I saw this question the other day, and I saw the answers in response to this question. I felt it was my duty to clear up the common misconceptions, and terrible advice I was seeing.
Not right away.
I was seeing people say “right away”, and this is simply not true.
While you have an open position, you will see that you are making money from the Option’s Theta Decay. However, that is still an open position.
As long as that position is active, anything can happen. Yes, your account is going to show that you are making money. However, you have not technically received anything, because it is still an open position.
Speaking of open positions, a trader should never count their chickens before they hatch.
The position could go as planned, or it could go catastrophically wrong. The time to celebrate, cheer, be happy, whatever… is when the position is closed. You could be cheering that you made money, or that the pain of a losing position is over. That topic is for a different article…
Thinking that you’ve got one in bag before the battle is over is a common error that trips up so many traders. I’ve made that mistake time and time again, until I finally stopped getting in my own way.
I think it’s important that traders do an emotional audit from time to time. Ask yourself:
- Are you feeling the elation and joy from an active winning trade?
- Is there a correlation between your winning trades that turn into losers and the feeling of elation?
- Are you accepting too many losses thinking that it’s just part of the game, but really you just didn’t manage your trades well enough?
These are just a few quick questions that you should be asking yourself on a periodic basis. Don’t stress over them every waking moment of the day. Just be cognizant of the relationship between the thoughts you’re having, and your equity curve.
Hope this helps.
Drop us a comment if you would like to continue the conversation, or let us know if this helped.
Have a great day!