Source item

It helps to think of trading in terms of a game. Box spreads, which I consider as defensive, or the last line of defense. I might deploy that in some extreme market dislocations (which I've not done in quite awhile) Think of this like a goalie, I also just keep cash on hand. Which is kinda like a defense. Then I have a portion that is long, and a portion I scalp with. Which is the offense. The scalping might be more aggressive. The constant issue I see is that people in general are all offense, and no defense. Which can work for periods of time, but it eventually leads to some pretty nasty drawdowns. You wouldn't really play any sports without a defense, and trading should be no different. Just like, there are times to gas it, and then there are times to protect the lead a little bit. And I actually think about these things daily, as my whole portfolio, and in terms of individual positions. Trading, is like a sports game as well in the sense of. You can just feel the momentum shifting each way. or the lack of momentum. I really do trade this way, and think this way and it really helps me see the field clearly. It also helps me smooth out my returns a lot where I often don't see huge swings either way, but a more gradual slope upwards over time. Different parts of your portfolio, have different jobs. If you have significant wealth, then you might think about how to smooth those returns. Bc the goal might not be so much wealth creation, as having a nice balance with preservation. But this will be for another day bc then we start talking about non-correlated returns and smoothing your returns/path of returns in general. But the idea, fits into the above in general as well.