Questions to Ask Yourself As An Options Trader

Why are you trading? Is it to get free from your hum-drum job? Is it because you hate office structure? Is it an escape from the reality you've created for yourself?

Recently, we've talked about proper mental preparation for trading options. And we briefly talked about the importance of having a trading plan. Jody Samuels- options and currency trading mentor and owner of Fx Traders Edge^TM (www.tradersedge.com)- spends a lot of time with her students helping them develop a trading plan. She feels it's an absolute necessity for any trader, be it options or other financial trading or investing. The first section in her trader's planning session is defining what motivates a trader. To do so, she asks a series of questions that must be answered with utmost sincerity. The following represents the type of questions she asks in this one section of her eleven-section plan.

• Why are you trading?
• What are your trading goals?
• What do you see as your greatest strengths as a trader?
• What are your weaknesses as a trader?
• What strengths do you have as a trader that can be improved and how would you improve them?
• What can you do to improve your trading weaknesses?
• What do you see as the greatest threat to you being a successful trader?
• How does your trading fit into your personal life?
• How much time each day can you commit to trading?
• What are your personal goals for the next 18 months?
• Where do you want to be in your personal life?
• Is trading stressful for you?
• How do you deal with stress?
• What do you do when you're burned out from trading?
• How do you keep a positive attitude when experiencing a string of losing trades?
• Do you have a daily routine for keeping physically and emotionally fit?

The above questions are just a small part of the trading plan that Jody develops with each one of her students. She and other successful and experienced investment traders understand the critical nature of clarity and truthfulness when trading. If you let your ego keep you away from the truth, it will manifest itself in your trading returns-or lack there of.

Traders need to realize that trading performance is not a measure of how good a trader they are but of how viable their trading system is. That's why it's so important to trade mechanically and without emotion. Follow the rules of your trading system and track every trade-particularly the losing trades.

A trader needs to constantly be asking questions not only of a technical nature but also introspective questions. "Why did I move my stops? Was it because of my ego telling me that I couldn't possibly be wrong? Why did I trade that day when I knew I wasn't feeling very well? When I look at a successful trade, do I feel proud for myself or my system?" The battle with ourselves never stops because traders are human and that may be the biggest obstacle to becoming a successful trader. Keeping emotions and ego away from the trading system is usually the difference between success and failure as a trader. By constantly being introspective and honest, a trader learns how to not only deal with trading but also themselves.