Active-Trader - Are you trading?

Welcome back, traders.

A funny thing happened to me this past week, I looked back and my recent behavior and realized, I was trading!  Now that sounds silly since I have been trading and investing for the better part of 30 years.  But this was different and here's how you know if you are trading or just on your way to becoming a trader:

5) Its Automatic

Your trading becomes a habit which almost exercises itself.  You don't have to think about it, its just happens by default.

One such trade happened with GILD this past week when in broke decidedly above the 261% fire line at $95.  I went long on the close in a classic case of John F Carter continuation.  The stock opened the next day at $98 and barely looked back.  I'm continuing to hold expecting a test of one of the 2 tree lines above.

4) You are trading setups and setups only

You don't take trades just because you thing something is going to happen.  For example, I was really convinced that GPRO was going to close below $40 and was tempted to sell the weekly 40 strike.  But other than that strong feeling, there was no setup.  GPRO did closed below 40, but it didn't matter.  I didn't take the trade and that's fine.

3) You are controlling your risk

Your positions have an automatic loss cut built into the trade structure.  This is easy to do with option spreads.

 I don't do a very good job with risk control on equities, so I guess I'm more of an investor than a trader in stocks so I fail the trader test there.

2) You are not emotionally invested in the outcome.

It doesn't matter whether you win or lose a particular trade.  There's always another trade and always another day.  As soon as you remove your emotions from the picture, the process and execution becomes more mechanical.

1) Your making money.

Have a great week ahead.