The 6 Secrets to Successful Options Trading

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2 Successful traders have a comprehensive private trading process that is executed in exactly the same manner all the time; a personal trading process that never changes. The process never changes, but the components may. For example, automobile manufacturing lines often follow the same process from the start to the finish, but the components may differ from one model to the next. The process however remains the same. Without this type of trading process, the chance of consistent success is seriously reduced. Developing a trading procedure is a challenge. Each of us must develop our own in our own way. This is significant because in order for our trading process to be effective it must match our style; it must take advantage of our strengths and it must compensate for our weaknesses. We must believe in it, and believe what it will do for us. We must possess our own process. A trading process is a comprehensive, step-by-step execution of our personal trading plan. Happily, there exists a body of knowledge to help in developing such a strategy. This knowledge can be found within the general theory of command systems, and offers useful concepts of control and planning. The use of control concepts and planning with the qualities of great trading practice supplies a suitable framework upon which to build our own trading process. None of these personal qualities are especially new. They may be greatly discussed in the literature on private behavior as well as trading. None of the planning theories

3 are new. They have been developed over many years of study of command and control theory. A great deal of research and studies have revealed 6 features that are the foundation of the trading process. We call the process DOFPIC. It stands for the qualities necessary for successful trading: Discipline is the ability to follow our trading plan, which allows us to control the fear and greed that are the prime motivations moving the market Organization is the specific process; the daily logs, the money management rules and the risk management stops we use to execute the plan Focus is the quality that allows us to be specific on which market instruments we trade and our role in the trading process. Patience is a constant reminder to trade carefully and to wait until our market has a shape that offers a very good chance of success Independence is the ability to ignore advice and tips from people outside of the trading world, people who most certainly know less about what is going on than we do. Confidence in our self and in our trading process follows from the other qualities, and is absolutely required for successful trading. We must organize and focus our trading tasks into an intelligent process. With discipline, come freedom, patience, and self-confidence; all essential to successful trading.

4 In a word, DOFPIC, we find it easier to just say (to ourselves) that we are DOFPIC traders. You may find it beneficial to use DOFPIC as a private "mantra," and we suggest repeating it often as favorable self-talk. The design of a trading process is essential to the development of the DOFPIC qualities. As we approach this objective, it is useful to remember 4 principles used for designing command and control systems: Goal orientation; having a clear understanding as to the goals of the process and constantly reviewing those goals to insure their applicability over time. Understanding the transformation from market information to decisions to action, a rule inherent in any trading process. The need for control over the execution of the process, and control over the outcome of the process; the return. Periodic evaluation and review of the process. The environment, the information, the technology, the trader, and the market itself will change over time. The trading process will need to be modified to reflect these changes. The qualities represented by DOFPIC transcend trading the option markets, but they have special significance here because adroit application of these qualities will allow us to meet some of our personal objectives.

5 The 6 Steps to Successful Options Trading; DOFPIC in Detail Discipline Discipline is a skill we require to follow our trading process, and permits us to manage fear and greed which are the prime drivers of the market. When you continue day after day, week-after-week to make great trading decisions, your self-esteem, your self-confidence, your self-worth, and every other self-value will grow. On the reverse side of the equation, when we don't do the things we know we should do, we feel disappointed and frustrated with ourselves. After all, how can you feel good about yourself when you don't do the things you know you should do? When an option trader follows his trading process, and makes good choices, it s normal to feel proud. When an option trader makes a feeble excuse and doesn t follow the process, they feel let down. Organization Organization is the specific repeatable process; the daily logs, the money management rules and the risk management stops we use to execute our trading plan. Prioritize the list of tasks that you undertake each day in your trading process. Make it into a routine.

6 Remember it is critical to aim to trade smart and not worry about how often you trade. Keep a Calendar, particularly one with important economic and market dates at hand. Focus Focus is the quality that permits us to be specific on which market instruments we trade and our role in the trading procedure. Focus on what's working rather than on what should alter. Each day start with the markets, then keep a list of stocks that you will analyze. Stay focused on that list, looking for patterns and setups across multiple time frames. This focus will develop into a favorable trading habit in time. Patience Patience is a constant reminder to trade carefully and to wait until the market has a setup that offers a very good chance of success. Patience results in better decision making. When you're patient you consider any pros and cons, and take time to evaluate the situation, see the large picture. The likelihood of making a big mistake decreases significantly because you avoid making it in haste.

7 Independence Independence is the skill to discount advice and tips from folks outside of the trading world, folks who most surely understand less about what is going on than you do. Ignore the media channels devoted to the stock market or chat rooms of traders. The tide shifts every day, remember TV channels are there to sell advertising not to dispense advice. Once you are fully confident in your trading process, you fully understand where you need to be; independent. Confidence Confidence in our self is the granddaddy of all qualities in our trading process. It s absolutely required for successful trading, and follows from the other qualities. The chief piece of advice given to every trader, before they ever begin trading; you have to have self-confidence. Developing this sense of confidence is an undertaking in itself. It comes from self-belief and it comes from adhering to, and applying your disciplined trading process.

8 The DOFPIC trading process schema The DOFPIC trading process schema is revealed in the figure below. There is no one starting point. It is equally as purposeful to start, for example, with confidence and to inquire what qualities are needed to be a confident trader. Not surprising, the reply is independence, and discipline, organization, focus A trading process that matches our personality and that takes advantage of our strengths and compensates for our weaknesses. In the end, this procedure will help us reach our personal objectives. Financial success is not achieved by 99% of the population, because they lack the real COMMITMENT to achieve financial autonomy. Most folks are too busy earning a living to endure to really think about the best way to make big money. Trading requires a great commitment in time, energy and patience to reach financial autonomy. The Options Hunter Fully embraces the principle of DOFPIC in the quest to guide committed individuals to attain financial independence.