After ending a long-term relationship and losing my job in September 2014, I found solace in watching Tom and Tony…sounds strange, I know.
Suddenly, I had all of this time and mental space to focus on watching tastytrade all day. I put all of my heartbreak and mental anguish into focusing and learning the tastytrade ways of 'Trade Small, Trade Often'.
But I knew that this was just a temporary situation for me. Only for a short period of time would I be able to focus all of my efforts towards trading.
I knew that the time would come when I would start a new 9-5 job and wouldn't be able to spend nearly as much time trading. Even if I could spend all of my time trading, Im not sure that I would.
I love what I do, and I like having a life outside of trading. I want trading to occupy a couple of hours of my day, so that I can go to work, go to yoga, go out dancing, travel the world, and do all of the other things that make me, well, me!
Don't get me wrong, I love listening to Tom and Tony scalp all day long, getting in and out of positions like trading ninjas! They are my gurus. But for a more balanced life, I like to follow Liz & Jenny.
Finding My “Trade-Life Balance” With Liz Dierking and Jenny Andrews
For those of you that aren't familiar Liz Dierking and Jenny Andrews, hosts of tastytrade’s LIZ & JNY Show, have been best friends since college and have been trading since 1997. They both got their start at the CBOE, the Chicago Board Options Exchange.
They are both currently full-time mothers and traders. They also have extremely busy social lives, which proves to me that you can have a busy life AND trade.
Here is a list a few of the techniques that I've picked up from them that helps me keep up with trading while living a busy, awesome and epic life!
1. Put Trades On Mechanically (Don't Overanalyze)
When you first start watching the LIZ & JNY show, you will notice the brisk pace at which they analyze trades, put on those trades, and take off other trades.
They have been compared to a whirlwind cyclone by other listeners. But all of this is a learning opportunity for me, it helps me learn how to think quickly, and put on trades mechanically.
As a premium seller, I have a checklist that I follow…
- Is the underlying liquid?
- Does it have high IV?
- Any upcoming binary events?
- Directional assumption? (am I bullish, bearish or neutral)
Once the items on the checklist have been satisfied, I place the trade.
When I started trading, I used to waste a lot of time going back and forth on whether a trade was the right or wrong one. With the checklist in hand, and an ever increasing amount of experience, my process has become quick and mechanical.
2. Use GTC Orders As Much As You Can
If you have a full-time job where you barely have time to eat lunch, there is no way you will have time to watch your positions all day long.
Liz and Jenny introduced me to putting 'Good 'Til Canceled' (GTC) orders in for as many of my orders as I could. They are orders you put in to close your position automatically. This way, I spend only a few minutes a day putting positions on and a few minutes on expiration week, closing out in-the-money (ITM) positions.
I like to set my GTC orders close to 50% of max profit. That way, I don't have to monitor my winning trades to decide when I should pull them off the board (not to mention it helps me stay mechanical).
3. Once You Are Out Of A Position (Winner Or Loser), 'Fugetaboutit!'
One of the main points Liz and Jenny try to drill home is that once you are out of a position, forget about that position. Don't follow your winners to see if you could have made more money out of it. And definitely don't follow your losers to see if they become winners.
Once you have made a decision to get out of a trade, stick with it, and don't torture yourself with what could have been (this could be translated to life as well).
4. All About Cost Basis Reduction
Almost all of Liz and Jenny's trades are about cost basis reduction. They always say that the reason they like options (vs. buying stock outright or any other kind of investment) is because options help you reduce your cost basis.
Their segments make me realize the advantages of trading options rather than buying index funds (which is what most of my millennial friends focus on).
5. Only Put Naked Trades On Where You Don't Mind Owning The Stock
Every time Liz and Jenny put on a spread with a naked component, they speak about what would happen if the spread went against them. When entering the trade, they are comfortable with the long or short stock position at the strike price, if the option moves against them.
I am not putting on naked positions yet as my account is too small. But I love the idea of CYA (covering your a**). If you are going to try and make more money through naked positions, you want to ensure that you are prepared and accepting of the worst-case scenario before trade entry.
In short, you should be comfortable being assigned stock at the strike price of the naked position (and if you are not, don't put the position on!).
Using these techniques, you will spend less time worrying about your positions and more time hanging out with friends, and family. If having a balanced life as a trader is important to you (as it is for me), then heed my advice!
I will leave you one of my favorite quotes that I remember as I balance my work/life/trade priorities...