Papale on the Business of Trading

By Steve Papale

Admittedly I have not watched a ton of pro basketball since the Bulls had their run in the 90’s.  I have a running dialog with my 17 year old that Michael Jordan was the best ever to play the game.  Period.  However the other night I watched Stephen Curry  for the first time.  I now know what everyone else knows – this guy can flat out take over a game.  His 3 point shots look more like quick desperation shots but they hit their mark consistently.  In fact when he shot I expected them to go in.  Looking forward to the finals tonight.  LeBron v Steph should be fun to watch.

Traders must trade.  Sounds rather profound.  As traders, whether full time professionals or part timers looking for additional income, the only way to profit potentially is to be in the game, that is the market.  At DiscoverOptions we spend a significant amount of time working with students in developing a trading plan suited to his or her particular strengths and temperament.  So if you’re a trader trying to develop a trading plan what are some of the things you should take a hard look at?

First it may seem obvious but start with strategies that are tried and tested.  Be wary of the latest shiny object in the world of trading strategies.  If it sounds too good to be true it probably is.  Virtually all traders making 50+% per year returns year in and year out aren’t likely to be sharing their golden goose ideas with the public.    Chances are even if they did it is likely that barriers to entry whether it be technology, capital or even relationships would keep most of us out anyway.  That said there are profitable, time tested trading strategies that the rest of us can employ in our campaigns.

Next, consider your personal temperament.  Do you like to take risks or are you more conservative?  Do 10% drawdowns cause you to lose sleep or can you look past them?  Trading is in itself an inherently risky business but there are more or less conservative strategies that can be employed.  What about time available?  Do you have the luxury of being near a computer most of the day to monitor positions and make adjustments or are you on the road or in meeting most of the day and can only check on things at lunch and after work?   These factors will not only help you determine what strategies to employ but can even dictate what months to trade and risk management procedures to employ.  There are lots of different ways to trade and make money (hopefully).  Each person must determine for himself which strategies and management is best suited for his or her personality.  Once past that, the business of trading becomes much more profitable and enjoyable.

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