An Option Traders Best Friend

If you were to ask Tiger Woods what his three favorite types of shots are, he could paint an exact picture for you, down to the last detail.

Without hesitation, he would describe…

…where he (and his closest competitor) stood on the leaderboard standings, the weather conditions and wind (direction and ferocity), how well he’d played the hole in the past, the lie, his stance, any obstacles, the exact pin placement in the green, the “safe” shot versus the “risky” play… he could tell you everything.

He remembers every detail of every time he takes his favorite shot.

We totally expect this kind of vivid memory from superstar athletes. But in reality, it is their ability to forget their past failures that allows them to become champions.

That is why even even after a blown putt, he can still hit a fairway wood 250 yards that settles two feet from the cup on No.18.

Or how even after a game killing turnover in the final moments of the 4th quarter, winners get it back by hitting a dead-eye jumper as the final buzzer blares.

Its because they let go of their failures so as to not hinder their ability to play at their peak performance for remainder of the game.

I guess you could say that they have a bit short term memory loss… and in those moments of intense competition, it is their best friend.

Those who don’t have a relationship with their “best friend” struggle to mentally get back in the game and find themselves making even more mistakes throughout the entire game.

Just like a highly skilled athlete, an options trader uses this short term memory loss as his “best friend” too.

After completely misreading a chart, getting in to early, exiting a trade too soon, or letting emotions run wild… the natural reaction of most traders is to replay over and over again, in excruciating detail, what happened.

Don’t get me wrong, learning from past mistakes can be valuable. However mentally replaying them over and over again, while on the hunt for new trades can be extremely dangerous… and is often what keeps some traders from realizing their full potential.

As traders, we have to spend a lot of time with our new “best friend”. Everyone makes mistakes. But loosing traders repeat those mistakes over and over again in their mind. Winning traders learn from the mistake, and then utilize short term memory loss to move on… only to get even better results the next time.

Have you been getting to know your “best friend”?

If so, tell me about in the comments section below.