Focus on in-the-money options and understand their behavior rather than being drawn to cheap out-of-the-money options.
Keep technical analysis simple by focusing on key setups and using a few indicators, such as moving averages.
Adjust trading strategies based on market conditions, recognize market cycles, and master exits for consistent results.
Deep dives
John Carter's Journey to Consistency
John Carter, an options and futures trader, shares his journey to consistency over the course of eight years. He experienced multiple boom and bust cycles due to taking on high risks and focusing on making a million dollars. After reading Mark Douglas's book, 'Trading in the Zone,' he learned the importance of patience and a probabilistic mindset. Carter advises novice options traders to focus on in-the-money options and understand their behavior, cautioning against being drawn to cheap out-of-the-money options. He also emphasizes the significance of identifying setups quickly and keeping charts simple with fewer indicators.
Using the Squeeze Setup
John Carter's preferred setup is called the squeeze, which occurs when Bollinger Bands trade within Keltner Channels. This signals a period of consolidation before a potential price move. Carter recommends keeping technical analysis simple, focusing on key setups that can be explained to a 12-year-old. He advises avoiding complex indicators and instead relying on price action and a few indicators, such as moving averages. Carter suggests traders track their setups by executing 25 trades, analyzing the overall profitability to gain confidence in their strategy.
The Role of Indicators in Trading
Indicators serve as an interpretation of price action and should not overshadow the importance of actual price movements. John Carter advises traders to prioritize price action and view indicators as derivative tools. He warns against getting lost in a variety of indicators and recommends focusing on the market's direction, whether it is trending up or down. Carter emphasizes that indicators should not replace price action analysis but rather supplement it.
The importance of different trading strategies in different market conditions
In this podcast episode, the speaker emphasizes the significance of adjusting trading strategies based on the market conditions. They discuss the three positions traders can have - long, short, or flat - and stress the value of being in a neutral state of mind, particularly when there are no clear signals present. The speaker advises traders to be patient, wait for the right opportunities, and avoid trading out of boredom, which can lead to capital depletion. They also highlight the importance of recognizing market cycles and adjusting trading positions accordingly.
The art of exits and the benefits of trading options
The podcast episode highlights the importance of mastering exits in trading and the benefits of trading options. The speaker explains the significance of stop losses and targets in maintaining consistent trading results. They mention the use of Fibonacci extensions to determine target levels and the advantage of options in terms of fixed risk and the ability to structure trades based on risk tolerance. Additionally, the speaker mentions the concept of financing trades using options, where longer-term options are bought while shorter-term options are sold against them. This allows traders to limit risk and potentially let winners run. The episode concludes with the speaker's reflection on evolving trading goals and the importance of building confidence and having a philosophical approach to trading.
Welcome back for another installment of the Chat With Traders podcast. I’ve got an awesome guest lined up for you, John Carter, from Austin Texas.
In short; John is an options trader (and also futures, to a slightly lesser extent), he’s been trading for around about 25 years now. His typical holding time for any given trade is just a couple days, and he classifies himself as an aggressive trader – which I think you’ll pick up on pretty quickly.
In this interview, you’ll hear I ask John about the multiple boom ‘n bust cycles he endured over the space of about 8 years before gaining real consistency. I also ask, is a high risk tolerance essential for becoming a successful trader?
Then we get into some talk about options, and John has some really great advice for those who are still trying to find their feet. Additionally, we talk about indicators and technical analysis, and we go step-by-step through John’s million dollar TSLA trade.
So there’s a lot packed into this episode, I hope you enjoy it, but more than that, I hope you can take at least just one thing away from this and apply it to your own trading.
