makes things.
5) Taking less trades per week
One of the first things I tell new traders that struggle is to limit their trading.
They seem to think that they need to be in the market 24/7.
That’s simply not true.
Some weeks I only take 2-3 trades and I do just fine.
In fact, I’ve been able to do just one trade per week when markets are slow.
Believe it or not, that’s when some of my best trading happens.
That’s why I designed a new service for traders – Double Down.
Members get two of my top picks per week, trade plan and all.
It’s a fantastic way to learn how to trade with laser focus.