The information throughout these articles has been broken down into basic and advanced strategies to highlight the differences between concepts that are solely designed to manage risk and ideas designed to also generate income.
By themselves the basic and advanced concepts presented here are not inherently more difficult from one another.
Nor are the basic and advanced strategies really required to be operated on their own.
As we know, it takes only small changes to convert one strategy into another.
If you were to add an out-of-the-money option to a futures or spot position, you could create a hedge.
To make another change only requires that you turn an out-of-the-money option into an at-the-money option and tie it to a futures or spot position to make a synthetic put or call option.
It simply requires the willingness to sell an option and purchase an option with the same contract month to create synthetic futures.
If you sell one option and purchase two options slightly out-of-the-money, then all of a sudden you have a type of ratio spread.
Subtle changes and modifications to a position can make it morph into an entirely different trade altogether.
By combining the basic strategies along with the advanced strategies, you have the ability to manipulate the markets, even if you are losing.
In the face of a losing trade, the majority of retail traders either freeze up or head for the hills.
Those who do exit their losing positions do so with their emotions.
It is important to know that whether it is the same moment that they exit their losing trade or days later, the simple fact that they can take the loss at all is a testament to their trading maturity.
It is a far better solution than freezing up in the face of adversity.
Professional traders do not look at taking a loss the same way as retail traders do.
Often professional traders think in terms of how to manipulate the losing trade into an opportunity to profit.
Whether they convert a trade into another form, such as an option hedge into a synthetic option, or they unwind an advanced trade, such as a collar into a ratio spread, they are looking for a way to put the odds of success back in their favor.
With that being said, for the majority of retail traders simply closing out a losing trade is most likely the intelligent way to approach loss.
Don't stop doing that.
Taking a loss gives you a chance to take a break from the market and come back to it with fresh eyes.
You can review your technical analysis as well as determine whether there has been a fundamental shift in the supply and demand of the currencies or futures you are currently trading.
When you have only a finite amount of capital available to you, closing out your losing trades is simply the most prudent thing to do, nine times out of ten.
The decision to combine strategies or morph one strategy into another strategy should occur only that tenth time-that one time when you know for a fact that your technical analysis signals have pegged the market's reversal or your original assessment is simply experiencing a setback.
You can see the shift in the market and you can tell that it only requires that you make one or two changes to your approach in order to be successful over the long run.
There are no hard-and-fast rules to trading with risk management strategies; as long as you keep your mind flexible to the market's behavior, you will be able convert from one strategy to the next with ease.
By themselves the basic and advanced concepts presented here are not inherently more difficult from one another.
Nor are the basic and advanced strategies really required to be operated on their own.
As we know, it takes only small changes to convert one strategy into another.
If you were to add an out-of-the-money option to a futures or spot position, you could create a hedge.
To make another change only requires that you turn an out-of-the-money option into an at-the-money option and tie it to a futures or spot position to make a synthetic put or call option.
It simply requires the willingness to sell an option and purchase an option with the same contract month to create synthetic futures.
If you sell one option and purchase two options slightly out-of-the-money, then all of a sudden you have a type of ratio spread.
Subtle changes and modifications to a position can make it morph into an entirely different trade altogether.
By combining the basic strategies along with the advanced strategies, you have the ability to manipulate the markets, even if you are losing.
In the face of a losing trade, the majority of retail traders either freeze up or head for the hills.
Those who do exit their losing positions do so with their emotions.
It is important to know that whether it is the same moment that they exit their losing trade or days later, the simple fact that they can take the loss at all is a testament to their trading maturity.
It is a far better solution than freezing up in the face of adversity.
Professional traders do not look at taking a loss the same way as retail traders do.
Often professional traders think in terms of how to manipulate the losing trade into an opportunity to profit.
Whether they convert a trade into another form, such as an option hedge into a synthetic option, or they unwind an advanced trade, such as a collar into a ratio spread, they are looking for a way to put the odds of success back in their favor.
With that being said, for the majority of retail traders simply closing out a losing trade is most likely the intelligent way to approach loss.
Don't stop doing that.
Taking a loss gives you a chance to take a break from the market and come back to it with fresh eyes.
You can review your technical analysis as well as determine whether there has been a fundamental shift in the supply and demand of the currencies or futures you are currently trading.
When you have only a finite amount of capital available to you, closing out your losing trades is simply the most prudent thing to do, nine times out of ten.
The decision to combine strategies or morph one strategy into another strategy should occur only that tenth time-that one time when you know for a fact that your technical analysis signals have pegged the market's reversal or your original assessment is simply experiencing a setback.
You can see the shift in the market and you can tell that it only requires that you make one or two changes to your approach in order to be successful over the long run.
There are no hard-and-fast rules to trading with risk management strategies; as long as you keep your mind flexible to the market's behavior, you will be able convert from one strategy to the next with ease.
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