Structure, Not Strategy, Gives You Freedom

by OptionPundit on July 24, 2014

Time and again, I am asked about the ultimate profitable option trading strategy i.e. which is the best strategy to trade markets? Which is the best strategy to trade options? and so on …as if there exists a HOLYGRAIL for trading and winning in the markets. My answer, has always been -


I will explain more about that later but before let me share with you a great video, a very powerful one which is appropriate for traders as well.  So here it is >>>  BE WATER, MY FRIEND:

Trading requires one to be like water as well, you have to adapt to changing market conditions. What worked in 2006/07 doesn’t mean it will work in 2014 too. Yes, there are things that won’t change i.e. fundamentals e.g. profit will still matter, valuation will matter too. Even though markets are rising non-stop, reality will return to normalcy as well. However, once you have acquired necessary skills and systems to profit from market, you have to choose what works best in current market conditions. Markets are dynamic and so should be your strategy selection.

Once a trader is like water, it is important to determine the shape he or she needs to take.

Strategy is not going to give you freedom. Structure will.

Strategy is like a set of code that enables one to achieve certain results. Let use a simple example first- You want to got to the top of the building, you can take elevators, or walk-up the stairs? or maybe a mix of both. “Reaching at the top” is the objective and which method do you use under the set of condition you have is going to be THE STRATEGY.

For instance – if time is utmost important factor for you, you may choose elevators but if the goal is to get healthy and fit, you may use both elevators and stairs or just stairs. But how do you choose the strategy, how do you determine the goals, objectives, how do you measure the outcome, this complete process is THE STRUCTURE.

It is THIS STRUCTURE that will give you freedom.

Do you have a structure in place?

A structure consists of a PROCESS FLOW, a set of rules that drives your behavior BEFORE, DURING and AFTER the trade.

A structure of a trade consists of PREPARATION, PROFIT with Discipline and PRESERVATION of capital.

Becoming a consistently profitable trader just might be the hardest thing you will ever do in your life. And even if you become one, enjoying the freedom and money will still require a process, a structure to be in place. So why not start it from the beginning. Respect the Structure and Pay attention to the process.

Hope this helps. Let me your views about Strategy vs Structure.

Should you have any questions, post it in the comments section or let me know via Ask(at)OptionPundit(dot)com

Profitable Trading, OP


Why Isn’t Warren Buffett Saying This Now?

July 9, 2014

Ever since I met with Mr Warren Buffett in 2004, my respect for him has been growing by leaps and bound, year after year. Even though I have read many major books written about him, there is nothing quite like meeting in person. I consider him my mentor, someone, who has always inspired me from [...]

Read the full article →

Crude Oil Testing Resistance

June 11, 2014

Crude oil futures are finding sellers at a significant resistance level  at 105, a level that has been acting as resistance since September last year. Such levels are key defining point i.e. it can break-out or turn down from this. Confirmation is the key. Right now, a pin bar is taking shape but we have [...]

Read the full article →

OP Income Newsletter Mar +19%, April +9% (Open)

April 4, 2014

At OP Income newsletter, the out-performance vs. broader markets continues. For Mar 2014, based on the invested capital (56% of the portfolio), it delivered +19.4% returns. That’s > +10% on the overall portfolio capital. This performance doesn’t include results from OPNExtra! (High risk/ High reward trades) which had a solid run during the month of [...]

Read the full article →

How High is High for S&P500?

March 5, 2014

It’s been 5 years since markets bottomed in Mar’09; S&P500 touched 200days moving average during Nov’12 and since then it has been almost 15months for this uninterrupted move. Markets have withered all kind of storms be it weather, taper-on/taper-off tantrums, government shut down, debt ceiling and all sorts of macro-economic data good or bad. Good [...]

Read the full article →