Finding Your Conviction During Max Volatility

Finding Your Conviction When $hit Hits The Fan

Finding your conviction in the stock market can be as challenging as choosing an emojis to describe your investment strategy. But worry not, fellow traders. We've got your back!

HOUSE NOTES

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WHERE DOES CONVICTION COME FROM?

Conviction in trading is driven by research, backtesting, and a comprehensive understanding of the financial instruments being traded. Conviction doesn’t happen at the snap of a finger or remain static. As the market works through its cycles, a trader’s confidence grows with familiarity or declines with doubt and uncertainty.

It is essential to understand that the market regularly cycles, and no strategy can guarantee complete protection against occasional setbacks. Experienced traders acknowledge this fact and are better equipped to handle their emotions and avoid impulsive decisions that can harm their long-term success.

To maintain confidence during market fluctuations, traders continuously learn and adapt their strategies based on new information and insights. They remain open to refining their approaches and consider the feedback received from their trades to make informed adjustments.

Furthermore, managing risk is crucial for traders to maintain their confidence. By controlling position sizes and having an exit plan for both profits and losses, traders can reduce the impact of adverse market movements on their overall portfolio.

TOP RISK MANAGEMENT TIPS WE APPLY TO TRADING

• You enter long in-demand zones, short near-supply zone

• If you are trading short-term waves, ALWAYS expect 0.

  • You will never oversize a position if you expect each option contract to go to zero.

• Maintain emotional discipline

• Enter the trade half size and wait to add full size upon confirmation

• Rolling up on your option contract

  • If I buy a call option for $150 and it goes to $300, I take my $150 profit and use $50 to enter a further out-the-money call option.

  • This keeps me in profit but still in the trade, assuming continuation will occur.

If the rolling up and down option strategy made zero sense, enroll below to access our advanced options trading E-book released August 1st, 2023.

Many risk management tips are dependent on the trading instrument. How you manage risk with options is slightly different from futures and equities.

If an option contract is .50 to 1.00, often, there may not be a need for a stop loss order. However, for equity traders, your downside risk is unlimited; therefore, a stop-loss strategy is vital.

TO SUMMARIZE

A trader's conviction evolves with experience, research, and adaptation to changing market conditions. While market cycles can challenge this conviction, maintaining a disciplined approach and confidence in well-tested strategies can lead to more consistent success in the dynamic trading world.

THE STOCK MARKET WEEKLY TRADING PLAN

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  • $TSLA $MSFT $ALGN $AMC $SQ $PLTR $AAPL

  • FOMC

  • Turning date

  • My Conviction

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