How to Manage Your Portfolio for Attractive Gains

This pertains to trades that you are in, not trades that you are about to enter. Consistency and discipline will show up on your P&L. That’s the numerical representation…that’s alpha.

If you see a chart that comes through you Twitter or StockTwits feed, delete it. It’s not helpful, insightful, although it might be entertaining. You don’t have the emotional makeup of the person sending it, so it’s irrelevant to you. It’s not like you’re going to put a trade on because you see it on social media.

Worse, if there are overlays on it, you might get a sense that they are important.

How do you handle your winners?

Do you feel enough anxiety to want to take it out of your portfolio and get rid of it?

Are you afraid you’re going to lose it?

Those are emotional issues, not financial ones. These emotions might appear for you whether you’re a discretionary chart reader or system trader.

Do you have the willingness to love it and let it grow up and develop into something amazing?

Do you become overbearing and stalk the trade and keep it on your monitor all day?

When the vol expands, you can trim the position so that you have the same percentage risk that you did when you added the position to your portfolio, or when you added your last risk unit.

When vol expands, you can cut the number of contracts per risk unit.

Allocators are looking at your daily equity volatility and in today’s environment, they are looking for low-vol gains.

Two Free Offers

Tony Saliba’s Options Playbook

Inner Voice of Trading Audiobook

Subscribe

subscribe on itunes

2 Reasons for Poor Trading and How to Guarantee Improvement

Practice Having Discipline

Like a baseball pitcher, you need to develop feel and consistency. That comes with a lot of practice and determination.

But practicing the right way. You have to be present.

That means focus and discipline.

You need to do the same thing over and over in order to be good an anything and that’s especially true for trading.

In trading, that means you have to start with good habits, trade positive expected value trades, and consistently replicate that process.

Stick to trading one strategy until you have it honed.

It can be boring because your mind will make you think there needs to be something more.

If you have a smaller account, you might think you are relegated to penny stocks or fallen angels.

I would not do that because the emphasis is on making lots of transactions. Unless you are an HFT firm, the number of transactions works against you.

Stay in your winners for as long as you can. They go a long way to ensure you are successful or are becoming a successful trader.

What I would do if I had a small account or was underfunded, is to either trade commodity spreads or option strategies.

You can create hedges with either strategy and limit your risk while putting the odds in your favor.

The margin requirements are also smaller so you don’t have to tie up a great deal of your trading equity in one trade.

Lack of discipline and consistency will create erratic performance and a poor track record.

Two Free Offers

Tony Saliba’s Options Playbook

Inner Voice of Trading Audiobook

Subscribe

subscribe on itunes

How to Achieve Your Trading Edge with Discipline

The benefits of running a system are multi-fold. Once you trust your model, you can go deep…

Once it’s live and trading, you will learn about the markets, your model itself, and most importantly, yourself.

You have to be there and be conscious of all that’s around you. A good trader will not become too euphoric in good times (they are what they are) nor too despondent during the bad times (as long as they are ‘in model’).

It’s possible to have worse results than what you saw in the Monte Carlo simulations. That requires a great deal of discipline, for it’s the daily discipline that will help you express your edge…every day, every week, and every month.

It’s the consistency to be disciplined that will show up on your P&L.

So you can outperform a great lot of traders, even some pros, if you can be consistent with your daily discipline and not wavering from it.

Free Offers

Inner Voice of Trading Audiobook

Tony Saliba’s Options Trading Playbook

Subscribe

subscribe on itunes

How to Live with Uncertainty and Imperfect Information

We traders are people who have to live with uncertainty and make decisions with imperfect information. No way around it. We willingly decide to take this lifestyle on. We play when the odds are in our favor. We play a game of expectation, not accuracy.

Most people can’t live with the uncertainly. High net worth investors like John Q. Public and his “Public Pensions” will pay you handsomely to make these decisions under such conditions. And, as long as you are consistent they will continue to do so for many years.

You can’t do this from the beach or in flip-flops. That’s Tim Ferriss stuff. If you want to be a beach bum, go for it. This is not for you. I’m speaking to the pro.

You have to be dressed as if your best client can walk through the front door at any time. Looking like a frat boy is not how you install confidence and you’re not going to trade $2,000 into millions. You actually have better odds with scratchers…

Tiger Woods played his best golf while his personal life was a big lie. Think about the emotional system he needed to play his “game.”

When his personal life blew up, so did his game. They were “perfect compliments.” It’s as if he needed the secrecy and his clandestine behavior to play at a high level consistently. Maybe that’s how he got “in the zone.”

That’s how his emotional model served him. How is yours serving you?

Nothing should get in the way of you feeling happy and trading. If trading is making you feel bad, you can quit trading.

Go for a quality, happy life first. Put a protective stop on your trading career to preserve your happiness. Driving yourself nuts is not worth it.

Free Offers

Inner Voice of Trading Audiobook

Tony Saliba’s Options Trading Playbook

Subscribe

subscribe on itunes

Why Fear Should Not Dominate Your Trading

Setting Price Targets is fear-based behavior on your part and you don’t want to let fear dominate your trading.

Setting price targets is about your fear, not greed. You set a price target so that you seem “reasonable” with yourself in terms of what you want from the trade. You should do that with your protective stops, not your winners. I’ve never set a Sell Limit order on my long positions…

Why would we want to set our sights so low…?

You need to start thinking bigger to allow your trades go to 20-1 in a reward-to-risk ratio. Let the market tell you where the bigger move is over. (See Chapter 2 “Surrender” in “Inner Voice of Trading” – free below).

If you can’t imagining it happening, it won’t happen for you because your behavior will predict the outcome.

You may have been coached wrong or have been instructed in a small-minded fashion in setting your sights to low.

It’s your fear that gets you out of the trade too early. Only small traders are looking short-term. Let the HFT guys chop them up, not you.

Join the big boys and let the institutions push your trades further into profitability. Use the market forces against competition for your greater profits, like in judo.

Whatever trading edge you think you have, you cut it at the knees by taking profits too early.

Free Offers

Inner Voice of Trading Audiobook

Tony Saliba’s Options Trading Playbook

Subscribe

subscribe on itunes