Back in my World of Warcraft days, we had a small guild of tightly knit friends (many of us are friends IRL). While there were guides online for new dungeon and raid mechanics, we had our own guild motto: learn by doing.
Reading detailed step by step guides and watching strategy videos give good overview of what is needed to tackle new boss fights. But when it comes to both execution and true understanding of each fight is best learned through hands on trial and error.
Today, I decided to finally jump in and try a variety of trading strategies that I’ve been studying. I put on my first calendar spread, jade lizard, and iron fly – all to capitalize on this week’s earnings calls (which is new for me too, playing earnings).
Unlike stocks, options pricing isn’t reflected linearly with the underlying change in price. Options also reflect the time until expiration and implied volatility.
While it’s true that I could run simulations, paper trade, or watch detailed tutorials on the effects of these strategies, from experience, nothing beats… experience.
From these earnings plays, I wanted to see how much volatility crush actually happens in a variety of strategies in the coming days. By now, I understand on paper how each strategy is supposed to act, but until I see it in practice, it will still remain theory.
For new traders, I do recommend using paper accounts solely for the purpose of familiarity of the tool, but you need to start actual money trading as soon as possible. There’s something psychological that forces your brain to actually learn and take it serious when you have your own money on the line.
In short, you will learn best… by doing.