Day 41 – Psychology and Discipline in Options Trading

Mindset, Patience and emotional control are just as emotional control are just as important as strategy and execution

Options trading is a game of probabilities, risk, and edge.
But even the best strategies fail without psychological discipline.
Understanding how emotions influence your trading — and developing habits to control them — is what keeps you in the game for the long term.

1. Emotional Cycles and Common Biases

FOMO and Revenge Trading: Jumping into trades after missing moves, or doubling down after losses, leads to overtrading and poor decision making.
Confirmation Bias: Seeing what you want to see in the data, and ignoring contradictory evidence.
Loss Aversion: Holding onto losers too long, cutting winners too soon.

How to avoid:

Pre-plan trades and stick to entry and exit rules.
Regularly review your trading journal for patterns in decision making.

2. Discipline in Risk Management

Position Sizing: Proper sizing prevents emotional swings and large losses.
Stop Losses and Profit Targets: Sticking to predefined exits keeps emotions out of trading decisions.
Routine Review: Scheduled reviews prevent impulsive reactions to market noise.

On Derive:

Use subaccounts to set strategy boundaries.
Schedule portfolio reviews, especially after big wins or losses.

3. Patience and Process Over Outcomes

Avoid Chasing: The best trades often require waiting for the right setup.
Sample Size Mentality: Focus on executing your edge over many trades, not individual outcomes.
Celebrate Process, Not Just Results: Judge yourself by discipline and execution, not just the PnL.

4. Adaptability and Continuous Learning

Markets Change: Stay open to new information, strategies, and tools.
Journaling for Growth: Track your thought process and emotions as well as trade details.
Peer Review: Discussing trades with others can reveal blind spots and improve discipline.

Your Action Today

Reflect on your last week of trades. Where did emotion influence your decisions?
Commit to one concrete process improvement — journaling, pre-planning, scheduled review, or peer check-ins.
Remember: Your trading edge is not just your strategy, it is your discipline.

Tomorrow, we look at option expiry dynamics and settlement on Derive — what happens before, during, and after expiry.

Coming tomorrow:
Day 42 – Option Expiry Dynamics and Settlement on Derive

Hasta manana
Cpt