Analyze the analysis

Analyze the analysis

The title says it all. If you can master analysis and capitalize on an opportunity, you can be rich trading options. In order to do this however the trader must first, analyze the analysis.

But…How do I analyze the analysis?

By waiting until the trade is closed. At which time, an opportunity for such hypocrisy is presented and I highly recommend you make the effort to perform this FREE  function. I realize it doesn’t seem like it’s worth your already limited time but what if you were able to uncover a costly trade mechanic? Better, what if you were able to spot a pattern that others may be missing?

Probably be worth the time then, right?

I agree, but I must admit, I rarely take the time to practice what I’m preaching here. The truth is,

I often fail to use the trade documentation as a benefit to my bottom line.

And if your in the same situation, don’t worry because it can be fixed. The secret is a series of analyses, to include; trade mechanics, trade rationale for different strategies, trade identification, and every other step in the trading process. Basically, analyze everything or just analyze the analysis!

Now, I know the rebuttal to this entire post will be, analyzing past data is useless because each trade is different. And while that may be true, the techniques you’re using to identify or place trades is likely flawed or, at least minimally skewed in some direction or another based on natural human bias.

To close this post, here are some questions that may get the ball rolling downhill.

  • Am I using the same indicators to identify every trade?
  • Are the indicators I’m using proven to work?
  • Is my decision making process the same every trade?
  • Am I a contrarian trader or continuation trader?
  • Does the price of my chosen asset move in a way that offers the greatest benefit to the strategy selected?
    • For example, if trading an OTM bull call spread does price have a wide enough range for the strategy to move ITM by expiration.
  • Can fundamental analysis add confidence to my technical analysis?
  • Have I successfully back-tested my analysis and strategy to determine historical profitability.

…the list goes on and on but you get the idea. In an effort to improve, we must gain a deeper understanding of every dynamic affecting profits. Most notably, ourselves.

To our profitability,

Jeff “the OptionBoxer”

 

 

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