Express Yourself

Most traders fall into bulls or bears, meaning, they understand that trading is about expressing a market view on a financial instrument directionally. Those are micro decisions that can hang up traders at every level.

You can buy things that you think will go up. You can short things that you think will go down.

You can also make simple bullish directional trades with options by buying calls and selling puts.

You can make simple bearish directional trades with options by selling calls and buying puts.

Taking it a step further, you can express your ideas with multiple options.

You can underwrite the cost of a directional call by selling another one against it, and do the same with puts.

You can offset the risk of a short naked option position by hedging with one that you buy.

You can also think of expressing your ideas in terms of relative value, that is, one instrument’s value to another.

You can execute this in equities by trading pairs (1 long / 1 short) and by trading inter- or intra-commodity spreads.

On a macro level, you can handle these decisions with a mechanized system or with by discretion. Both are valid.

All have their own reward and risk tradeoffs.

Worse, the indecision and lack of confidence in yourself will shut you down indefinitely.

“Indecision” and “lack of confidence” are emotional issues and I discuss them in my book, The Inner Voice of Trading.

So the question I have for you is, which combination of macro and micro is the best manner of expression for you?

If you don’t know or a stuck trying to figure it out, let’s chat and see if my coaching or mentoring could help.


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