Do you guess too much as an option trader? What I mean is, do you force your opinion on a stock or the market believing it should do something based on your thoughts, and are you surprised when it does not? If you have traded you have had an opinion about a stock, the market or both. But what I see far too often is the disappointment when a stock does not perform as the individual predicted. Well, guess what, stocks and the market have a mind of their own.

Free Will

Like all of us who are option traders, we have free will (for the most part) to buy or sell whatever we choose. The market and stocks have their own free will too. You cannot force your opinion on something because the market sets the price no matter what you may think.

Now don’t get me wrong, we have all thought a stock, ETF or index was too high or low aside from technical analysis. Especially with the market recently surging to new all-time highs, I have had several students shaking their heads in disbelief. How can the market be at all-time highs when there is so much uncertainty in this world, I have heard a few times? That is fine but when you are not willing to separate reality from your opinion, you get yourself into trouble…trust me.

Go With the Flow

Try to remove your own personal thought and opinions from the market especially for short-term trades like swing trades and focus on the technical aspects instead. Instead of asking why, ask yourself what has a better chance of happening based on technical analysis? I promise you will be better off from a financial perspective and there will be much less head scratching.

John Kmiecik, Market Taker Mentoring