Yesterday I shared five fundamental truths about trading that I keep coming back to after 27+ years in the markets. Today we're diving into the first one.
Anything can happen.
Three words. So simple they almost feel throwaway. But sit with them for a minute. Really let them land. Because most traders nod along when they hear this and then go right back to acting like they know exactly what's coming next.
We've all been there. You've done your research. You've got a thesis. The chart looks perfect. Everything lines up. And then the market does something completely different. Not because your analysis was wrong, necessarily, but because the market doesn't care about your analysis. It never has. It never will.
I think it was John Lennon who wrote: "Life happens while you're busy making other plans." That couldn't be more true in the stock market.
We may have a preference for what we'd like to see happen. That's fine. Preferences are human. But the moment we become attached to a specific outcome, we've already lost. Because now we're fighting reality instead of responding to it.
This is why planning matters so much.
And I don't mean planning for the one thing you think will happen. I mean planning for a variety of outcomes. What if the stock gaps up? What if it gaps down? What if it does nothing for three weeks? Having a response ready for each scenario means you're never caught flat-footed. You're never frozen. You always know your next move.
Of course, we can't plan for EVERYthing. That's impossible. And this is exactly why position sizing and defined risk through options and options spreads matters so much. It's the catch-all. The safety net that keeps you protected in any worst-case scenario, even the ones you couldn't imagine. When your risk is defined, you already know the worst that can happen. And you can live with it.
Here's the part that surprises most people: accepting that anything can happen is actually freeing.
There's a relief that comes with letting go of the need to control everything. A weight lifts. You stop clenching. You stop needing to be right. And in that space, something opens up. Your thinking gets clearer. Your execution gets sharper. You start responding to what the market is actually doing instead of what you wish it was doing.
It's a mindset. It's expansive. And honestly? It's exciting.
When you truly accept that anything can happen, you stop being afraid of the market and start being curious about it.
Tomorrow we'll tackle truth number two: you don't need to know what is going to happen next in order to make money.
If you want to trade alongside me with real-time trade alerts, detailed plans, and a community of serious options traders, subscribe to All Star Options.
Sean McLaughlin | Chief Options Strategist, All Star Charts
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