31 lines
2.0 KiB
Plaintext
31 lines
2.0 KiB
Plaintext
Preface
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I’ve always been fascinated by trading. When I was young, I’d see traders
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on television, in their brightly colored jackets, shouting on the seemingly
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chaotic trading floor, and I’d marvel at them. What a wonderful job that
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must be! These traders seemed to me to be very different from the rest of
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us. It’s all so very esoteric.
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It is easy to assume that professional traders have closely kept secrets to
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their ways of trading—something that secures success in trading for them,
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but is out of reach for everyone else. In fact, nothing could be further from
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the truth. If there are any “secrets” of professional traders, this book will
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expose them.
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True enough, in years past there have been some barriers to entry to
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trading success that did indeed make it difficult for nonprofessionals to
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succeed. For example, commissions, bid-ask spreads, margin requirements,
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and information flow all favored the professional trader. Now, these barriers
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are gone. Competition among brokers and exchanges—as well as the
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ubiquity of information as propagated on the Internet—has torn down those
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walls. The only barrier left between the Average Joe and the options pro is
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that of knowledge. Those who have it will succeed; those who do not will
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fail.
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To be sure, the knowledge held by successful traders is not that of what
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will happen in the future; it is the knowledge of how to manage the
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uncertainty. No matter what our instincts tell us, we do not know what will
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happen in the future with regard to the market. As Socrates put it, “The only
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true wisdom is in knowing you know nothing.” The masters of option
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trading are masters of managing the risk associated with what they don’t
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know—the risk of uncertainty.
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As an instructor, I’ve talked to many traders who were new to options
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who told me, “I made a trade based on what I thought was going to happen.
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I was right, but my position lost money!” Choosing the right strategy makes
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all the difference when it comes to mastery of risk management and |