Have you ever felt that your emotions take over when you are options trading? You get anxious, you feel unsure, you hold to your losers, and your day ends up ruined? Those are valid feelings and you are not alone in the process. I, too, experienced this emotions when option trading; just the thought of opening a contract and watching the charts gave me anxiety, but after many yers feeling this way, after many courses and mentorships I understood that I have control over those emotions, and that I have to be consistent and follow each and every steps I have set up for myself.
Now, I encourage you to see what works for you, to try different techniques and see how it makes you feel… But remember, YOU are the only one able to control your emotions and YOU are the only person in the world capable to make this change. So let’s get started!
1. HAVE A PLAN
Having a plan is key element in controlling your emotions. When you enter a trade with a plan in place you are less likely to let your emotions make the decisions for yourself, its like if you have program your computer to perform certain task for you depending on your criteria. Understanding that having a plan consist of different components:
- Know your entry
Make sure when you are selecting your entry, everything is in confluence with what you are looking for. For example, your entry point could be when the market has a clear trend, you are at a key level, and you have a signal. If all three elements don’t align with each other then it means that it is not the perfect time to enter. You want as many confirmation as possible to ensure that you are making the right decision.
- Know your profit target/stop loss
This is by far one of the most important element to follow. Knowing your profit target and your stop loss BEFORE you enter any trade. Understanding this will help you to minimize emotional decisions. It is important to not let your winners become losers and your losers to expire worthless. Take your profit when it hit your target, cut your losers with it reached your stop loss. Understand, the market does not move the way you want it to move, the market moves the way the market will move and holding into your loses will make you burn your trading account, specially with a small account.
