{"id":37536,"date":"2014-05-15T12:19:00","date_gmt":"2014-05-15T16:19:00","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=37536"},"modified":"2023-04-17T15:43:57","modified_gmt":"2023-04-17T19:43:57","slug":"why-blindly-following-your-options-trading-rules-eventually-leads-to-failure","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/why-blindly-following-your-options-trading-rules-eventually-leads-to-failure","title":{"rendered":"Why Blindly Following Your Options Trading Rules Eventually Leads to Failure"},"content":{"rendered":"<p>Trading rules are designed to help us make money and eventually become a better trader.<\/p>\n<p>Unfortunately market conditions change. The static examples you find in trading education\u00a0don\u2019t\u00a0\u00a0provide guidance to navigate new price action.<\/p>\n<p>This is where the rubber hits the road and where success or failure lives or dies.<\/p>\n<p>How do you adapt? What is your plan after the perfect entry?<\/p>\n<p>Price action, the Greeks\u00a0and\u00a0volatility\u00a0readings don\u2019t remain in a perfect vacuum and that\u2019s why most people,\u00a0ultimately,\u00a0never transform into \u201ctraders.\u201d<\/p>\n<p><strong>Why Rules Based Options Trading is Not the Answer<\/strong><\/p>\n<p>Back in the mid 2000\u2019s iron condors, bullish verticals and covered calls were the big thing. We had an extended period of time with a low volatility, and up trending markets. Those strategies were working great. All you needed to do was follow a basic set of rules, all of a sudden you were a great trader.<\/p>\n<p>In 2007 these iron condors and neutral to bullish bias strategies started taking losses. Traders were merely following a set of rules and didn\u2019t understand how to adapt to the market, they didn\u2019t know what to do. So they started to panic.<\/p>\n<p>They would take on too much risk and trade differently without understanding the consequences. They started jumping around and implementing unfamiliar systems without proper testing.<\/p>\n<p>The lesson\u00a0here is\u00a0this:\u00a0\u00a0following a system without learning\u00a0<em>how to trade<\/em>\u00a0in the process leads to a false sense of security.<\/p>\n<p><strong>What Most Options Traders Never Truly Understand<\/strong><\/p>\n<p>Options trading rules have their weaknesses but unfortunately you don\u2019t find them until the conditions change. At this point you\u2019ve mistaken a perceived skill for your ability to follow directions.<\/p>\n<p>How you will identify and control risk prior to initiating a trade, changes dramatically after the trade begins to unfold. As market conditions change and eventual trading losses\u00a0begin\u00a0to mount, many traders take on too much risk and trade differently without understanding the consequences.<\/p>\n<p>You start jumping around and implementing unfamiliar systems starting the process all over again.<\/p>\n<p>Instead of having one year of experience you now have 12 one-month experiences. You are not benefiting from the cumulative education and growth that can only come from a path intentionally designed to seek out feedback to improve.<\/p>\n<p>When you are prepared in your mind, for nothing but a seamless positive outcome, it will be difficult to make progress. If not impossible.<\/p>\n<p><strong>How to Become a Successful Options Trading Student<\/strong><\/p>\n<p>To start with a solid foundation, your goals need to align with your current skill level. Your initial plan must be designed to withstand large price movements and minimize drawdowns while you learn how to trade (the real mechanics of options trading), not just following instructions.<\/p>\n<p>Next you will need a basic framework that explains how to properly analyze and understand your position. You should seek to understand the multiple adjustment strategies, which scenarios they correct\u00a0and,\u00a0of course,\u00a0\u00a0when to use them.<\/p>\n<p>When you truly understand your position, how to\u00a0identify risk,\u00a0and how to correct that risk, you begin to transform into a real trader. Developing the skill to adapt strategies to changing market conditions will help ensure your long-term survival in the markets.<\/p>\n<p><strong>What to Do Next<\/strong><\/p>\n<p>In the coming two weeks we are publishing emails and blog posts to show you why it is important to stop blindly following rules and jumping from one strategy to another in search of the options trading Holy Grail.<\/p>\n<p>Seth Freudberg<br \/>\nDirector, SMB Options Training Program<\/p>\n<p><em>The <a href=\"https:\/\/broadcast.smbtraining.com\/smboptions\">SMB Options Training Program<\/a> is a program designed for novice and intermediate level options traders who are seeking an intensive training process to learn how to trade options spreads for monthly income. For more information on this program contact Seth Freudberg: <a href=\"mailto:sfreudberg@smbcap.com\">sfreudberg@smbcap.com<\/a>.<\/em><\/p>\n<p><a href=\"http:\/\/www.cboe.com\/resources\/intro.aspx\" target=\"_blank\" rel=\"noopener\">Risk Disclosure<\/a><br \/>\nNo relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Trading rules are designed to help us make money and eventually become a better trader. Unfortunately market conditions change. The static examples you find in trading education\u00a0don\u2019t\u00a0\u00a0provide guidance to navigate new price action. This is where the rubber hits the road and where success or failure lives or dies. How do you adapt? What is your plan after the perfect &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/why-blindly-following-your-options-trading-rules-eventually-leads-to-failure\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":290,"featured_media":37551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3926,3956,1402,1584,1616,1373,15],"tags":[3957,3958,593,3959,4683,1093,38],"class_list":["post-37536","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-comments-2","category-john-locke-3","category-m21-trading-system","category-options-education","category-seth-freudbergs-blogs","category-smb-fundamentals","category-trading-lesson","category-trading_theory","tag-blindly","tag-eventually","tag-failure","tag-leads","tag-options","tag-rules","tag-trading"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Blindly Following Your Options Trading Rules Eventually Leads to Failure | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/why-blindly-following-your-options-trading-rules-eventually-leads-to-failure\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Blindly Following Your Options Trading Rules Eventually Leads to Failure | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Trading rules are designed to help us make money and eventually become a better trader. Unfortunately market conditions change. The static examples you find in trading education\u00a0don\u2019t\u00a0\u00a0provide guidance to navigate new price action. This is where the rubber hits the road and where success or failure lives or dies. How do you adapt? What is your plan after the perfect ... 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