1. Pre-define risks of every trades
The risks of my trades are controlled by my trade sizes mainly. I trade a predefined contract size of options persistently. So the portfolio risk is always predefined, although it may increase after certain adjustments. I don't assume MAX losses with my spreads since I plan to make adjustments before that. It's a challenge for me to establish a rule to insure for potential black swan event.
2. Completely accept the risk or take action to eliminate non-tolerant risk
For high probability option selling portfolio, it's crucial to ensure comfort-ability with the risks of the portfolio and corresponding adjustment trades. It's one of my trading rule that if the predefined risk is violated, the extra positions should be closed.
3. Objectively identify trading opportunities
My trading rules specify when to initiate/exit monthly trades, and when to adjust trades. I also trade indexes mainly. As long as these rules are clear, there is no issue of missing opportunities.
4. Execute trading rules for each opportunity without reservation and hesitation
Since I have detailed rules for opening positions, I can easily open positions without any issue. The challenge is in the adjustment side. As long as my criteria to start adjustment is clear, this should be OK in general.
5. Reward ourselves as market gives a win for us
Need to encourage ourselves for successful establishment and execution of trading rules. I think it helps to nurture winning altitude as well. No plan to take profits away from trading account at this time.
6. Keep monitor trading processes and susceptibility for making errors