It’s a scene directly out of Sex and the City. You can picture it now. Sarah Jessica Parker’s character has just suffered another relationship set-back. Right on cue, Kim Cattrall’s character offers another pearl of relationship wisdom.
‘Whoever cares less, wins.’
Maybe not the best philosophy for a marriage or long-term relationship. But for a trader who’s evaluating a trade and the trading news, it’s perfect.
Trading News Headlines: It’s About You
Now, if you’ve never seen the show (or the movie), let’s just say that Kim’s character has a somewhat detached approach to relationships. It kept her (character anyway) from getting too close, and getting hurt when things went south.
The same exact mentality applies to trading …
I can not stress one thing enough – If you’re trading based on news or headlines you will lose a lot of money very quickly. The market will already have sniffed out whatever is coming down the road so let price action dictate the story – not the story itself. $SPY $QQQ
— Steven (@SMCya21) December 7, 2018
Breaking Up with Your Trade
Breaking up is hard to do. But the second you enter a trade, that’s exactly what needs to happen. The careful thought, evaluation, moments of second-guessing are all in the past – you’re committed the second you get filled.
Yet for millions of traders, that’s the exact moment when all reason goes out the window. Everything they promised themselves they wouldn’t do – they dive in and do. Decisions get made. Stops get pushed back. Accounts get cleared and lives are changed.
It’s the tale of every blown account out there. You can take a step forward simply by caring less and being able to cut bait.
This is especially the case when dealing with trades that are tied to trading news of any kind. Being detached from both the news and your potential position is critical if you’re going to accurately evaluate the conditions.
Equally important, only exposing small portions of your capital will help limit your risk, but not necessarily your upside.
In other words: Do the exact opposite of what most day traders and investors do every minute the market is open.
No doubt, there are opportunities that surface every day.
The Worst Emotional Trading Roller Coaster
No trade is more emotional than breaking news. You might think that it’s the breaking news that causes all the heartache – but scheduled trading news events wreak just as much havoc on blood pressure levels around the world.
This is because traders enter their trades with a preconceived notion of what’s about to happen. The worst trade formula ever known on earth. Making matters even worse? The talking heads on TV do nothing but egg you on.
Before you know it – you’re entering a trade full of conviction and emotion. Completely blind to the risk that you’re taking. Completely unequipped to manage the trade – regardless if it goes in your direction or against you.
The key is knowing where to start.
Tearing a Page Out of An Institutional Trader’s Diary
With the thousands of breaking trading news stories, announcements, tweets (and tweets about tweets), it can be impossible to know where to start. Adding to this is the urgent stress that comes with every screaming headline, that make you feel like you need to act immediately.
Under those circumstances, it’s hard to see how anyone would make a profit.
Institutional traders understand this. They’ve been trained to tune out the noise. They could CARE LESS what the headline is. They’re looking for very specific headlines that meet their breaking news strategy criteria.
Once they find the right news event, they zero in on the market conditions they need to profit. These conditions are created by the market’s reaction to the news. This allows them to MAKE MORE.
Check out this video where Sam Seiden shares how to trade like an institutional trader.
Why most retail traders are trying to make money the wrong way and how you can trade like an institution
Here’s the Good News
You don’t have to be an institution or a hedge fund to profit.
You just need to care less. Start detaching yourself from your trades a bit more and you’ll find the freedom you need to succeed!
For more on options trends, read more articles here.