For poker players, ‘Big Blind’ sounds very familiar. You might be wondering, what I mean by the ‘Big Blind’ Philosophy — let me explain
Characteristics of a Big Blind
A ‘Big Blind’ is a person who sits two spots away from a dealer & who is forced to enter a betting round on a poker table. There are four underlying principles driving the ‘Big Blind’ philosophy:
- Big Blind always enters a betting round with a ‘fixed downside’
- Big Blind only puts a small portion of her stack to take the initial bet
- Big Blind observes the players (read market) behavior after entering the betting round
- Big Blind is forced to enter but last to ‘opt-out’
If you want to be successfully generating income trading options, you should stick to the above 4 principles with military discipline. To reinforce these 4 principles, I’ve named my platform ‘Big Blind’
1. Always know your downside
Option strategies are all ‘leveraged’ plays — for every one rupee capital you trade on, you usually are taking a higher risk with options than individual stocks. It is absolutely essential that you go into a trade knowing the exact amount of downside (to the last rupee) in worst case scenario.
2. Only risk a small portion of your stack
There is only one truth in the options trading world and that is “anything and everything can possibly go wrong”. Along with Principle 1, its always important to remember that you never go all-in on a single bet, ie you never put all your money on one single bet.
3. Observe the market and keep improving
Every trade is a new lesson to learn — keep a notebook and record your entry, exits, market volatility, stop losses, market movements, your greed/panic and actions that were not part of your original plan. A lot of trading is also about understanding your own behavior — if you can master your emotions, be a good student and stay disciplines, no force on earth can stop you from making money in option trading
4. Always exit as per plan
Entry is not as important as exit — always have a plan in mind for exit and stick to that plan. It is very easy to get swayed by the market especially when you picked up a lot of losses. It is very important to keep emotions out of the door and always, always stick to plan.
With these 4 foundational principles in mind, let’s start our journey to unravel options trading
