G Guides

🤑 President’s Day Special: How to Make the Most of Your Winning Trades ✅

Jeff Zananiri

February 19, 2024

4 min read

Happy President’s Day, traders!

Jeff here.

You need to hear this…

Trading options is as much about managing your psychology as it is about managing your portfolio.

And with the market closed today, now’s the perfect time to go over some critical aspects of your trading mindset.

After all, the real battle often lies NOT within the markets, but within your mind…

The challenge of deciding when to sell, the paralysis of fear when adding to a winning position, and the rollercoaster of emotions that accompany each trade are dilemmas every trader faces.

WARNING: In a mania-driven market bubble, like this one, understanding the psychological aspect of trading is more crucial than ever.

It’s about making informed decisions that align with a well-considered strategy, not fleeting emotions.

Today, I’m gonna give you my time-tested blueprint for mastering the psychological complexities of trading options.

By embracing the strategies discussed, you’ll learn not just to survive but to thrive in the options market.

This is about transforming trading from a sprint into a marathon where strategy, not emotion, guides your path to long-term success.

Letting Winners Ride

One of the classic dilemmas traders face is selling too early, often before reaching the goal set in their trading plan.

The euphoria of seeing green, combined with the fear of losing it, can lead to premature exits.

To counter this, consider taking a partial profit.

Selling a portion of your position, say 50%, when it shows a reasonable profit, allows you to secure some gains while still having skin in the game.

If you’re up 100% in an options trade, and you sell 50% of the position, you will lock up your initial investment while letting the rest of the position ride on “house money.”

This strategy can reduce the psychological burden of wondering whether to hold or sell, which is why I send my Burn Notice Alliance members immediate alerts about when I’m scaling out of a winner.

After securing a partial profit, step away from the trading screen. This mental break can prevent overthinking and allow the remaining position to work as planned.

To protect your gains, adjust your stop loss to just below the level where you took your first profit.

Avoid placing your stop loss at round numbers or obvious levels, as these are spots where many traders tend to place theirs. Make yours 10-20 cents below the obvious round number.

Adding to a Position

When it comes to adding to a winning position, a lot of traders hesitate.

The fear of jeopardizing existing profits or entering at an imperfect price can be paralyzing.

REMEMBER: Perfection isn’t the goal — adaptability is.

You don’t need to nail the exact top or bottom to be a killer trader. In fact, trying to do so will likely lead to disaster.

Adding to your position should be about enhancing your exposure to a great trade, not capturing every tick.

Start small to build confidence. You can always add more as the trade moves in your favor.

Being nimble, and willing to take profits and re-enter, can help you grow your position with the trend while managing risk.

Managing Emotions

The emotional highs and lows of options trading can be intense.

To make it in this game in the long run, you must maintain a balanced approach to these emotional swings.

Celebrating wins too vigorously or wallowing in losses can disrupt your equilibrium, leading to irrational decision-making.

When you find yourself overly emotional, from a win or a loss, take a step back.

(Now is a great time to do this with the market closed.)

Remind yourself that trading is a long-term endeavor, with wins and losses evenly distributed along the way. Treat each trade as part of a larger process.

If a losing streak leads to a negative emotional state, consider drastically reducing your position size.

Trading with 10% of your usual size can help mitigate fear and allow you to focus on the process rather than the outcomes.

This approach can also prevent significant financial damage during a downturn in your trading performance.

Trading success often hinges on your ability to manage yourself.

By taking partial profits and securing gains, you allow your winners to run without leaving the outcome to chance.

Adding to a position shouldn’t be about perfection but about participating more fully in confirmed trends.

Above all, managing your emotions by maintaining perspective and adjusting your approach during tough times can keep you in the game.

Remember: Trading is a marathon, not a sprint.

Focus on the process, and the results will follow.

Have a great day off,

Jeff Zananiri

P.S. Ever wish you could take the “guessing games” out of options trading?