Exactly 5 years ago, going into July 17 of 1998, I built up a sizable position in puts. I was either right or lucky, doesn't matter, but the market did come down hard and I made a lot of money. This was a bad thing, because it gave me an inclination to look for a repeat performance. Any approach which is likely to make a trader stubborn is a potential problem.
We study sentiment and we use it in a contrarian way. However, we mustn't forget that we are human and that more often than not our own personal sentiment should be dealt with in (sort of ) a contrarian way. I've noticed many times that when I enter a position with "confidence", such a position is likely to turn out to be a loser. On the other hand, positions which are entered with worry and with a sort of trepidation, the ones which you have to "force" yourself to enter - are more likely to work out.
(In other words, if one ever feels very "confident" about buying an option, perhaps it would be wise to consider selling it instead... g/ng)
My only real regret about this game is that my intellectual arrogance prevented me from becoming a serious student of markets for a number of years. You see, long ago I decided (almost casually) that since stocks were moved by a such great number of uncontrollable variables - "investing" was in reality gambling. As any good lie, this one contained a good deal of truth - and it ended up costing me many years of what would be valuable experience. |
