I have been hearing a lot of irrational tirades by traders and analysts lately. It’s driving me crazy, because I know from experience that successful options traders don’t fight the markets. Instead, they follow the markets.

Markets keep going up – and it’s driving people nuts

So, what’s with all the kicking and screaming right now? After a stellar fourth quarter, traders, investors, analysts – heck, everyone! – believed stocks were due for a rest. Yet somehow, the markets keep going up. The SPX 500 currently sits at new highs, and the other indices are also in record territory.

This wasn’t supposed to happen! The markets were supposed to pull back by now. In short, the markets are not doing what some traders want them to do, and they’re mad. Is that rational? Not at all. But the desire to be right is so strong at times that it causes people to make irrational decisions and change their behavior. Declaring “I’m right and the markets are wrong!” might be good for the ego, but it won’t always be good for their portfolio.

Unfortunately, in the game of trading, being right doesn’t always get the job done.

Successful options traders don’t fight the markets

In the end, what matters most to our portfolio is taking profits and growing our portfolio when trading conditions are optimal. Being right by calling the market’s next move doesn’t create wealth.

Here at Explosive Options, we use the indicators as guides, and not many of them are flashing warnings. Charts are strong, money is flowing to stocks, Fed policy is dovish, the trade deal (phase 1) is done and earnings season is upon us. Those are powerful signs that the bull case remains strong.

Traders can argue all they want about a correction coming. Eventually, they’ll be right, but how much money will they leave on the table? The answer: a lot.

We have taken some chips off the table because it’s part of our routine. We regularly rotate out of names, take profits, cut losses, raise cash and add protection. This is what successful options traders do. Until warning signs start appearing, we will continue on this course.