Structure, Not Strategy, Gives You Freedom
Published on July 24, 2014
Structure, Not Strategy, Gives You Freedom
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 –
“IT IS STRUCTURE, NOT STRATEGY, THAT GIVES YOU FREEDOM”
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
It is not easy to find the strategy or what works for each individual. It took me a couple of years before I realized what I want from my investing and how to get there. I was looking for shortcuts, but none worked. I had to learn the hard way. And once I found out what I wanted and what investment vehicle could get me there and how to use it to make money. Now I trade options and after 8 years of learning, last three years I am finally profitable. Profitable in a such way, that I cannot believe it that it is possible to reach such profits.
So, it is hard to learn the strategy and how to use it, it is worth it.
@Martin,
Thank you for sharing your experience. You are absolutely right. Finding what works for you takes time and experience. There are no short cuts and Mr Market doesn’t care for anyone. Once these two things are understood, a trader starts to learn how to take advantage of it and make a “business” out of it..a business that’s unique to him..
Cheers and profitable trading, OP