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The Option Genius Podcast: Options Trading For Income and Growth

Updated 8 days ago

Business
Investing
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Let's talk trading. Especially how to trade options for income. Whether you want to trade for a living, have a side hustle, or make extra monthly income from stocks, this is the place.We are here to help individual investors learn to trade options in a way that is simple, fun and profitable. The goal is to help you achieve Freedom. Financial freedom so you have no more worries about making ends meet and so you have more than enough for safety and security. Time Freedom so you can do what you want when you want. And Choice Freedom so you can live your life on your terms with no restrictions. We call it living the Option Genius Lifestyle. Where you can earn consistent monthly income by selling options using safe, conservative strategies. We place high probability trades and earn market beating returns in a way that takes just a few minutes a day. Listen in to learn how you can do the same. Hear from professional traders that have beaten the game. Some of the strategies we discuss are covered calls, naked puts, credit spreads, vertical spreads, iron condors, butterfly spreads, calendar spreads, strangles, straddles, and more. This podcast is about how we trade options and how it lets us life a lifestyle other people can hardly imagine. Trade from anywhere in the world, for just a few minutes a day, in a way that is super safe and can still make more than the averages? Listen in to learn how and check us out at OptionGenius.com

Read more

Let's talk trading. Especially how to trade options for income. Whether you want to trade for a living, have a side hustle, or make extra monthly income from stocks, this is the place.We are here to help individual investors learn to trade options in a way that is simple, fun and profitable. The goal is to help you achieve Freedom. Financial freedom so you have no more worries about making ends meet and so you have more than enough for safety and security. Time Freedom so you can do what you want when you want. And Choice Freedom so you can live your life on your terms with no restrictions. We call it living the Option Genius Lifestyle. Where you can earn consistent monthly income by selling options using safe, conservative strategies. We place high probability trades and earn market beating returns in a way that takes just a few minutes a day. Listen in to learn how you can do the same. Hear from professional traders that have beaten the game. Some of the strategies we discuss are covered calls, naked puts, credit spreads, vertical spreads, iron condors, butterfly spreads, calendar spreads, strangles, straddles, and more. This podcast is about how we trade options and how it lets us life a lifestyle other people can hardly imagine. Trade from anywhere in the world, for just a few minutes a day, in a way that is super safe and can still make more than the averages? Listen in to learn how and check us out at OptionGenius.com

iTunes Ratings

76 Ratings
Average Ratings
56
5
2
4
9

Very informative

By William Hemsworth - Feb 08 2018
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Great show with great info. Highly recommend.

Loving the Content

By The Fat Packs Podcast - Feb 08 2018
Read more
Soon to be new to the market and I'm so glad I found this. Great insight and very helpful.

iTunes Ratings

76 Ratings
Average Ratings
56
5
2
4
9

Very informative

By William Hemsworth - Feb 08 2018
Read more
Great show with great info. Highly recommend.

Loving the Content

By The Fat Packs Podcast - Feb 08 2018
Read more
Soon to be new to the market and I'm so glad I found this. Great insight and very helpful.
Cover image of The Option Genius Podcast: Options Trading For Income and Growth

The Option Genius Podcast: Options Trading For Income and Growth

Latest release on Jan 13, 2020

Read more

Let's talk trading. Especially how to trade options for income. Whether you want to trade for a living, have a side hustle, or make extra monthly income from stocks, this is the place.We are here to help individual investors learn to trade options in a way that is simple, fun and profitable. The goal is to help you achieve Freedom. Financial freedom so you have no more worries about making ends meet and so you have more than enough for safety and security. Time Freedom so you can do what you want when you want. And Choice Freedom so you can live your life on your terms with no restrictions. We call it living the Option Genius Lifestyle. Where you can earn consistent monthly income by selling options using safe, conservative strategies. We place high probability trades and earn market beating returns in a way that takes just a few minutes a day. Listen in to learn how you can do the same. Hear from professional traders that have beaten the game. Some of the strategies we discuss are covered calls, naked puts, credit spreads, vertical spreads, iron condors, butterfly spreads, calendar spreads, strangles, straddles, and more. This podcast is about how we trade options and how it lets us life a lifestyle other people can hardly imagine. Trade from anywhere in the world, for just a few minutes a day, in a way that is super safe and can still make more than the averages? Listen in to learn how and check us out at OptionGenius.com

Rank #1: Option Selling Defined - 015

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I realized that we have done many episodes already where we talk about why you should be selling options, but never gave an explanation.

Option sellers trade in a market neutral way. So you don’t need to market to go up or down. You can trade it when it doesn’t even move.

Also, option sellers have probability on their side. So we do trades that have for example a 70%, 80%, or even 90% probability of working out in our favor. These calculations are done using sophisticated statistics and mathematical formulas that won the Nobel Prize.

In addition, to be even safer, we use other risk management techniques like stop losses, and spreads which limit our losses.

And the example given was the insurance company. So just like the insurance company collects premiums so do option sellers.

In fact, the insurance company analogy is a great one.

Because as well talked about in 8, the real reason options were created were as a way to lose money. They were created as a hedge. As insurance.

So the option seller acts as the insurance company be selling options to farmers, manufactures, and investors who are looking to protect their positions.

That’s one way to describe the option seller.

The second is as a casino or more accurately as the house.

The house takes bets from gamblers and has the odds in its favor. Over the long run, the house always wins.

For us, the gamblers are called speculators. These are the option buyers who are betting against the odds hoping for a big payday. Kinda like lottery ticket buyers. The option seller is the house, and takes the other side of the bet. Once in a while, the option seller loses, but over time, the house always wins. It’s just math.

And with the odds in my favor, I don’t care which way the market goes.

I don’t have to predict. If I want to do a bullish trade, I can, but I don’t have to be right to make money.

This removes so much of the stress.

When you have a 70, 80, even 90% chance of winning on a trade, you don’t have to be the best trader in the world to make money.

You see, when you buy a stock it has to go up for you to make money.

And if it does not, then your money is just sitting there not earning anything. Unless it’s a dividend stock and you get some measly return like 2%.

And if it goes down then you lose.

You have to be right about the direction.

It is the same with buying options, except it is exponentially harder

Not only do you have to be right about the direction, but you have to know by when the move will take place, and how much the stock will move. If you are wrong on any of those three elements, you lose.

Here’s the magic:

When selling options, you get to play a range. The stock does what it does and as long as it stays in the range you want, you win.

Let’s use golf as an example.

To make money with stocks you have to get the ball into the hole in 3 strokes.

To make money by buying options you have to hit a hole in one.

To make money by selling options you just have to hit the ball onto the course.

One additional point I want to make is that emotionally, winning more often does wonders for your self-esteem and confidence. And as a trader, having confidence in your trades and yourself is a key factor to success.

Because with selling options, what we are doing is hitting base hits. Over and over. Not trying to hit home runs. Because you know what happens to the guy who tries for home runs – he strikes out most of the time. And in investing, a strike out means losing money which is not a good thing.

The episodes continues with examples of. Listen to the whole thing to get the complete picture.

What to Learn How To Sell Options? Get Our Free Course at - www.optiongenius.com

Jan 21 2018

26mins

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Rank #2: The Five Finger Strategy - 004

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Welcome to another edition of the Option Genius podcast. I'm your host, Allen Sama. Today, I want to be talking about something that I call the Five Finger Theory or the Five Finger Strategy, if you will. Basically, this is something that I think is very, very crucial to your success. Not maybe your trading success, but definitely your overall financial success. I think it's, super, super important. I call it the Five finger Strategy. That's my personal twist on it. Now, you might have heard somebody mention something in the past about multiple streams of income, so it's kind of like that but it's my own take on it.

This particular strategy will help you overcome the financial pitfalls that happen to everybody. It's my opinion that you need five fingers in your life, or five separate, distinct sources of income. Now, I don't care how rich you are. If you only have one or two fingers, it can all be taken away from you very, very quickly, and in some cases over a night.

Links:

https://optiongenius.com

https://optiongenius.com/blog/79-alternative-investment-platforms/

Nov 08 2017

22mins

Play

Rank #3: Getting Started As An Options Trader With Craig Davis - 48

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In this episode we talk with a newer options trader who wants to make trading options his full time gig. So let's dive into his questions:

For more information on the program discussed in this episode, The Iron Condor Mastery, Click HERE

Craig Davis: So in terms of becoming options trader, being a specialist, what's the top three, top five things I should be looking to do, be, read, think about, think about, and words I'm supposed to have, things like that?

Allen: Okay. The top five or three things that you need to know to be a full-time trader. Obviously, you need to learn. There are many different ways to learn, right? There are many different coaches out there, there are different books out there. You can go, I know in the US we have the public libraries, and you can get any introduction to trading book, and they'll have lots of different strategies in there, they'll teach you everything. But I think it comes down to, so let's say...

Okay, so if I was going to be a trader, so I'm starting over, I'm working my job, I think in the beginning I would try to be more realistic and say, you know, "I need to set my goal, whatever my goal is." I need to, whatever my monthly expenses are, it's 5000 pound a month, or 10,000, whatever your expenses are. So, that's the central goal. And then I think you have to get into the psychology aspect of it first.

Craig Davis: Yeah, okay.

Allen: Where you have to figure out, okay, why? Why is this so important to me? What's going to happen if I don't achieve this goal?

Craig Davis: Okay, yeah.

Allen: Because I think you really need to dig down and make a list of all the negative things, and all of the horrible things that will happen. You know, I'm going to be working until I'm 70 years old, my kids are not going to be able to go to the right college and university, and all these different things, to make it like a mandatory thing in your life, that you have to achieve this goal no matter what happens.

The reason I say that is because a lot of people, they have, "Yeah, yeah, I want to make more money, I want to make more money." But then, while they're on the road, the road has bumps. And so sometimes they go over a bump and say, "Oh, that was too bumpy. I'm going to get off of this road. I don't want to do this anymore." Or they pause, or they stop. They pull over to the side, and they say, "Oh, I'll get back to that after my kid graduates from school, or I'll get back to that after this happens. Let me do this project at work first." They lose track, and then they never come back.

Craig Davis: Okay, okay.

Allen: So, that's a big problem. So, the mental aspect is there. And then the second thing, I think once we have that, then really, you know, you need to look over your entire lifestyle and say, "Okay, I obviously... You need money to trade." There's no other ways about that. So, we need to have, and build up our account as much as possible, so that we have some money to trade.

Craig Davis: Yeah.

Allen: That way you're reducing your expenses as much as possible, paying down your debt, so you're not paying extra fees, and interest, and all that stuff. And then, putting that money away and saving it. Once you have that done, let's say you have the mental aspect done, you have some money to trade, then I think you do some research and you say, "Okay, there are all these different strategies, which one do I think gives me the best chance for success?" And for every single person, it's different. There are people who tell me that, "I think what you're doing, where you're selling options, that's way too boring for me. I want to be a day trader, and I want to get rich in three days." Then, you try that path, right?

Craig Davis: Okay.

Allen: There are people that are very aggressive, there are people that are very conservative, and they say, "Oh, I don't want to take very much risk." Well, okay, then put your money in the index fund, or put your money in a bond fund, and just buy bonds, and make, whatever, two, three percent the bond is paying you, and you live off of that. There are some people that, I know one guy in Canada, he has a company where he teaches people how to do dividend investing.

Craig Davis: Oh, okay.

Allen: By the right shares, and they'll give you four or five percent a year in dividends.

Craig Davis: Okay, fair enough.

Allen: So if that's your thing, that's your thing, that's all you do, and that's all you do. You don't need to worry about it. I found that, for me, I found something that I don't want to only make four or five percent. I want to make, per year, at least 20 percent. And then, I want to do it in a way that made sense to me. For me, I'm a bit of a lazy person, honestly. I don't want to put a lot of time [crosstalk 00:04:31]-

Craig Davis: I think you're being over modest.

Allen: No, really. If you talk to my wife, she would definitely agree with me.

Craig Davis: Well, so you do some work somewhere, so there's some work there somewhere.

Allen: We do a little bit of work here and there in the office. But in terms of the trading, it's not that much. In the beginning, I wanted to find out what I wanted to do, so I did a lot of trades in the beginning. I did a lot of what's called the virtual trading, where you get a free account, and you just do all the different strategies, all the different trades, see which one works for you. I did a lot of back testing.

Craig Davis: Yeah.

Allen: There's software out there that lets you basically go back in time, and you put on a strategy, and then you just go through day by day by day how the strategy worked. If you need to adjust the trade, you can, if you need to change your strategy, you can. So, that was very, very beneficial, because that took a lot of time... If you do virtual trading, like paper trading, or you use real money and you do...

Let's say I want to do a butterfly spread. You come up with your own criteria and you say, "I want to try this new strategy that I've created. I'm going to do this, and this, and this, and this." To actually do it in real time would take you 30, 35 days, and you only get to do one of them.

Craig Davis: Right.

Allen: If you do the back testing, you go back to, let's say, 2000, January 1st, 2000, and you put on your trade. Within like three hours, you can do 10 hours, or 10 years worth of trades.

Craig Davis: Right [crosstalk 00:06:07].

Allen: So it's a big, big chance where you don't spend that much time on it. And you get the learning much faster.

Craig Davis: Right, I see. Yeah. Okay, yeah.

Allen: In the beginning I would find, I would say, "Okay, I'm going to find..." I wanted to find one strategy. Just one trade I could just do it, I don't have to do anything else, I don't have to worry about anything else. This is the only thing I wanted. I just wanted to find one thing that would work. I tried different things. I tried butterflies on McDonald's, butterflies on Walmart, I tried iron condors on certain stocks, iron condors on indexes, credit spreads, double diagonals, cover calls. I tried several different strategies. They all have their benefits, and they all have their negatives.

Craig Davis: Okay, yeah.

Allen: I do think that you can take any one strategy and just work with it, and learn it, and do really, really well with it. So if you find one strategy speaks to you, then focus on that one. Do your virtual trading, and if you can afford a back testing software, get the software, and just within a weekend, you'll have done dozens of trades. You'll have a leg up on everybody else that's doing this. I think that's a secret that people don't really use as much.

Craig Davis: Have you got like two or three back testing softwares that are for doing research?

Allen: So, the one I use most is called Option Net Explorer.

Craig Davis: Okay, Option Net Explorer, yeah.

Allen: I think that one costs... I don't know how much it costs now. Let me see. They have a 30 day trial, so you can try it for 30 days. After that, I think it's... Actually, the 30 day trial is 10 pounds.

Craig Davis: Okay.

Allen: And then for a year, it's 500 pounds.

Craig Davis: Wow.

Allen: You're in the UK, right?

Craig Davis: Yeah.

Allen: So yeah, so it's 500 pounds. So it's a little pricey, you know, maybe you don't need it for a month, or you don't need it for the whole year, but [crosstalk 00:08:16]... Yeah, so it's 10 pounds for the month, so you try it out. And if you like and you want to keep doing it, you can do, they have a three month plan and then they have a 12 month plan.

Craig Davis: Yeah, I'll look at that three month. Okay, three-month and 12 months, okay.

Allen: I mean, you look at everything and you say, "Okay, these are the different things that I want to test. Before you open the account, or before you do the trial, come up with your rules. Like, "Okay, I'm going to do this strategy, and this is my rule, this is what I'm going to put the trade on, this is how I know I'm going to be in trouble." You know, so you have a basic whole trading plan. And then you go and you test that, and you try it. You say, "Okay, this didn't work. Okay, how can I fix it? What can I do differently?" Then you go back and you try it again, and try it again, and try it again until you come up with something that works for you. We have different trading plans that are [crosstalk 00:09:07].

Craig Davis: I'm looking to specialize in the Iron Condor one.

Allen: Okay.

Craig Davis: Because I've seen some things, and trades in the range, and all these adjustments and all that seems like it's a good plan. And then I seen on your program, you have the lazy day trading, or something like that. That incorporates some Iron Condor. So, maybe I am heading towards the iron Condor thing to focus on and try and specialize in.

Allen: Yeah. So we do, we have that course. It teaches everything of a tizzy about the Condor, how it works, how do you do it. It gives the different trading plans that you can use based on if you want to be aggressive or more conservative, whatnot. So, if that's something that you want to focus on, then just go 100 percent and do that, and see how it goes. Do the trial, and test all the different trading plans, see if you can find some other trading plans online.

Craig Davis: Okay.

Allen: I know the ones that we've put into the course, we've tested them, we've done them with real money, so we know that they work. So the question is really, "Okay, so here's the plan. Allen says it works. Now let me go back in time and let me try it, and let me see how I do."

Craig Davis: I like that bit, yeah.

Allen: And let's see. You know, let's see if Allen is full of it, or let's see if he's really telling the truth.

Craig Davis: Now, that's fair enough. I like it. Yeah.

Allen: Because it also, like I said, it's different for everybody. So, the trading plan, we've gotten testimonials from people and said, "Hey, I tried this and it worked great," and then we've had other people that said, "I tried it and it failed, and I didn't work." So, what's the difference? The plan is the same, the market is the same.

Craig Davis: People.

Allen: It's the people that are, they're doing something different or whatnot. We had one student, he was in one of our other courses. It was, you know, you put on the trade and you wait until the trade, if it goes against you, you have to let it go to a certain Delta.

Craig Davis: Yeah.

Allen: So we do that with condors as well. You put the trade on at a certain Delta, and when it gets to a certain Delta, that's when you know that, okay, it's time to change or adjust the trade.

Craig Davis: Yeah.

Allen: Well, this fellow didn't want to wait until that Delta. He was looking at the money and he said, "Oh, I was down 200 dollars, so I got out of the trade, and it didn't work."

Craig Davis: Yeah.

Allen: I said, "But, that's not how it works. That's not the plan."

Craig Davis: Yeah.

Allen: You can go down four 500 dollars, and then eventually it will come back up, and then you'll win. So, you have to be able to ride the waves. For him, that particular plan, or maybe trading in general was not, it didn't fit for him, because of his style. If you cannot see yourself and say, "Okay, I'm going to put the trade on..." When we're selling options, especially with iron condors too, in the beginning of the trade you might be down 100 dollars, 200 dollars or something, before it turns around and then it starts making money again.

Craig Davis: Yeah.

Allen: But if you don't have the patience, or you don't have the ability to just sit and wait, then this is not the trade for you.

Craig Davis: That's true, that's true. Yeah, from what I can see and from what you're saying, it seems like you have to have that confidence to stick to the plan, and just follow the rules according to the plan. So yeah, I think that's-

Allen: You have to have confidence in the plan. So, that's why you do the back testing. You just do it as many times as you can, you track all your results, and you look at it and you say, "Okay, you know what? Over the last 10 years I made money eight of the years or six of the years, I lost money for of the years. In my head, am I behind? Is that acceptable to me?

Craig Davis: Yeah, yeah.

Allen: You know? I had a friend of mine, he found this strategy for the iron Condor, somebody showed it to him, that says, "This is how you put the trade on, and then you never touch it."

Craig Davis: Oh, naughty. Yeah.

Allen: That's it, you don't do anything else. You put the trade on, and then you just let it do its thing, and the numbers should work out, and you should make money. So, it's either you're going to win on that trade, or you're going to lose the maximum.

Craig Davis: Yeah, that's not a good trade then. That's not a good plan.

Allen: Right. I mean, before we make a judgment, we have to test it. So my friend, he's very smart, so he said, "Okay," and he got it. He got the same software, this option software. Now this guy, he's wealthy, he's already wealthy. He went and he found somebody, and told them, "Hey, I need you to learn how to use this software, and I'm going to pay you to run this test."

Craig Davis: Nice one. A real life scientist, yeah.

Allen: Yeah. So, he hired this person, and the guy did all the testing for like the past 20 years or something. The results were that if you had traded this way every single year for 20 years, you would've just about broken even.

Craig Davis: Oh my gosh, that's not good.

Allen: Yeah. There were some years where it did very, very well, and then there were some years where he lost a bunch of money. But overall, over 20 years you would've broken even. So he's like, "Yeah, this doesn't work," and I'm like, "Well, I'm glad you know before you wasted the next 20 years to try to bring it out."

Craig Davis: [inaudible 00:14:35].

Allen: So for iron condors, I do believe you have to adjust it. That just gives you a better chance to win.

Craig Davis: Yeah.

Allen: But another thing you have to be aware of is, you don't always want to be in the market.

Craig Davis: Okay. That's an interesting concept. Because you're always like, when you see on some of the things where they say, "Oh, yeah, you've always got to be [inaudible 00:14:59]." So it's interesting when you say be in the market and out the market. What do you mean by that? That's a good mindset, I suppose for someone that starting out?

Allen: In the stocks, when you're investing in stocks, they have gone back in time and they've looked at this, and they've said that most of the games that are made in the stock market are made in a few days every year.

Craig Davis: No way.

Allen: Maybe like 20 days every year. That's when the majority of the gains happen.

Craig Davis: No way, so what's happening for the rest of the time?

Allen: 70 percent of the time, stocks go sideways.

Craig Davis: Sideways, okay.

Allen: Yeah, that's why iron condors work. They go up, and they go down, and they go up, and they go down. That's why they tell you that you always have to be in the market if you're a stockholder, because you don't know when those days are going to happen.

Craig Davis: Yes, yes.

Allen: It could be in the beginning of the year, it could be in the middle, could be the end. You might miss out on a rally... Like for example, this year, 2019, if you were in from January to now, you would be up whatever it is, 16, 18 percent.

Craig Davis: Yeah.

Allen: If you missed these first few months, and you get in right now, well it looks like the market's going down, so you might lose money the rest of the year.

Craig Davis: Yeah, yeah.

Allen: That's why if you're a stock trader, most of the time you have to have your money in the market, because you can't time it. You don't know when it's going to go up and when it's going to go down.

Craig Davis: No, no.

Allen: Most of us. Most of us cannot.

Craig Davis: Most of us, yes. And unless you've got that magic crystal ball where you can say, "Oh, yeah..."

Allen: Yeah. But when you trade the iron Condor, or other option strategies, you want to look at what's the VIX. The VIX is the volatility of the overall market.

Craig Davis: Yeah.

Allen: Now, the more volatile it is, the more volatility there is, the more the option prices are worth. You get more money when you sell them. But, that also means that the stocks are moving up and down much faster.

Craig Davis: Right, okay.

Allen: So you have to be on your toes. You have to be watching every day when it's very volatile, and you have to be ready to adjust, you have to be ready to play with it, and you have to be... To trade when it's very volatile, you have to be the best of the best.

Craig Davis: Right, okay.

Allen: When volatility is very low, the stocks aren't really doing anything, you can put on the trade and just wait, and then it expires, and you're done, right? Anybody can do that. And so in the beginning when you're starting out, I tell people like, "Hey, if it's too volatile for you, if you are getting nervous because there was a two percent move, or a three percent move in a day, then that's a signal that this is above your skill level, and you need to just get out."

Craig Davis: Okay, yeah.

Allen: Because if we are trading iron condors, we can make 10, 12, 15 percent per month.

Craig Davis: Yeah.

Allen: Do we need to do it every single month? No.

Craig Davis: No, okay. Right.

Allen: If you have two or three good months, and you're up, let's say... Let's say it's the end of March and you're up 30 percent for the year, that's a pretty good year. You could take the rest of the year off, and say, "Hey, I made 30 percent." Most people don't do that, because they're so greedy. They're like, "Yeah, I want to get more. Let's go for 70 percent. Let's go for 100 percent."

Craig Davis: Okay.

Allen: Eventually one of those months you're going to lose. And the thing is, you really cannot tell, in the beginning, you cannot tell which months are going to be simple and which months are going to be very volatile. But the thing is, when you're done with a trade, you can re-examine and say, "What's going on in the market right now? Do I want to get in right now, or do I want to wait? Is there some news event on the horizon, or something that would cause the market a lot of uncertainty and a lot of concern? Then I'll just wait until that thing is over with, and I'll see how the market is reacting to it, and then I'll put my trade up." So, that's what I mean by you don't have to be in it all the time.

Craig Davis: Right.

Allen: You can pick and choose. [crosstalk 00:19:05]... Sorry, go ahead.

Craig Davis: Is there a way in your training, or is there some way to be able to help you make that decision? Because I might see the... The VIX might be something given this is in the market, but [inaudible 00:19:22] say with confidence to say that, oh, the market's a bit volatile at the moment, I might stay out of it?

Allen: So, it takes a little bit of experience to be able to really pinpoint it. But I'll give you the short version.

Craig Davis: Okay.

Allen: What I do whenever I'm putting on a trade, especially my iron condors, and I do them every month on SPX, and I do them on Rut, those are the two big ones that I like... You can do them, if you have less money you can do them on SPY, and IWM, or any of these ETFs.

Craig Davis: Okay.

Allen: I like to do them on the big ones, because it takes less contracts, and it has different advantages. But, I look at, when I'm putting on the trade, I have an analysis sheet and I say, "Okay, what is the VIX trading at right now? Do I see any kind of support and resistance on the chart? How did I do last month, how did I do the month before?" And then I'll also look at the standard deviations. So, standard deviation is basically a percentage movement. It's a statistical number, statistics, so it will tell you that the SPX moved in a bigger amount than it normally does.

Craig Davis: Okay.

Allen: So even if the volatility is still the same, today they had a really big move for some reason. So normally, you know, 70, 80 percent of the time, the SPX will be within one standard deviation.

Craig Davis: Okay.

Allen: If it moves more than one standard deviation, then that's a cause of like, "Hmm, let me pay attention to this."

Craig Davis: Okay.

Allen: If it's moving more, if it's moving two standard deviations, then that's a flag. And say, "Okay, there are big moves happening here, I need to pay attention to this, or maybe I need to get out of the market, or maybe I need to stay out."

Craig Davis: Right, yeah.

Allen: If there is a day when there is more than a one standard deviation move, I don't get in, I don't put a trade on that day.

Craig Davis: Right, okay.

Allen: I want to get in when it's a calm day. So that is the shortcut there, that you need to monitor the standard deviations on a daily basis, and see how they are doing for whatever instrument you are trading. If it's not SPX, if it's a stock, [crosstalk 00:21:35] you can find the standard deviation for everything. Look at it and see, "Okay, I was trading it last month, and it wasn't really moving very much. But now, it's moving one standard deviation every day for the last three days. Okay, something is going on."

Craig Davis: Okay.

Allen: So that's like a flag, it's a bell. "Ding, ding, ding." [inaudible 00:21:58].

Craig Davis: Yes, okay.

Allen: You need to research this more and decide, "Hey, what is the cost, and do I want to get in or not?"

Craig Davis: Yeah.

Allen: There's different ways. Sometimes I look at it and I'll say... When I'm putting the trade on I look at it, "Okay, over the past two weeks, how many times has it moved more than one standard deviation?"

Craig Davis: Okay.

Allen: If you get two or three, that's normal. You have to understand what is normal for whatever instrument you're trading.

Craig Davis: Yeah.

Allen: But for SPX, two or three times is normal. If you get seven or eight, that's very high, because it's only for two weeks. Over the last 10 days, it moved a lot more than one standard deviation seven times, that's very high. So that means that, without even looking at the news, you know that there is something happening in the market.

Craig Davis: Right, okay. Yeah. No, I like the sound of that. That's a good... There's one thing to a trading plan, but this analysis sheets sounds like another good thing as well. And definitely looking at standard deviations, and the movements and the market's an instrument. That sounds like a good, what's it called, skill, or discipline to have. So thank you.

Allen: It's something that can help you, you know? Just keeping an eye on it. It's not a hard and fast rule that you don't do it, or you have to... I don't initiate a trade when there's more than one standard deviation. Do you have to do it that way? No, that's just my personal preference. But, this is something that you can, it's like another tool that you can use.

Craig Davis: Okay, yeah. Lots of tools in the toolbox sounds good to me, lots of skills, yeah. I like the sound of that. So that's something I need to have in my vocabulary more than the standard deviations, the percentage movements?

Allen: Well I mean, if you don't do the standard deviation, you can look at the percentage movements, but then you'll have to remember. It's harder to remember. If you... I don't know what broker you're using.

Craig Davis: I'll be using Interactive Brokers.

Allen: Okay. So, I'm not familiar with their set up, but if you call them, or you find online that there must be a way that you can actually, on your chart you can see the standard deviations.

Craig Davis: Yeah, let me write that down. [inaudible 00:24:26] brokers where on charts I find the standard deviation. Yeah, okay.

Allen: You might have to write it down, or they might have it visually on your screen, however. But whatever works for you, it's a good measure to keep track of.

Craig Davis: Yeah. Thank you. No, we'll do that. Standard deviations, [inaudible 00:24:55] analysis sheet. Is the first one on there now? [inaudible 00:25:02] I need to get a trading plan, makes me stick to the trading plan, my analysis sheet. So you've now got another sheet now that says analysis on it [inaudible 00:25:10], and check standard deviation.

Allen: You also want to make sure that you're not trading during earnings, if it's a [inaudible 00:25:20].

Craig Davis: Okay.

Allen: And, if you're doing iron condors, you want to know in advance, at least have an idea of what you are going to be doing as an adjustment if the trade goes against you.

Craig Davis: Okay. That sounds like an interesting technique. How would I... Because you've got a couple of programs, is that mindset and that skill set within there, like that adjustment thing that you were just saying, like is that [crosstalk 00:25:51]?

Allen: In the course, and the iron Condor course, that's covered in detail.

Craig Davis: Oh, okay. So then-

Allen: Yeah, so we actually have videos where I went through some, I think it was three really, really horrible iron condors, like the market just went crazy. I go through it on that software, that back testing software I told you about.

Craig Davis: Right, okay.

Allen: I go through it on there, and I go day by day and I'm saying, "Okay, market just dropped 50 points. Okay, this is what I'm thinking. Do I do this, or do I do this, or what happens if I do this? Okay, which one am I going to do? I'm going to do this, because of XYZ reason. Okay, now let's see if it worked. Let's go day number three, day number four, go forward, go forward." So basically I'm telling you what I'm thinking as I'm going through the trade.

Craig Davis: Okay. I like it. That's a good, that's the best way I think.

Allen: So now are you going to be, you're in the UK, are you going to be trading the US stuff, or English stuff?

Craig Davis: US. I'll be looking to do US, yeah.

Allen: Okay, so the market-

Craig Davis: But I think my main focus is going to be the US stuff I think. Like the SPX, like I just said, SPX, or SPY and all that. I want to try and do something may be on the SLV possibly, if I can do something.

Allen: Okay.

Craig Davis: As I say, I've I've got to look at your program, look at the resources that I've got, and then just [inaudible 00:27:16]. But yeah, the ETF SPY might be the one that I start with as well. But yeah, that's where I'll be starting, on the American stocks, and the American instruments.

Allen: Right now, gold is very steady, I think. I haven't checked it. I think it's been steady. I haven't checked SLV though. Let's see how that's doing. So yeah, these are ones that do not have earnings, so they are good to do that, they're good for iron condors.

Craig Davis: Okay. Sounds like a good one to do some back testing and research on that. Okay, yeah.

Allen: Definitely. Yes, definitely. Hold on a second. Hold on, I'm going to share my screen.

Craig Davis: Oh, okay. Do I have to press anything? Oh, no, it's fine.

Allen: I don't think so. You can see?

Craig Davis: Yeah, yeah, yeah, yeah, yeah.

Allen: All right, so here is SLV, and you know, it's pretty much up at 16, and died down at 13 something right now.

Craig Davis: Yeah.

Allen: So basically if we're doing an iron Condor... And you can use... In the course we normally go for about 45 days. But we can go 28 days. This one doesn't have a lot of volume, SLV though.

Craig Davis: Right.

Allen: So, might not be the best one.

Craig Davis: Okay.

Allen: Let's try it.

Craig Davis: Do you have a minimum volume in the instrument that you go for? What's your guide range?

Allen: I just want to see some action.

Craig Davis: Oh, okay.

Allen: If I'm doing five contracts, and like this one, this one has 200 contracts every day, 100 contracts. That's fine, because I'm a small part of that.

Craig Davis: Right, okay.

Allen: But the other one, SLV, this one was only showing, like right here, there's only 230. So, these are the only two options I have. So, I don't have a lot of choice in which to trade, so it was like, ", yeah, I don't want to do that one." You know, compared to SPY, you take a look at that one and you're going to say, "Oh, you have a lot of these to choose from."

Craig Davis: Yeah.

Allen: People are trading all of them. So, you have enough liquidity to get out if you need to as well.

Craig Davis: Yeah, yeah. Liquidity, that's definitely a good keyword.

Allen: So if you are doing this one today, depending on how much money you want to put into each trade, you can go to the 292 maybe. Let's say we do 200 each, so two points. This is what our trade would look like.

Craig Davis: Yeah.

Allen: This trade gives us a 66 percent probability of winning, it's right in here in the middle, and then I can put these on the chart. So basically, this redline and this redline are the top and the bottom of our trade.

Craig Davis: Yeah.

Allen: So it seems like it'll do all right.

Craig Davis: Yeah.

Allen: This is a yearly chart. In this trade, what can you make? You can make 55 cents, and it's 200, so let me see if I... You can make 100, you can lose 300. So you know, whatever that is. You have a 66 percent chance of doing that. So what is that, like 33 percent gain? One divided by three?

Craig Davis: Yeah.

Allen: You could make... I mean, so you can be more conservative than this if you wanted to.

Craig Davis: Yeah, okay.

Allen: You can bring these all the way out to here, and go maybe 75 or 80 percent probability. That way, your tent will be larger.

Craig Davis: Right, okay.

Allen: So, less of a percentage return, but more chance of being safe.

Craig Davis: Okay.

Allen: Now the thing is, like right now, I don't know if you've been following the news or not, but the US and China, they're having their little trade war.

Craig Davis: Trade wars, yeah.

Allen: So that has been sending the market up and down almost every day for the last week or so.

Craig Davis: Right, I see.

Allen: If there's a tweet from Trump, then it goes up, otherwise it goes down. So in this environment I would say, no "Well you know, VIX is up a little bit, let's look at standard deviation, and these are the standard deviations. So in the past two weeks, we have one, two, three, four, five, six, seven, eight, nine, 10, one, two, three, four days where it moved more than one standard deviation." So that's a little bit on the high side.

Craig Davis: High side, okay. Yeah.

Allen: I would love it if it's like this, where it's all just gray, and no, they may be have one, but that's about it.

Craig Davis: Yeah.

Allen: This is telling me things are getting heated up.

Craig Davis: Right, okay.

Allen: Just looking at it visually. You see this, you see a lot of gray, a couple bars, a couple bars, couple bars, then all of a sudden you start seeing more reds and yellow. Yellow for here is a danger, because it's more than two standard deviation.

Craig Davis: Right.

Allen: And then, you're see more color, it's getting a little heated, so you have to be careful. That's all that tells you.

Craig Davis: Yeah, that's cool. Okay. So you say something about news, what kind of news are you following, or if there is one I should start looking at, one or two?

Allen: I try not to.

Craig Davis: Oh, okay.

Allen: I try not to watch the news. [crosstalk 00:32:48].

Craig Davis: Okay, good.

Allen: Yeah. I've done... When I do my back testing, you don't hear any news. You're just looking at the chart, you're looking at the trade and you're going day by day. You don't know what's going on in the world.

Craig Davis: No.

Allen: You will do better in your back testing than in real life, for sure.

Craig Davis: Yeah, that's true.

Allen: Just because the news has an effect on us.

Craig Davis: Yeah, true.

Allen: When you're in the trade for 30 days sometimes you get scared, sometimes you hear something. So, if you're only watching the trade, you're not watching the news, you'll actually do better.

Craig Davis: Right, okay. No worries.

Allen: But sometimes there's stuff like this, when it starts dropping all of a sudden, then you have to pay attention. "What's going on? Why is it always that it's going steady for so long, and then all of a sudden it starts dropping?" And then you have all, look at this, you see this? Red, red, no red, red, red, red, red, yellow. This is like, "Hello, wake up, we have something going on here."

Craig Davis: Yeah.

Allen: So that's when you watch the news and you see what's going on.

Craig Davis: What's going on, right. When the red flags are there, then watch the news, okay.

Allen: Yeah. So I mean, I watch some shows that tell you like technical analysis, what other people are thinking. They'll say, "Oh, this is the line of resistance, and this is the support level, and this is this," okay, I'll take a look at that. But on a day to day basis, the nude is total baloney. They have no clue why the market is moving. Really, on a day to day basis, they don't have any clue. They have to make up something.

Craig Davis: Yeah. Yeah, just to keep the viewers happy, I suppose, yeah.

Allen: Yeah, I mean, they have to have airtime, right? They're on 24 hours a day, they have to talk about something.

Craig Davis: Okay. Yeah, yeah, no worries. No, that's really insightful there, thank you. Yeah, so red flags, warning, check the news, standard deviations. [inaudible 00:34:51] if it's yellow, yeah, stuff is happening.

Allen: I mean, Interactive Brokers might not show it like this.

Craig Davis: No, that's fine. If they've got it somewhere, I'll just have to just get my eyes used to the way that they present the data, but yeah, I'm happy to do that.

Allen: So essentially you have about 2000 to trade with, is that what you wrote?

Craig Davis: Yes.

Allen: Okay. And your expenses, your goal is about 3500 a month, and you want to get there in about three years.

Craig Davis: Yes. Or sooner, or sooner.

Allen: Or sooner.

Craig Davis: I put that down there because, like as I say, I just put the figures down there, in terms of like what's achievable and what's possible.

Allen: So let's say, here, let's do some quick math. So, 3500 times 12, 42,000 pounds a year, and you have 2000 to work with.

Craig Davis: Yeah.

Allen: That's 42,000 divided by, let's say, 25 percent a year. If you're making a 25 percent yearly return, you would need an account of 168,000.

Craig Davis: Nice one.

Allen: And you're at two.

Craig Davis: Yeah, so that's no chance. [crosstalk 00:36:04].

Allen: How long will it take you to go from 2 to 168? There's a small chance, but you'll have... I don't want you to take excess risk is what I'm saying.

Craig Davis: No, no, no, no, I'm in it for the long term. I'm going to start small, grow small, learn.

Allen: And right now you have two, but that's what we talked about earlier, you're saving whatever you can. [crosstalk 00:36:24]...

Craig Davis: Yeah, you'll add into it, yeah.

Allen: Yeah. One of the things I tell some people is that, when you're doing your back testing at your paper trading, even if you're not real money trading, keep a result of all the records.

Craig Davis: Yes.

Allen: Keep a track record of how you're doing. Because you never know when you're going to run into somebody who has money, or an uncle, or someone who's... Because you know, when you go to a party or you meet someone, you say, "Oh, hey, what are you doing now? What are you up to?" And you, "Oh, I'm trading options." "Oh really?" "Yes." "How are you doing?" "Oh, I'm doing fantastic." "Really? Oh, okay, I have some money that I need to invest. Can you do it for me?"

You will be surprised at how many people there are that have money, that they don't know what to do with. So these people, they might come and tell you, "Okay, I have 20,000 pounds, please do something." And you do it for them if you want to, and then you keep, "Okay, I'll take half the profit." "Okay."

Craig Davis: Yeah.

Allen: But keep in mind though that that also brings another level of stress.

Craig Davis: Yes. I could imagine, yeah.

Allen: Losing your money is one thing, losing somebody else's money is a whole different thing.

Craig Davis: That's true. Yeah, man, you have to be careful. Yeah, that's fine. Yeah, man. Just go and lose their money that easy. There's a UK term, they call it like a... I don't know how you'd say it in American slang, but in the UK it's like, "Don't pee it down the toilet," or something like that.

Allen: Yeah.

Craig Davis: Yeah, so I understand [inaudible 00:38:05].

Allen: Yeah, we call that, what do we say? We say we pissed it away.

Craig Davis: Yeah, that same thing, yeah. So yeah, we say the same thing.

Allen: Cool.

Craig Davis: So yeah, definitely. That sounds like a way forward. That's excellent.

Allen: So what else, what other questions?

Craig Davis: So, with respect to... I'm just trying to think, I think I've gone through the sort of, like you definitely have the mindset [inaudible 00:38:36]. With respect to adjusting, so you've calculated how much to put on a trade for an iron Condor. I'm just going by the term, like the rollover adjusting, is there a way to calculate, or you can't tell how far it could go against you, is there a way to make it like a rough ballpark figure on how much to put aside if you needed to do an adjustment? Or is that all on your course on how to make the decision should you adjust, or should you do this, or take money off the table?

Allen: In reality, you can adjust forever. You can adjust month after month. You can keep it rolling forward, "Okay, so I didn't do good this month, I'm just going to roll it into next month," and then roll it into next month, and you can just keep going. I don't think that's a good idea, because it never ends.

Craig Davis: Yeah.

Allen: If I lose money on a month, then I just want to end it, and then start over fresh.

Craig Davis: Yes.

Allen: I don't want that baggage of coming, "Okay, I'm down 300 dollars from last month, I got to make it up." No, I want to start fresh, and whatever I can make, and then get it back eventually. If I was to put... I usually keep about half of what I put in originally.

Craig Davis: Oh, okay.

Allen: So, if I put in 1000 on a trade, I might keep another 500 on the side.

Craig Davis: Okay.

Allen: Or maybe another thousand, and worst-case scenario, to adjust.

Craig Davis: Okay. Why not, why not? Okay, I like that. Yeah. I like that. It makes sense. So 100 to 50 percent, why not? Why not? I like that. I like that. So trade, and that's what you [inaudible 00:40:22]. Okay, why not? Yeah, I like the sound that that's okay. Let's see, what other questions could I ask you? I sure have put some on my email, but-

Allen: It says here that you took some courses already?

Craig Davis: Yeah, so I took some courses. I know this might seem like a strange one. There's a guy called Robert Kiasaki. I went to one of his training things and I thought, "Right, I'm going to fly in..." So pretty much, he's the one that put me on the path to try and look into do these things. I've been trying to do real estate things, and business things, and the stocks and shares thing. So I've done a couple of things, but that was just like the theory. I never got into a paper trading account.

So last year I went, because in my full-time job I work in healthcare, I work in a pharmacy. So I got this contract, I was at the hospital pharmacy, where you've got more some more and things. I worked with this guy, I worked with him before, and he says, "Oh, come and work with me on this iron, and it's paying me [inaudible 00:41:21] a bit more money." So I thought, "Oh, based on the hours that I've got, this is okay."

But what I didn't factor in, and maybe it's a life lesson, is like the downside. If you can imagine, I experienced the most downsides where, this is my assumption, I never asked, so I suppose I wasn't wrong. So for example, the person contracted [inaudible 00:41:46] for his business, he was saying, "There's too many staff, we're not going to employ staff." So I go, "What do you mean by that?" I had to find out the hard way that if all the jobs don't get done, I have to stay behind.

Allen: [crosstalk 00:41:57] Yeah.

Craig Davis: So before I was supposed to do 45 hours a week [inaudible 00:42:02], I think I must've pushed about 75, 80 hours a week. I was there late nights on weekends, I was there on my days off.

Allen: Right.

Craig Davis: I was there trying to... So, my plan was to go there, get my paper trading account up and running, start doing some stuff, so that's where I had the idea to get onto the [inaudible 00:42:22]. But then it stopped. So let's say, so April, May, say June 2018, I stopped doing stuff. So in the process now, I have to send an email back to Interactive Brokers, because my account cleared [inaudible 00:42:37] on SLV. I was selling some put options, because I thought, "Oh, I've learned about put options, let me sell some put options, and if it goes up, I keep the premium, if it's slow I keep the premium, if it goes down, then I don't get the stock anyway, but I got it for discount."

So I started doing all that and then, boom, the reality of that kicked in. Then, I says, "Oh, I need some annual leave." He goes, "Oh, I can't find cover for your annual leave." I go, "What are you talking about?" So before I just assumed, I never discussed it. Well, it's not that I didn't discuss it, but I thought like, well... So for now, I'm just working with teams now where if I can get an agreement where possible, I'll go for that. Because before, I just overlooked it.

Allen: Mm-hmm (affirmative).

Craig Davis: I overlooked, like with my other team, like they were saying, "Oh, you got to do this [inaudible 00:43:30]." "You guys are killjoys." He was telling me, "Sorry, we can't give you cover for your leave," so I says, "What are you talking about?" So, I didn't have the words and the vocabulary, because I never thought I'd have to present an argument to ask for... Or, [inaudible 00:43:47] present an argument to request for annual leave.

Allen: Yeah.

Craig Davis: Never. I thought, "Okay..." So with respect to the courses, I started off with Robert Kiasaki, did some real estate ones, and there's a guy called Andy [Tamura 00:44:04], he had some ones. Then recently, I went on to Udemy, and that's where my... Because on Andy Tamura, he did one of these things and then I stopped. [inaudible 00:44:16] the profile, and when I seen the profile, "Oh, someone on Udemy," and I seen this thing it says like, "How to make money on weekly options," and it was talking about iron condors.

Allen: Mm-hmm (affirmative).

Craig Davis: So I researched and said, "Oh my gosh, he was talking about that." And then they say, "Oh, you've got to get educated," so I went on some podcasts and then I came across yours. I was listening to the way that you were speaking for your people and I thought, "Yeah, yeah." Because they say sometimes if a person, you can listen to what they're saying, but you have to make the decision on what they're presenting and what they're saying.

Allen: Right.

Craig Davis: What gave me the confidence to say, "Oh, yeah, this guy seems okay..." Because when you where then talking to the student guy, you... Because there's some people, like I said, that can sugarcoat it. But you actually said to him, "No, you need to get someone that's going to make you accountable, like a trading partner, that's got a list of rules." [inaudible 00:45:09], "Okay, you didn't get the trade, what are you going to do about it?"

Allen: Right.

Craig Davis: And that kind of thing. I thought, "Yeah, I like that." Because that's what you need, is everyone, "Oh, yeah, it will be fine [crosstalk 00:45:19]." You want someone to know, really to... Yeah. So I thought, "Okay, yeah, you seem like a serious guy. You want people to benefit."

Allen: I learned from experience. That was my wife. That was my wife standing there telling me, "What are you going to do to fix this?"

Craig Davis: The best trading partner, yeah. Yeah, but that's a good incentive as well.

Allen: Yeah, every day she would come up the stairs when I was at home. Every day she would come up the stairs and stand there until I talked to her.

Craig Davis: Yeah, "What have you done? What are you doing?" So yeah, so there you go. Behind every strong man there's a strong woman, I could imagine.

Allen: Oh, yes.

Craig Davis: Like I said, so for me, that's what got me onto the parcels. And there's programs. I seen yours, I listened to that podcast, and I looked into some of your things and I thought, "Okay, I want to be an expert, so I'm going to have to put the money in. Because why not pay, say, 297 dollars if it's going to say..." I'm telling you before I was not an ambassador. I don't know why I wasn't listening before. It's like I just have the theoretical, I had to practically...

[inaudible 00:46:41] like the insurance, if it can save you money, I don't mind spending 297 dollars going in the forum, and it's going to save me 3000 dollars or something like that down the road. I haven't got a problem with that anymore. Before I might've been, "Oh, I'm going to risk it." No sense. Because it could be worse. Because as I said, there is no...

Allen: You mentioned a couple things. You said the weekly iron condors. I would not do that.

Craig Davis: Well, so don't do the weekly ones, [inaudible 00:47:18].

Allen: Those are for experts, and those are for people who like to gamble. If you don't have the money to risk, I would not do that at all. I would stay with the monthly.

Craig Davis: Yes.

Allen: The weeklys, you cannot adjust them. I'm sorry. I don't care what other people say. They just move so fast, that you cannot adjust.

Craig Davis: Right.

Allen: And the money that you make is so little, that you're only trying to make five, six percent. But that thing could, you know, you sell it for 20 cents today, tomorrow it could be a dollar, what now?

Craig Davis: Yeah.

Allen: You can't do anything. I learned the hard way that those are very dangerous, and they...

Craig Davis: Yeah.

Allen: And the [crosstalk 00:48:01] Kiasaki, he gets paid a lot of money from that Andy Tamura guy, to just be the head. You know?

Craig Davis: Yeah.

Allen: He will just use your name, and your picture, and your video, and... I mean, I love his books, I love his books, and they make a lot of sense, but yeah, so be careful of those. [crosstalk 00:48:30].

Craig Davis: He doesn't recommend the weekly options [crosstalk 00:48:34] for him. He didn't recommend that. I did see it on the Udemy, where it says, "How to make money selling options doing this weekly..."

Allen: Oh, I see, I see.

Craig Davis: So for me, I was looking at it as a learning exercise, where what is the difference between doing this weekly iron Condor to the monthly? Because they do say do it for 45 days, and do this.

Allen: Right.

Craig Davis: So, I was just looking into the process, but yours seems like you've got the accelerated version, where you've got the whole package there, you're going from start to finish, and this and that.

Allen: Yeah, I mean, and if you have any questions or anything, you just email me, I'll help you out.

Craig Davis: Yeah, definitely, definitely.

Allen: If you need anything, just let us know.

Craig Davis: Yes, yes.

Allen: But really, take the plan, do the back testing, if you can afford it.

Craig Davis: I will.

Allen: I haven't checked, there might be something out there that's cheaper.

Craig Davis: I can have a look. So if I literally Google, is it called like back testing software? Is it like that, or is it-

Allen: Yeah, so just option back testing software.

Craig Davis: Okay.

Allen: You might find something. I know this company that I use, on the screen, the Think or Swim, they have something for back testing.

Craig Davis: Okay.

Allen: It's included, it's free. It's not very good... I think it's right here, Think Back. So, it's not the best, but it's free.

Craig Davis: Okay.

Allen: You can go back in time, so let's say you want to go back a few years, go back to this day. So it'll tell you, "Okay, SPY on that day was 131." And I think this is a chart for it.

Craig Davis: Yeah.

Allen: It gives you all the prices. So, you can put on a trade and then just go through it and see. Just go day by day. Like, "Okay, this is the 7th, today's the 8th, today's the 9th, how's my trade doing?" It's not as good as the other one, but then again, it's free.

Craig Davis: Okay. I can have a look at it. I have seen the Think and Swim. I don't think they're taking account for the UK anymore.

Allen: Oh, I didn't know that.

Craig Davis: [crosstalk 00:50:42] Interactive Brokers.

Allen: I see, okay. That's horrible. Tasty Trade... Or, no, Tasty Works is another one.

Craig Davis: Okay, let me try that, Tasty Works, yeah.

Allen: They're a newer broker, and I know they opened for Australian accounts, so they might be probably open to you guys too.

Craig Davis: UK, okay.

Allen: And they are, you know, they focus on options.

Craig Davis: Oh, excellent.

Allen: They have a lot of educational stuff as well. Some of their stuff I agree with, some not.

Craig Davis: No worries.

Allen: Okay, so the guys who, they're the same guys who made Think or Swim.

Craig Davis: Oh, okay. Oh, that's good.

Allen: In the past, they were floor traders on the exchanges. Then they made Think or Swim, and you know, they started doing videos, and teaching people. They were the ones that told everybody to do the iron Condor without adjusting.

Craig Davis: Really?

Allen: That's how they got popular, yeah. And then they sold this company to Ameritrade for millions and millions of dollars.

Craig Davis: Okay.

Allen: And then after they have the buyout period, where they cannot do anything for a lockup, they cannot do anything for a certain amount of time. Then once that period expired, then they went and they opened another brokerage.

Craig Davis: Oh, okay.

Allen: They're still out there, making videos and whatnot. So, they have a lot of content that people like. But they might, let me see if they open accounts in the UK. I think they do.

Craig Davis: Okay, I'll have a look. But like as I say, with this Andy Tamura guy, you mention weekly, but he says safety, so that's where I got the safety element. But yeah, he definitely was saying, "Grow small, take your time. [inaudible 00:52:43] paper trades."

Allen: Right.

Craig Davis: But no, I don't think he wouldn't have said anything about [inaudible 00:52:49] saying about, "How do you have a losing strategy?" And rather than taking the maximum offer, he was the one that [inaudible 00:52:58]. So that gave me the idea. That's what I was leaning to. Because he said, "How do you turn a losing trade, so you don't get the max loss, and you're sort of not [inaudible 00:53:07] after having the max loss?"

Allen: Yeah, so that's basically talking about adjusting.

Craig Davis: Yeah, yeah. So yeah, man, Think or Swim [inaudible 00:53:25] said to do that, wow, they would've believed it.

Allen: Yeah.

Craig Davis: Well, like as I say, if it were, it depends on what context. Yeah, if they break even after 10 years and that.

Allen: I was shocked, I didn't know that. I hadn't done it, my friend did it, and I was like, "Wow, really?"

Craig Davis: Wow. If something sounds too good to be true, it most probably is or something, they might say. But no, I'll look for that. I'll look for the Tasty Works. If I can start an account, then I can look at that.

Allen: Yeah. The only reason I tell you that is because their software might be better than Interactive Brokers.

Craig Davis: Ah, okay.

Allen: It doesn't matter which one you use, but their software, because they are focusing on option traders, so their software might be better. And they're newer, so they'll respond to you. I know Interactive Brokers, they don't really respond very well. Their customer service is not the best.

Craig Davis: Right, that's all I need to know. You've got a problem, you can't get a hold of anybody.

Allen: Yeah, I opened an account with them, and I couldn't even figure out how to use it, seriously. And so I emailed them, and I didn't get any response. Then I canceled the account, and then they contacted me. They were like, "Why'd you cancel?" I was like, "Well now you contact me."

Craig Davis: No, that's not the best way.

Allen: I think they are the cheapest, but you know, you really have to know what you're doing.

Craig Davis: Yeah. [inaudible 00:55:08].

Allen: Yeah. So you have your game plan?

Craig Davis: Yes, I have definitely... Oh, man, Allen, you're a top man, you're a superstar. I've definitely got a game plan. You gave me so much food for thought, hints and tips. I've been writing down some things. I know you're said you're recording, but let me just write it down while the inspiration's there. Yeah, I'm definitely more [inaudible 00:55:30] focus on these and back testing of the plan, which I never thought about, which makes sense, just to get confidence. Not confidence, but at least I can, what's it called, develop the skill of putting on the trade, and making sure I'm doing it properly. So yeah, yeah, I like the sound of it.

And plus, yeah, I can view like how many trades over how many years in like a few minutes, so I like that. That's good. Then I could just say, I just have to get used to the [inaudible 00:56:00] where I'm coming forward, the volatility in that. So yeah, man, definitely got a game plan to go forward with. Looking forward to be working with you, and being part of this [inaudible 00:56:14] team. It's going to take me a few days until I digest everything, and get into it. But, I'll definitely be staying in contact, and if there's anything else that [crosstalk 00:56:27].

Allen: It's interesting, it's fun, but when you're doing it, it's very boring.

Craig Davis: I'm glad you're telling me that, that's okay. They say the good plans are the [inaudible 00:56:40] ones. So it sounds like I've got a bit of a...

Allen: Yeah. Like, yesterday the market was down, so it was exciting. It was like, "Oh my God, what do I do? I got to do this, I got to do this." Today, market is flat, and I've got nothing to do today. Most days you don't do anything. You just sit there and wait.

Craig Davis: Waiting for something.

Allen: Yeah.

Craig Davis: Man, I didn't do an adjustment or something, or I didn't do this, didn't do that.

Allen: Yeah.

Craig Davis: I like it, I like it. So, that's where the boring part comes.

Allen: Yeah. That is also something that you're going to have to learn with experience. You might adjust sometimes too soon, sometimes too late. It's a fine line. Like, we'll give you rules that say, "Okay, if this happens, you adjust."

Craig Davis: Yeah.

Allen: But there's always the thing that, you know, "Oh, if I didn't adjust, it would've worked out great. If I had waited another day or two, it would've worked out great." So, that always is there. When you have a firm set rule, it doesn't always work out in the best way. That rule will work most of the time, not every time. And so as you get experience, you'll realize that, "Okay, I know my rule says to adjust, but I am going to wait one more day, because I see something something on the chart, or I think this is going to happen," or something.

Craig Davis: Yeah.

Allen: That's why we don't give Vista computers. This is why we do it ourselves. Otherwise, we could just make a computer program, and let it run, and hopefully it works.

Craig Davis: Yeah. No, that's fine. No, I like it. Yeah, man. Allen, definitely [inaudible 00:58:28], it sounds like you've done a great journey. You're a great teacher, and you want to encourage people. I'm glad you've got your course, and the website, the podcasts. Yeah, man, I'm glad that you've even got this thing, where if you want to speak with you, to donate some money. So even that for me, that's a learning for me as well. But yeah, man, this is definitely much appreciated. Definitely. Plan everything for everything.

Allen: Great. I hope I was helpful, and like I said, going forward, you need anything, just email us. We're here.

Craig Davis: Yes, definitely, man. I'll email you guys. Yeah, man, definitely much appreciated for the help and support. Definitely much appreciated. Thank you.

Jun 11 2019

1hr 4mins

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Rank #4: The Path To Options Trading Success - 46

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What is the best way to learn how to trade?

Is there one best way to learn trading?

That is what I cover in this episode...

Hey, hey, hey, genius nation. How are my passive traders doing today? How are you feeling? What's going on? You know what I love? I love when you guys reach out to me and when we can communicate back and forth. So whenever one of you or if you have an issue or if you had something that you want to say to me, I would love it, and I do love it. It's one of the highlights of my day when I get a comment. If somebody, maybe they post something, they email us, or they post something on our blog as a comment or one of our Facebook groups, our free Facebook group, if they're a member in there. If you're a member, go ahead, let me know how you're doing today. Let me know what questions you have. Let me know how we can help you, myself, or my team or anything.

But I do understand that sometimes you might have a situation where you don't want to make it a little bit public. Blog post, comments, and Facebook groups, and when you write a review for the podcast, those are all pretty public, and people can see that. And I understand that if you have a longer issue or if you have a longer comment, then you can always email us. I love getting emails. We get several emails every day and the ones that my team can answer, if you're asking a question like, "Hey, what's the best broker to use," then my team will handle that. But if it's a more detailed question, if it's a personal issue or a trading issue, then I have those reserved for me, and I take some time every day to answer those.

And that's really part of how I feel that I am able to give back. So even if you're not a member of one of our services or one of our courses or whatnot, if you do have something, please reach out to us. We'll do our best to help you out as much as we can. That's getting us to our goal of helping 10,000 individual investors achieve financial freedom. So if we can do that without you giving us any money, then that's fine too. As long as it gets you to where you want to go and makes the world a better place, I guess.

And so today's podcast, I had a lesson that I wanted to impart upon you, and I'm going to cover that. But we got an email recently that was very lengthy, and it was confusing. It had me scratching my head for a little bit. It was a aggravating. It was really annoying in a way. I don't know. I mean, it gave me so many different emotions as I was reading his email that it totally confused the heck out of me. But when I went through it a couple of times, I read it two, three times, and I realized that the person that wrote this email really, really needs the lesson that I'm about to impart.

And so I thought that he would be really awesome if I could share with you just a few lines from this email. It was very lengthy. I'm not going to read the whole thing but just a few lines to get you into the framework to understand what that guy was thinking and what that guy was feeling when he wrote this. I did respond to him, and I gave him suggestions on what he can do because that's what he was looking for. But in this podcast, I want to go through that lesson to see how it applies to this.

Okay. So now I get this email. We get emails every day, but I got this one email, and it was very lengthy, and I was like, "Okay, this is going to be a good one," because he wrote, it was several paragraphs. And I'm going to read some of the things that he wrote. He started off by saying that, with pleasantries, "Hey, how are you doing? I've been following you," blah, blah blah. And then he goes on, and I'm going to read some of the lines. So he starts out by saying that, "I've heard options are manipulated. This is not an easy market, and hedging positions is important." Now this is one line of one paragraph. Okay, so I'm going to bounce around.

I'm not reading the whole thing. I'm just taking single, single points to get you to understand what I think is going through his mind. He wrote really long. So that was the first point that when I was reading through it, I was like, "Okay, I want you guys to hear this." And then then he says that, "I think most traders fail because they are the Jack of all trades, and they switch from stocks to futures to options to currencies without developing the skills in one." And at this point I'm like, "Okay, this guy, he's preaching to the choir." He knows what we're talking about because we're always talking about get that one strategy, and if you're going to be jumping around, you're not going to ever be good at anything. If they got, dive deep, gets good at something, be consistent, be profitable before you add something else. So I thought, this guy, he's been listening. He gets it. He understands it.

So let's keep going into the email. Then he says that, "I'm thinking about taking an options course." I said, "All right. That's cool." He goes, "I belong to an alert service now, and I'm happy with it." Okay, that's awesome. And then he says that, "I have a full-time job, 60 hours a week, and I cannot dedicate to trade full time right now. But that's my goal." I say, "All right, man. You are like so many of our clients, of our members, and our customers. That that is the goal, right? Maybe you can trade a little bit. Maybe you can trade during lunch. We can show you how to do that."

But that's what his goal is, and I commend him for it. So then he says, "I understand where you are coming from with money spent on education. As I have spent," this is him talking, "As I have spent $25,000 so far and not placed a single trade just yet. I am preparing to set up an LLC as I am at the point where I will start swing trading stocks soon." Now at this point, I was getting confused. I say, "Well, wait a minute. Well, hold on a second here. You work 60 hours a week. You don't have time to trade full-time or even really, 60 hours a week. You have a alert service that you're paying for every month, but you have not done a single trade ever. You've already spent $25,000 on education, but you have not done a single trade. You're paying for a service that gives you trades, and you're happy with it. How can you be happy with it if you're not making any money from it? I don't understand."

I'm confused at this point. I'm very confused. And then he goes further. He goes, "I am preparing to set up an LLC." You're preparing to spend money to set a corporation to trade in, but you have never traded a single share before. How do you even know it's going to work? Why are you going through all this extra hassle and wasting time? And then he says, "I'm at the point where I will start swing trading stock soon." Okay, you going to swing trade. All right, good. You made a decision. You're going to do something, awesome, great. I commend you for that, but then why are you telling me in the previous paragraph that you were thinking about taking an options course and that you belonged to an options trading service? This makes no sense to me. I don't understand. Help me. Please somebody explain what's going on here.

Then he continues. He's going on. He goes, "Two of my mentors day trade futures and swing trade stops." Okay. The next line, the very next sentence it says, "I would love to be coached and mentor to learn options." Again I'm like, "Wait a minute. Whoa. You have two mentors that do futures and swing trading stocks. They're two different things, right? Kind of similar but still two different things, and now you want a coach to trade options. You want to be mentored in trading options." Okay, I mean, coach, you want to get a coach. Coaching is not cheap, right? To have a tab, somebody actually work with you one on one as a coach, as a mentor, that's not cheap. But you want to spend the money do that even though you've never done a trade yet.

And then he continues. He goes, "I will be in webinars all day Thursday as I am attending the something something summit." Okay. It's just pitch, okay? It's people pitching product after product after product after product. So a guy comes on, tells you how good his trading is and that you should buy his product. Next comes on and talks about how good his trading is, and you should buy his course. Next guy comes in and says, "Oh, I'm making tons of money. You should buy my course." That's what a summit is. You get guru after guru after guru coming on, giving you really no information and then just pitching product after product after product.

So he's going to be spending all day, all day Thursday, listening to these gurus pitch their products while he works 60 hours a week, right? So he's working 60 hours a week. I guess he took the day off for this. I don't know. And then he says that, "I've attended the summit two years," so he's gone to this thing for the past two years. This will be year number three. Supposedly he's getting something out of it because he's spending all this time on it. But again, then he's never placed a single trade.

I have no clue what's going on. Then the next line, it goes, "I enjoyed your presentation last week. It will probably take me four months perfecting your strategy." He enjoyed the presentation that we did. We did a training, and he was on. That's why he was writing in because he wanted to talk to me. So then he goes on and says, "This is my phone number. Please call me. I'm available after dinner time. Please call me at night after dinner time." And it's, okay, well, first of all, dude, I don't know what to say to you, right?

There's so many different things in your email. You start off by saying, you think our options are manipulated, and it's not an easy market to trade. Okay. And then the bottom, you're telling me that you can probably, it's going to take you only four months to perfect the strategy that I was talking about. So the strategy that I showed on the training, which is already not perfected. Nothing is perfect, but I showed the way I trade, my particular strategy, and he wants to take four months to perfect it, meaning I guess improve it or make it better than what I'm doing. But then here's a guy who has never done a trade before in his life, and he thinks he can perfect something that I've been doing for the last several years.

So that's where I was. That ticked me off to be honest. But do you see? I mean, I don't know. Maybe you can see yourself in this, where this guy is completely, completely bonkers. He's confused, and I don't blame him. His heart is in the right place. His brain may be not be in the right place, but he has his goal set that he wants to retire, and he's working hard. I mean, I got to give him credit for that. It's not easy working 60 hours a week and trying to learn how to trade and make yourself better.

But what I do fault is, how do you spend money month after month on something? How do you spend $25,000 without even trying a trade? And okay, fine, maybe you got suckered into it. Maybe somebody did such a great sales pitch that you just got suckered into some product. Okay, I get that. It's happened to all of us. You go to a seminar or whatnot, and you think it's going to be great, free information, and at the end it's like, "Okay, here, sign up for $5,000 program." Okay, we do it because they make you such an awesome, amazing offer that you think you can't fail. But then we learn, oh, that it's not the truth, but okay, even, oh, that's fine too. You spend $25,000. Okay, fine.

But the fact that bothers me is that he's still spending time going to sales pitches. Why are you spending time going to sales pitches when you have all this training or whatever that you already have that you're not using. Number one, you're not using any of it. You haven't done a single trade. And then you're going to the next step of making a corporation to trade in. I mean that is, if you are already a professional trader, if you are already making a very, very good amount of money, then you should go and look at and say, "Yeah, what, I'm going to start open a company," and we've talked about that in a previous podcast.

So if that's something where you're at, then you can listen to that podcast. But if you have never done a trade before, you don't need to worry about anything about setting up a company to trade in. You need to worry about A, putting a trade on, and B, not screwing it up because you're going to screw it up, especially in the beginning and to tell me that it's going to take you four months to perfect something that I'm already doing every day, where are you coming from? You have all this confidence. You've never done a damn thing yet. Jeez.

So, I mean, hopefully you're not in this situation where if you are, then it's very simple how to get out of this situation. Number one, stop wasting your time going to pitches, okay? Stop reading emails where all they do is try to get you to buy something else. If you have to, unsubscribe from that list, okay? Because a lot of these companies, that teach you how to trade, right, that's all they do. They sell you a very cheap product. Maybe it's seven bucks or 20 bucks or 50 bucks or 100 bucks or whatever. And then every day you get bombarded with emails about how you should buy one of their other products, and they have 10,000 other products, and they're all great, and they're all making millions of dollars, and they're all, you could triple your money in two weeks in all of them. But it's all BS, right?

So get off of these email lists. Get off all of that. Pick one thing, right? Pick one thing that you can do, that you want to do it. This guy tells me he wants to do swing trading. Okay, fine. Go do swing trading. Get away from options. Get away from futures. Get away from currencies. If you want to swing trade stocks, go swing trade stocks, right? Why are you on a options trading training? Why are you going to this summit? All of them are not talking about swing trading. They're going to be talking about all kinds of stuff, and then you're going to get sidetracked again, right? When you are learning, when you are trying to do something new, when you are trying to improve your situation, the tendency that we all have is to learn everything we can about it. Okay.

And this is the lesson part. When we learn, and for some reason, we look at trading because we don't know any better when we're starting out. We look at trading as trading, one big umbrella. So stocks, buy and hold, is the same thing as swing trading is the same thing as futures as currencies as options, cryptocurrencies even. All these things get lumped in together in our brain as trading. Say if your goal is, "I want to become a trader," or "I want to make 5,000 bucks a month from trading," right? That's your goal. We think that if we read a book on stock options, we're getting to our goal. If we read a book on swing trading, we're getting to our goal. If we're taking a course on technical analysis, we're getting closer to our goal. If we're learning about buying a course on futures, we're getting to our goal. The truth is we're not because each of those is a separate path. Each of those is a separate road that is taking you further and further away from your goal. Basically, you're just going around in circles. Does that make sense?

I've said this before many, many times. We need to pick one strategy even when it comes to passive trading. There's dozens of strategies that you can use to sell options, but we don't focus on dozens of strategies. If you're starting out, you focus on one. You get good at that, and you study that, and you practice that, and then when you're consistent and profitable, then you add strategy number two if you need to. And then maybe you go to strategy number three. You really don't need more than three strategies to be honest. You can make a very, very, very nice living and trade really well and have a awesome, amazing return every year with just two strategies.

And then there are those people that I know that do amazingly well, trade for a living, with just one strategy, just one. That's all they do. They master it. They pick one. They go at it, and they master it. That's all they do. So if you want to succeed at this, that is the path. The path is not to open a company before you ever done a trade. The path is not to spend $25,000 and never do a trade. The path is not to have an advisory service give you trades, and you never do them. The path is not to say, "Oh, I have mentors and this and this, but now I'm going to go learn something totally different." No, those are not the path. Those are distractions. Those are side, whatever they're called. They are not taking you to your goal. You want to get to your goal? You need to simplify it. You need to make it cut down as much as possible. Get rid of all the noise, and then you focus on step by step.

Okay, this is very important. You pick a strategy. You learn about that strategy, and then you implement it. You go out. You get a paper trading account, and you go out and you get a backtesting software. You go out, and you just do the trade. You don't even have to know everything about the trade. You don't have to know everything about how it works. You don't have to know every single adjustment. You don't have to know anything really except how to put on the trade and a basic idea of how the trade works. Once you have that, you go, and you put on a trade. Make it a very small trade if you're losing real money, okay? If you're using paper money, go and do it. That's what you should be doing. But if you're using real money, you go out, and you put it in a very small trade, so that if it does lose money, it's not the end of the world, okay?

And then you see how the trade reacts. And then you get to another point in your progression, and then you'll get stuck. You'll say, "Oh, okay. I put the trade on. Now what do I do?" Okay, well then you learn, and you go investigate. And you say, "What do I do now? Oh, I just have to wait. Well, okay, all right. I'm going to wait. All right. Oh, hey, my trade's making money. What do I do now?" Okay, well now you can go, and you can learn the next step. You can learn the step of what do I do when my trade is making money, right? And then you have different options. "Do I let it expire? Do I get out at a certain percentage point, or do I have a stop loss? What do I do?" Right? And then, "Oh, what about if my trade is losing money? What do I do now? Oh, my God."

Okay, well at that point you learn what to do about that. You say, "Okay, I need to adjust my trade. All right. How do I do that?" Well, go find an adjustment and see how it works, and if that does not work, then you go, and you find a second adjustment. You don't need to learn 20 different adjustment strategies before you even put on a trade, okay? What I'm saying here is to take it step by step. One thing, learn about it, learn about that step, then go to the next step, and then learn about that step, and then go to the next step and learn about that step.

This will get you to your goals so much amazingly faster than all of the other people who just sit around and just get educated, get educated, get educated, get educated, and never take a single action, okay? If you want to get ahead, if you are an action taker, if you want to make this work, you have to put on the trade. That's the biggest hurdle. I don't know why people think that just, I'm just going to learn about it and learn about it and learn about it and learn about it and learn about it, and I'm actually doing something. You're not. You're wasting your time. If all you're doing is learning, you're wasting your time if you are not implementing what you're told to do.

So for example, this guy, if he wants to do swing trading, get out there and put on a freaking trade, okay? If the trade does well, then you figure out, what do I do now? If the trade does badly, it starts losing money, then you figure out, what do I do now? Okay? While you are learning, this is the fastest, fastest, fastest way to succeed in anything, right?

I mean, if you are trying to bake a cake, you don't need to know all the nutritional properties of every single ingredient. You don't. You need to know step by step what do I do. Okay, you take the onions. Oh no, not onions. You're trying to bake a cake. You take the flour. All right. What do I do with flour? Okay, go on Youtube. Find a video on how to, whatever they do. They knead flour I think, so here, knead the flour into dough. I guess, I don't know. I mean, I've never baked a cake before. I'm sorry. I don't know what the steps are, but you take something, and you do something with the flour, okay? Okay, now I'm done with the flour. Now what do I do? Okay, I think you got to bake the flour or something, so, okay, how do I do that?

Learn how to bake it, put it in the oven, put it on certain degree. Okay, fine. I'm done with that. Now what do I do? Okay, now I got to put the icing on it. How do I do that? Okay. Find out how you do the icing. Okay. You go, and you make the icing, or you go, and you buy the icing. Okay. Now I'm going to decorate the cake. Okay, cool, step by step by step. If you sit there and you go, and you read a book about how to bake a cake, right? You just spent, I don't know how many days in reading a book about how to make a cake, but you still don't have a cake. If you do it the way I just told you earlier, hey, you might have the worst cake ever, but guess what? You are now a baker. You baked a cake, okay?

So now you take and you say, "Hey, I baked a cake," and somebody's going to come and say, "Well, you baked a horrible cake." "Well, yeah, I know, but I baked a cake, right? So that's good. I have one cake under my belt." And then if that other person knows how to bake a cake, they'll help you. They'll point at, "Okay, you did this wrong. You did this wrong," and then you can go, and you can fix it. But you are not afraid anymore. You're not afraid of baking a cake. And when it comes to trading, you're not afraid of putting on a trade. I mean, maybe that submit button, you put in the order, but that submit button, maybe that's the scariest thing in the world right now because you're afraid of losing money. The only way to get over that fear is to hit the button, to actually do it.

And if that's the case, then find the trade that has the least risk, that has the least amount of money, that even if it goes horribly wrong, and you lose 100%, it's not going to kill you because that experience that you get from doing that is going to be immeasurable. That confidence that you get, that "Yes, I did it. I finally did it. I finally put on the trade," immeasurable. So depending wherever you are, whatever path on the option continuum you are, maybe if you're option level two, five, six, whatever, doesn't matter where you are on your phase of learning options, forget all the noise.

Do it step by step. Do take an action and then figure out, "Okay, now I'm at a roadblock. Now I need to know, what do I do at this point?" And then you figure that out and then you take the next step and then, "Okay, I'm at another roadblock." Then you take the next step. Then you take the next step. And not only that, but when you ask for help, it is so much easier for somebody like me to be able to help you out, right? Because you've already done something, and you have a specific question. "Okay, I wanted to do a credit spread. I put on the credit spread. Now this is my situation. What do I do?"

Okay, that is so much easier to answer than this fellow's email because he was all over the place. I don't even know what he's asking me. He's swing trading, but then he's starting his LLC, but then he can't work, or he works too much, and then he's going to all these different trainings. I mean, even if he takes my course, do you think he's actually going to listen to anything I ever tell him, or is he just going to go to the next course next week, buy something else, and learn about that, and then go learn something else? I can't help you if you don't implement. Nobody can.

And if you're so vague, and please don't tell me to call you after dinner time, right? I mean, I have a life. I have kids, have family. I'm not going to call you after dinner time. If you want to sign up for our coaching, then you can sign up for coaching or one on one coaching. That's fine, but it's going to be done at a time that I can do it, right? So, I mean, I really appreciate it, this guy reaching out, and I tried to help him as best as I could, but there's only so much you can do for people that are rudderless. You're in the ocean. You don't know what direction you're going in, and you don't know how to get there. But if you pick a direction, right, and then you want to learn something, the fastest way to do it is step by step.

Do not try to learn every single thing you can do without taking any action. Once you get a few trades under your belt, once you get a few successes under your belt and a few losses as well, then you will have a much better idea of, "Hey, what do I need to focus on? What do I need to learn? Where are my blocks?" And then you can go and totally jump in and master that one particular strategy. Don't try to master all, every... Even when it comes to options trading, there is nobody that is an options master, that knows everything about options, that knows about every single strategy and is consistently profitable with every single strategy because it's all very difficult, very complicated to learn everything.

That's why you need to niche down. You need to keep it as simple as possible. Learn step by step because you are not a guru. You are not a trainer or a trader or a mentor to a million other people, right? You are responsible for your own trading account, and in that sense, all you have to do is make more money, have more money at the end of this month than last month. As long as your account balance is growing, you're in a good spot. And that's the goal. More money at the end of every month, profitable trading, consistently, consistently profitable. That's all you have to worry about.

Some people telling me that, "Oh yeah, I want to learn the most complicated strategies." You don't need to. It's not about showing off, right? If you make money every month with the most basic strategy, the bank doesn't care, right? Nobody else cares. Your wife is not going to think any lower of you because you did it, you're making money with covered calls instead of ratio spreads or box spreads. Nobody knows. Nobody cares. As long as you have a profitable trading account, that's all that matters.

Your broker doesn't care even. Your broker knows what you're doing in your account, but they don't even care, right? As long as you are consistently profitable, you are a good account for them. You're doing more trades. You're making them more money. You're going to stick around. That's the kind of person that they want. They don't want somebody who's going to open account and trade and blow up and leave in a couple of months. They want the trader that's going to be there for a long, long time to give him commissions month after month after month. Those are the types of people that they like to have accounts, and those are the type of people I like to work with that can focus on one thing, learn, grow, grow, grow, and then add other things as well.

That's what makes it fun. When you're making money, it's fun. When you're just learning, you have that false sense of I'm actually doing something. I'm actually moving forward. I'm learning, so that when I do finally started to trade, all this knowledge is going to just rush out and make me profitable. Like he says at the bottom, it's going to take him four months to be profitable. No, I don't think so. Not with all the other stuff that he shared. I mean, I don't even know if he has a trading account set up yet.

So, take it small, step by step. That's the lesson for this podcast, okay? Step by step, take it small. Don't need to immerse yourself in all the noise. Don't need to learn everything. Implement, please put on a trade, and then see where it goes. And then when you get stuck then research what you need to do next and then implement more. And then you get stuck, and then you research more, and then you learn a little bit more, then you learn a little bit more, then you learn little bit more. The trade is over, and then you're either successful or not, but you've had done a trade. You're experienced, right?

And then we have to add more and more and more experience. Do more and more and more trades, so that you learn more and more, and you learn faster. The more trades you put on, the faster you're going to learn because the more things that could happen. And the more you'll have to figure out, "Okay, what do I do next?" So that is what I wanted to impart with you today. Take it to consideration, right? And put something on please. I know it feels good to learn stuff. I know it feels good to listen to even podcasts, right? I know you're listening to this, but this is all a waste of time if you cannot go and put on a trade. If you don't that, then there's no reason for this, okay?

So please pick a strategy that you like. Put on a trade. If it's on paper, fine, great, I don't care. That's even better because you're not losing anything. Just put the dang thing on. See how it does, and then see where the roadblocks are. Learn the next step and move forward and then move forward and continuously moving, moving, moving forward. Because then when you're actually doing stuff, and you listen to podcasts, or you get more education, or you read a book, or you take a course or whatever, then you will be able to take that and apply it to what you're already doing, and it'll ROI immediately. Does that make sense? I hope it does. Remember, trade with the odds in your favor.

www.optiongenius.com

May 09 2019

23mins

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Rank #5: From Struggling Trader To Making A Killing With Dan Hayden - 49

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How do you go from being a struggling trader to making a killing with options? That's what I'm talking to Dan Hayden about.

You see, Dan Hayden is one of our students in our new course that we have released, it's called the Passive Trading Formula. He's been in the course for a few months, and he wrote to me, and was very enthusiastic and was very happy with his results. When I read them, I really could not believe my eyes. I was shocked and I was like, "Man, I got to interview this guy. I got to figure out exactly what he did, how he did it, and I have to share that information with you guys."

This episode is an interview with Dan Hayden and how he is learning. He was already an experienced trader. He knew a lot of strategies and everything, but it was just something in the course that helped him to take it to the next level. Then we're going to help him take it even more to the next level.

 If you are struggling, even if you've known a lot of strategies, even if you've done courses or whatever, but there is something still missing, I think this episode is something for you to listen to. Hopefully you'll get something out of it. Let's go ahead, let's cue the music and get with it.

For more info on the program mentioned in this episode check out our Passive Trading Training HERE.

Dan, why don't we get started and let me know a little bit about you. Who is Dan? Why do you trade options?

Dan Hayden:      Yeah, so my name is Dan. I'm in Upstate New York. I started trading options a long, long time ago just because I wanted to earn along with the normal earnings of the stock market and I wanted to complement my trading.

Way back when, I don't know how, I think it was from my family, my grandfather, I was drawn to the stock market because it seemed like that's one of the ways in order to build wealth. Not to say that I had a lot of wealth, but it's another tool in your bag to complement your normal investing that you're doing with normal stocks.

Allen Sama:        Do you work full-time?

Dan Hayden:      That's when you and I got in touch with each other, because I was actually laid off. I had a awesome job, I was laid off, and I was at the point where I had to decide, "Shoot, do I just retire now? Do I go back into the workforce?" I had an awesome job and loved what I did, but I did travel a lot and it took a lot out of me. Therefore, it hampered my ability to just trade options because I was so busy.

When I contacted you, you had a promotion going for your new program. Right now, I am consulting. I do some work on the side and I am trying to, with your services, and system, and help, and as well as people on your site trying to get back into it, trade, develop a strategy so that I can comfortably earn a couple of thousand dollars each month is my goal.

Allen Sama:        Yeah, I mean your story is very similar to a lot of the stories that we hear. People have been working really good jobs, they're making a decent amount of money, their family gets accustomed to a certain lifestyle. Then because of the economy, or the company, or something happens, and that job and that income is not there anymore, then the question is, "What do I do now?. [inaudible 00:04:01] go back into the workforce?" If I do, a lot of times it's hard to make the same income as you were making before in the same job.

Dan Hayden:      That's exactly right.

Allen Sama:        That supplement income has to come in [inaudible 00:04:14]. Then a lot of people come and say, "Okay, I have money that I have saved up over the years. How do I make the most of it?" I'm really excited that you're taking action.

Dan Hayden:      As we spoke, you and your program has given me the confidence to realize that. All of these services, and I get way too many in my emails, and they're provocative, they stimulate your interest and you're like, "Oh, wow. Maybe I should join this. Maybe I should do this."

 It was great because as I jumped in, it made me realize that I am blocking all of these other emails that come to my inbox, and I don't want to be clouded by they have the best new widget, and they have the best this and the best that. Because you've shown to me, and I have questioned you that these other places are making something very, very easy complicated. Your scanning, your reviewing of the three moving averages, and showing the trend makes it very, very simple to select the trades that are applicable.

Allen Sama:        There are people who are traders and then there are people who are expert marketers. Sometimes I envy them, some of the other companies. They're like, "Man they make hundreds of millions of dollars a year selling their services. I wish I could do that."

Dan Hayden:      Yeah. It's all what you want too. If you're a really good trader ... I always said, if you're a really good and you have something that's really, really a great program, why do you have to charge people right away? Let them get into it and then bill them. If you're so good at trading, why would you even offer this because you can just stay at home, do your trading and make your money there. Why do you have to offer these services?

 That's where the suspicion comes in. I just had one in about a year, a year and a half go subscribe to them. That's when the market turned. I realized that they're not doing anything different than I was doing in selecting the verticals to trade. Their losses were like my losses on my own. It's like, "I can I lose my money on my own without having to plunk down $750 or $1,000, or whatever."

When you and I, when I applied to your program, it was perfect timing because I was down. I was hitting the chops because you never expect you to be laid off. Never in my life had I been laid off before. I'm like, "I had invested and been wise with my money all my life." I was at the point where I could say, "Well maybe I can just stay home and enjoy my family, and relax a little bit and start getting back into trading options."

 It was perfect timing because you lifted me up and got me back into trading. It's been fun. You have a very practical approach to selecting stocks to trade on. I also like your methodology of thinking. It's almost like a cycle. You could sell puts on really good stocks that you want to own and collect dividends, because I have another fund that I do that with. You own those stock and then you can trade covered calls on those. You can bring in, if you are executed and you do now own Verizon with a 5% or whatever it is dividend, and then you start selling covered calls on those so you have more income coming in. Then you're also doing your vertical spreads so you have additional income coming in.

Technically there's three ways to create an income stream and it just made a lot of sense to me.

Allen Sama:        For our listeners, I just want to let you know that Dan is part of our Passive Trading Formula program, our course. That's what he keeps mentioning, the program. That's the one that he's in.

Basically the idea behind that is I got to a point where in my own trading, where I didn't want to spend os much time watching the markets and watching my trades. You can do that in the beginning if you're just starting out with a little bit of money, you have to be a little bit more aggressive, so you have to take more risks. But eventually you get to the point where you're a little bit older or you [inaudible 00:08:47] a little bit more money, and you say, "I just want to do this in a passive way."

The myth is that if you're not as actively engaged, you won't make as much money. Dan has proven that, what would you say, Dan? In the first four months of 2019 or the first five months, your paper trading account was up about 90,000?

Dan Hayden:      Yeah, but I do have to take a little bit of that back because some of that I was called out on and it impacted my results. But I think overall it was $45,000. Clearly ...

Allen Sama:        In about five months?

Dan Hayden:      Correct. Yes.

Allen Sama:        On what type of account? Which size?

Dan Hayden:      I did a paper trade account and I automatically, I think I put in $250,000 into it.

Allen Sama:        All right, that's a really sweet gain. How long do you think you spend every day on your trades?

Dan Hayden:      It's actually changed because from the beginning of the year, I think we got started in January, I had all the time in the world. Then I just got called for a contracting position, so I am working as a consultant with a company right now. I've pulled out a little bit more. I traded a lot for January, February, March, April. May has been a little bit less. I just have to figure out what my time scan is going to be so that I have the appropriate amount of time to be trading.

Allen Sama:        Do you think that the trades that we're doing require a lot of time for you?

Dan Hayden:      No. I think in and this is something that I want to learn more of and I asked on our call last week is that I want to be able to set automatic stops, which I know you're not a big of, but I want to get into a method of basically setting stops right when I set up the trade so that if I do have to fly somewhere, I don't have to be with a computer.

 Time wise, not at all. I started with my watchlist, you'll see two watchlists on the left, I started with mine and then I put yours in as well. I like yours better. Now I'm also just scanning through companies that I know there's no premium to paid on them. I don't even go to them, I just go to the next one. It almost seems like I'm trading the same stocks over and over again. [inaudible 00:11:32] less and less time.

Allen Sama:        Yeah, that happens. You develop some favorites and you like the way they're acting, you like the news that's coming out. Some of them might be on your list. You might trade them over and over again for two, three years. Eventually stuff will change, the stock will change, it'll change is behavior. Maybe a new competitor will pop up, or new CEO or whatever. Then it'll drop from your list. You're be like, "I don't want to trade that one any more. It's not acting the same way."

That's why we focus on that watchlist and say, "These are the same companies I want to watch every month." Then you get a second feel, like a sixth sense that it's not acting properly. Let's not trade it this month. Let's just relax and watch it, and then we'll maybe look at it again next month.

Dan Hayden:      Absolutely. I hope more and more people start getting active in your site with interactions because I've learned of companies that I've never even heard of before that have very good premiums. It's been interesting picking up a stock here or a stock there that you can start to track as well.

Allen Sama:        That's why one of the reasons we have everybody put the homework inside the group itself, because that helps other people. Anytime somebody puts in a homework assignment and says, "Okay, these are the trades I've found that I really like." Other people could look at those and be like, "Whoa, that's a really good trade. I think I'm going to do that one."

Dan Hayden:      Exactly. [inaudible 00:13:03].

Allen Sama:        There was a couple that I found from somebody that put them in and I'm like, "Oh, wow. I didn't even know this one particular stock was paying that much right now." I was like, "Wow."

Dan Hayden:      Exactly. Some with very rich premiums. That's what we're all looking for.

I like it when people, when they communicate. I think people shouldn't be ashamed or nervous about asking questions because everybody is starting out at different levels so that when experienced people can support the young people, or the new people just starting out, it makes for great interaction and a great learning experience in your group.

Allen Sama:        What strategies have you decided to focus on?

Dan Hayden:      I have been doing some naked puts, some selling. Then I started with covered calls only because I have a couple of stocks that I have a lot of shares in and I said, "Okay, I want to build up some income," but I haven't focused on that too much. Most of it has been vertical spreads and selling puts.

 If you're on right now, I guess I'm a simple guy, I got to make it really easy for myself. What I'll show everybody is basically I'll go through here on the left-hand side, and I'll start with my watchlist and the charts. You'll see here that I have the three simple moving averages, the 20, 50 and 200. You can see that I ... You want to go with the market. If the market's up ...

Allen Sama:        On the screen you're showing your Thinkorswim paper trading account, right?

Dan Hayden:      Correct. Yes.

Allen Sama:        Yeah, okay.

Dan Hayden:      Like I said, I think I started with 250 and right now net liquidating would be 484. Clearly it's been pretty nice. I wish this was really money, but this has been really fun.

As you've told me is to develop the confidence to basically start cash trading at the right time, because you did, you were very pointed to me, how long did it take me to learn my trade? Because I wanted to go right in, "Okay, hey. I've been pretty successful. Can I go right into cash now?" You said, "Give it some time, get more comfortable." It's true. Hey listen, we're going to lose some money, but if we win more than we lose, we're going to be way better off.

I'll just scroll through and see which ones are either above the 20, 50 and 200, or below the 20, 50, 200. For example, ADM I'll say no because it's right in the middle and it's just not one to be traded. AGN looks like it's down, so that's something where you could actually do a call. This is Allergan and I think Allergan pays a good premium. What I do is I come right over to ...

For people who are watching this, what I'll do is I set up basically almost three screens going at once. You can do this, and I know Allen, you did this on one of your calls, but you can do this by detaching this layout right there. I detached two layouts. All this is to do is just to make it simple and quick, so that I can scroll through, select ones. Then you see down here on the bottom left and if I'm scrolling all over the place, I apologize, but I have on my scratch pad basically the numbers that I want for my verticals in order to know that I'm at the 10% level. Right away, as easy as it sounds I always like, "Okay, I got to look. Is this 10%? Is this 10%?"

As Allergen showed, it's down. I would look and say, "Okay, let me look at some calls." I'd go to a delta of typically we're working around the 10%, so I looked between seven and 14. Maybe got to the 14, which is 140. I go over to this page and look at the 140, it's /135. Okay and it says it's not available. I don't know why it wouldn't be, but maybe it's just uploading. Not available.

Let's go to the next one. I would scroll down all of these. This one looks good too because it's above the three moving averages. However, it looks like it's dipping down a little bit for AIG. Got Applied Materials.

 This is how I would scroll, as you've educated me in looking for those that are either above or the below moving averages. Altria is a good one. I'm trying to think of some of the goods ones that I like. I can go here. Broadcom, AVGO, that's one that I have traded almost every month and is a pretty good one, so let's go to it.

Allen Sama:        In terms of the credit spreads or the layup spreads, do you follow the rules as laid out in the course or have you modified them?

Dan Hayden:      No, I pretty much follow your rules. I probably have gotten a little sloppy this month because for example, I was gone this week traveling and I wasn't on top of it as much as possible. I'll travel with my iPad and leave my computer at home, and my computer basically is the best one. iPads I have trouble basically executing the trade with Thinkorswim.

Allen Sama:        Oh, it's not the same thing? I know I do it on my phone, so I use their app on my phone. I've never done it on an iPad before.

Dan Hayden:      Yeah. I can't get used to the phone app either, but either one, I'm more comfortable with the MacBook. I'm just going to bring up Broadcom to see where we are at right now. Right now it's right in the middle of these three, so I would stay away from a trade right now.

Allen Sama:        About how many trades do you put on at a time?

Dan Hayden:      It all depends. It all depends on what's telling me to trade. Right now I have, there's a put. The puts are on Altria and AT&T, two high dividend players. If I own them, I'm good. If just take the premium in, I'm good and then I'll do it again next month. But right now I have NVDIA, Intuitive Surgical, Campbell, Arcadia, Pacific and Broadcom.

 You can see here, profit and loss. These are things about setting up automatic sells when they hit a certain point.

Allen Sama:        Let's say you got about one, two, three, four, five, six, seven, eight, nine. Nine trades on.

Dan Hayden:      Yup. One, two, three, four, nine.

Allen Sama:        In addition to your covered calls.

Dan Hayden:      Covered calls, I've stopped doing those. I used to do the covered calls on these stocks right here, but I was ... The covered calls to me, I'll get into those later. With Alexion, I have 1,000 shares of that. That's the one I really wanted to stay focused in on. But I've put that on the side burner. I'm just doing the puts in the vertical spreads.

Allen Sama:        The thing is, with the different strategies, you can take and see what the market is giving you, and you can manipulate. If you're in a bull market, naked puts, they do awesome, put spreads do awesome. Covered calls, if you're not in the stock, if you don't own the stock and you just want to get out every time, then they work really well. In a sideways market, I love covered calls.

Dan Hayden:      Which right now, would you consider us being in a sideway market? We're up one day, down the next, up one day. I would think ...

Allen Sama:        We're still in a pretty good bull market in a sense where we're a 1% or 2% away from the all-time highs. I would say we're still bullish, especially if the fed does cut rates again. We have all this other news going on, all the noise that goes on in the market. But for the last, I don't know how many years, the bull market has been there because the fed had rates so low. I think that if they start cutting rates again, that's just going to signal to the market again that [inaudible 00:21:15] just take it up higher even more.

 In my opinion, yeah, it's a pretty good bull market. Yeah, you can still make money with non-directional trades, but overall I think we're ... I like this type of market where it's going higher, but it's doing it slowing. We're not like shooting, shooting up higher. Not too much volatility for our premium to be good. We can make our 10% on our spreads and not have to worry about too much movement.

Dan Hayden:      That might be help too, is to say, in a bull market, a slow rising bull market, it's best to trade the puts, covered calls. What would be the best vehicles in select markets, that might be helpful too. For me, whatever spits out as I scroll though, and I try to scroll through on Monday morning to determine what I'm purchasing for that next ... What don't we try 25 to 35 days as the best timeframe? Or a little bit longer.

For example, Allen, SPX right now, it's above the three moving averages. Technically this looks like it could be a trade. This is the vertical.

Allen Sama:        I've noticed that [inaudible 00:22:36] here, when you're looking for trades you're looking at the monthly ones. But on some of your trades that you already have on, you've done the weeklys.

Dan Hayden:      Yeah. I try to do it, I think you said the sweet spot is 30 to 40 days out, so I'll try to go 30 to 40 days out. I think those were set last week. That's typically why. Right here, I would look at this 35. If I'm wrong, you let me know. With SPX above the three moving averages, I look at the 35 and look over here on the puts. I would look at is the delta around ...

What do you like? You like deltas around 20?

Allen Sama:        It depends on how many days. I would like to get it as low as possible, but if I'm going in there about 30 days or less, then the delta increases probably about 20. If I'm at 35, I might try to get a 15. But really, we're trying to make 10%, so I'd like to get as far away from the money but still be able to have a potential 10%. The delta in that case, I use it more as a guideline, not as a hard and fast rule that this is the delta I'm going [inaudible 00:23:45].

Dan Hayden:      Just to give anybody ideas, I have it set up so you have the singles on one page, so I can automatically go to what I was looking at, which was the SPX. I'll go down and I'll look for between a 10 anda 20 delta that brings in good returns. I would go down here, let's say, to a 15 delta, 35 days out. It's somewhere around 27.20.

Then on this next page, I already have the verticals pulled up, so I can automatically look and say for the 15 deltas, 27.70, I can almost right away go to 27.20, so 27.20. I am doing 27.20, 27.25, which would be right here. I wish I could show you exactly what the bid-ask spread was, but it could be because of the bandwidth, but I'd be looking at this area. You've got plenty of open interest. It's the SPX, so you can expect that.

 I would be looking in this area between a 10 delta and a 15 delta. Then I'd automatically go over to my, this is up here, so I automatically go over to my scratch pad to make sure that whatever I am trading, I'm making 10% on that money.

Allen Sama:        That's why I think you need the computer instead of the iPad, because you have so many screens open.

Dan Hayden:      That's probably it. But as you get going, I'll minimize these screens for the verticals, and I'll minimize the screen for the singles so that I'm actually overlaying each one. Right away I can go from one to the other, to the other and say, "Yup, that's a trade." If not, then I go right back over here, click this and go to the next stock.

 If you have a big screen and you're at a desk, this is easy to do.

Allen Sama:        Yeah, [inaudible 00:25:47].

Dan Hayden:      But I'm lazy so I carry around a laptop and don't want to hook it into an office. I typically sit on my front porch, and make the trades and make my notes.

Allen Sama:        That sounds pretty sweet, man. Making money on the porch.

Dan Hayden:      I overlook one of the Finger Lakes, so you got to take advantage of that too.

Allen Sama:        Okay, so you told me that your goal was to make about a couple thousand dollars a month.

Dan Hayden:      Correct.

Allen Sama:        Do you think you've been doing this for what about six, five months now?

Dan Hayden:      Correct, yes.

Allen Sama:        Do you think you have the confidence to start going real money?

Dan Hayden:      I do. I do. I have confidence and I have confidence in the selection criteria. I asked you, I said, "This is way too simple. This doesn't make sense." You can get pushed up and above, but you use your rules to get in and get out. You can minimize the losses because in this crazy market, anything can happen. Macroeconomically anything can happen that can impact these markets quickly. We can get pulled around. I've seen in. Where I get in, it makes sense. [inaudible 00:27:04] trading below or above the three moving averages, and then all of a sudden the market goes crazy and does something opposite. I've seen it right at the beginning of this year.

That's the only thing that I have to build more confidence on, and I'm working with the Thinkorswim platform is that when I do make the trades, I am going to start setting stop orders so that if it hits a particular level of a loss, I'm out. If it hits a particular level of a gain, for example, at five cents, 10 cents, I'm just out. I move out, Thinkorswim has a pretty good commission rate so it's not costing me a lot to get out. At five cents I think it's free, and then I move on to the next trade.

 Yeah, the confidence is there. Do I get nervous that I don't want to lose money? Absolutely. But you got to expect that if you have good rules, any money that you do lose should and could be minimized. That's the one thing that I have to integrate into my trading because hey listen, I had the time to be at the computer every single day for an hour, and check on my trades. But as recently, I really haven't because I've been flying around and meeting up with these companies. That's why I want to get good with setting up automatic stops.

Allen Sama:        It's about an hour that you said, you spend about an hour looking at your trades when you can?

Dan Hayden:      Yeah. It doesn't have to be every day, but probably an hour throughout the week. Especially if there's some newsworthy events happening, you want to be on there definitely during that day. But it's probably an hour a couple of times a week. That's only, that's like managing seven trades or so, something like that. It's not a lot of trades, not a lot of time, but typical to when you pick up this laptop or computer, I get carried away and I start looking for some other good dividend playing stocks [inaudible 00:29:08], because I love the scans.

 Here's one that I did looking for dividends, high dividend plays and what I could maybe sell puts on. I'll do certain other things while I am looking at the trades that I have already open to try to create other opportunity.

Allen Sama:        [inaudible 00:29:30] you just love this stuff. You're just into it.

Dan Hayden:      I do. I do love it.

Allen Sama:        If you didn't get sidetracked, it would be so easy. Just log in, check it out and I'm out.

Dan Hayden:      Absolutely. People go on Facebook and all this stuff. It's great to keep up with that at stuff, but I enjoy looking at the stocks, the stock market and just trying to pull a little bit from the market into my accounts.

Allen Sama:        Yup, yup, yup. Okay, you've been ... All right, what else? I had a couple questions for you in my mind. They just slipped.

Dan Hayden:      See because you're probably looking at your screens right now.

Allen Sama:        No, I'm looking at yours. I'm at home. I didn't even make it to the office today, so I'm just looking at the laptop. All I see is your stuff.

  Wait it's funny though, you don't usually Analyze tab. I use that one almost exclusively.

Dan Hayden:      Yeah. Before I got with your service, I used to use it all the time because I used to do these butterflies, and things that I picked up from all of these services that were trying to get your money. So I did use this a lot to analyze broken wing butterflies, and we used to do iron condors with butterflies in the middle to bring the iron condor up higher.

I'm not the smartest guy at this, but I was learning more and more about this as I started to throw on another trade, either to save things or to increase my profit. Maybe it's something I should be using more. Do you use it just to see about your profitability, and when it does break even and start losing?

Allen Sama:        I like putting the lines on the chart, but you know how it says they are add simulated trades?

Dan Hayden:      Yup.

Allen Sama:        I'll just look at that one and that pops up the option chain as well. I'll go down to a specific delta. You know how you were looking at should I do this one, or should I do this spread, or should I do this spread?

Dan Hayden:      Yup.

Allen Sama:        Then I'll just pop it up, I'll just pick one, do it as a vertical and then it'll have the numbers down at the bottom. So it'll be like, "Okay, so the 100, 105, he's giving me 50 cents and then the 105, 110 is giving me 25 cents." I can have two or three perspective trades on the screen. Then I'll just leave it there.

Sometimes I'll do a trade and there is certain stocks, like I know IBM. It doesn't have a lot of premium, but it's a very slow moving stock. I like to trade it, but you have to get in really early. Sometimes you have to get in 40 days or 45 days to be able to get decent premium amount.

Dan Hayden:      [inaudible 00:32:04] decent premium?

Allen Sama:        Yeah, in order to get a decent return.

 I'll go and I'll check it, and sometimes I'll leave it there. Or some other stock that maybe on the chart looks really good, but it's gone up too much or gone down too much. Right now, I'll put in a trade. I'm like, "Oh man, I really want to do this trade but it's only giving me 9%. Oh, gee. Okay." I'll just leave it there in the analyze tab, and then maybe two or three days later or a week from now, I'll come back and I'll look at it again when I'm going through my list, and I'll be like, "Oh okay, this one now, it's giving me 10 and a half percent. Okay, I can do it," because it pulled back or it moved around a little bit.

It just stays there. Then if it doesn't work out, then you could just exit out and delete it, so it's not a big deal.

Dan Hayden:      Now is that in our trading videos? Do you have a session on that?

Allen Sama:        No, I don't think so. That's just something I picked up myself.

Dan Hayden:      Yeah, that'd be cool to go in your brain and see how you use that function with the add simulator trades, because when I went into analyze, I would always go to the risk profile. It's interesting how you use the add simulator trade.

Allen Sama:        I like the risk profile too, just to tell me what is exactly the probability and then I like to put it on the chart. I like to put my break-even line on the chart and just see it. I know your fooling yourself because you think, "Oh, that's so far away. That's never going to make it." You're fooling yourself, but I just like the way that looked.

Dan Hayden:      No, that would be cool for one of your programs just to say something that, "This is how I approach this in monitoring whether I should get into a trade or not get into a trade."

Allen Sama:        Yeah, so we can do that. We'll do that. Let's do that on the next coaching call. I'll go in ahead and go through the screen and we'll do several of those.

One thing I also wanted to mention, you got your scratch pad. That's really cool. But for me, to keep it simple, if I'm doing a five point spread, I'm looking for 50 cents. If I'm doing a two and a half point spread, I'm looking for 25 cents.

Dan Hayden:      Exactly. That's typicalLy how it [inaudible 00:34:14], $1 spread, you're looking at a buck.

Allen Sama:        That's a little bit more than 10%, it's like 11% if you get exactly that. You can say, "Okay, I can go down a penny or two. I'm okay with that."

Dan Hayden:      Yup. You got some flexibility. Yeah.

 You know what else I noticed too, Allen, is when I go to set up a trade and it's a good trade, but it just misses the mark for example if it's a dollar spread and it comes in at 0.08 cents, a lot of times I'll put in 0.09 and leave for the day, and it hits.

Throughout the day, something happens. Maybe the stock changes a little, the prices changes a little bit, but I'm like, "I'm close enough where I'm basically at 10%, but I'm going to set the 10% and walk away." I've had more and more stocks, it fills while you're never there with a good premium.

Allen Sama:        That's a good tip.

Dan Hayden:      Yeah, that's something else that I've done a couple of times.

 Hey, this is the time that you experiment a little bit. You don't want to nick your percentages, but you also don't want to miss out on a good trade because there's some weeks where it's tough to find a good trade. Even the consistent one's just not offering a premium for some reason.

Allen Sama:        Yeah. It goes through different ups and cycles. When you have earnings, it's harder to find a good trade. Sometimes you have to go to ETFs or something. But what you just mentioned, putting in a trade like, "I really love it and it's really close. Let me try it." It's not going to hurt you. You put that on and sometimes because of the way the option premiums are priced, maybe a large order comes in, or the stock moves and down a little bit, and the premium just move more than they should sometimes and you get filled on those.

Dan Hayden:      Yeah, that's been interesting.

You made it really practical, how to approach it. Also, I will say that there's one gentleman who put on the site Excel spreadsheets, which I downloaded and they're awesome. He has a really great profitability chart, so you can put the numbers in and it'll calculate it out automatically. I can't remember the name of the gentleman that did it, but really nice addition in your site.

Allen Sama:        If somebody was thinking about joining the course, the Passive Trading course, what would you say to them?

Dan Hayden:      I would say people can hear what they want to hear, but there's so much pollution out there from these other services. You teach a person to fish so he can feed for a lifetime, and that's what I wanted. I don't want somebody to basically take the steering wheel and drive the car. I want you to teach me how to drive the car so that I don't have to rely on other people.

I would absolutely recommend it. There's as much risk as you want in it, but you control your own destiny. That's the best place to be in because I don't want to send my $1,000 to this service and they're the ones picking out the trades, when in all reality you simplified it to such a fashion that you can join this service, but then you can learn it and move on if you want.

 Hopefully they stay with you and they believe in you because I believe in you right now. You've simplified something that quite honestly as you first join, can be way overwhelming. But you made it simple, you've allowed for three different ways to have extra streams of income, and you teach us to do it. That's the best thing that you can ask for. Yes, I would definitely recommend people to join.

Allen Sama:        That's funny too because you said you've studied iron condors, you've studied broken wing butterflies, which is a pretty advanced trade. But you're like, "I want to go back to this stuff that actually keeps working. I'm not going to go so advanced. I want to try to make it simple so that it doesn't take a lot of time, and you don't ave to monitor it so much and is just a lot less stressful," I think.

Dan Hayden:      It absolutely is because the more things you stop placing on, the more you do have to watch the monitor, and the more you have to react and do other things to fix that broken wing butterfly.

The only reason, Allen, I got into broken wing butterflies is because I paid a service to basically teach me how to do broken wing butterflies. It's probably a really good service, but quite frankly, it's way too complicated. It's not necessary. A vertical spread, if you get good at it, it can be boring, over and over, and over again. But if it's boring and your account is growing, that's a good thing.

Allen Sama:        Yeah. That's how we designed it. We want it to be boring, we want it to be passive so that we can actually go and ...

Dan Hayden:      Enjoy life.

Allen Sama:        ... spend time doing what we want to do. Yeah. There are people that want to be on the screen all day checking their stock, and checking their trades and what not. There's definitely a place for that.

 In the beginning, I tried it that way. To me, the more complicated it got, the more I realized that maybe I'm not the smartest guy in the room, but there is so many extra things that I can miss. I'm like, "I'm just a normal person. This is getting too complicated for me. Let's just tone it down. Let's take something that works, I know it works."

What I love with you is you've put in the time, you've put on the trades. How many trades have you put on since you started paper trading? Just ballpark. 100? 200? 500?

Dan Hayden:      No. It's not that many. It's probably a little over 100.

Allen Sama:        Okay, so 100 over five months. So 20 a month, that's decent. You were practicing, you're gaining confidence, you're learning how you like to set it up with the three screens, and how to monitor it, and set up your charts and all that stuff. That takes a little bit of time, but now I think that you're at the point where, "Hey, I turned 250 into 484."

Dan Hayden:      Right. Right

Allen Sama:        That's [inaudible 00:40:29] double. That's really good. In five months, holy cow.

Now it's time for you to now slowly, slowly transition, I think, into the real money. Maybe you pick one ... Or maybe you start with a small amount of your capital, whatever amount. You start with a little bit. Maybe let's do three spreads and two covered calls a month, or two puts and three spreads, or something like that.

Dan Hayden:      Exactly.

Allen Sama:        Let it out.

Dan Hayden:      With a lot less contracts.

Allen Sama:        Oh yeah. Yeah, of course. Yeah, [inaudible 00:41:04].

Dan Hayden:      Here I'll do 10 contracts every single time. There, real money, I'll probably do between one and five contracts.

Allen Sama:        Whatever the amount you have to work with, [inaudible 00:41:18]. If you have 10,000 to work with, okay, I'll do $1,000 in each one or something like that.

Dan Hayden:      Each one, exactly. Proper money management. Yeah, [inaudible 00:41:28].

Allen Sama:        The contracts doesn't really matter, but the fact that you've almost doubled it in five months means if you were working with a $10,000 account, you would have done the same trades. You would have been almost the same thing. The numbers, you just add zeros at the end for more money.

That's what I love too that you can start out small, do the same exact trade. You don't need $8,000 to do a trade. [inaudible 00:41:48] trade, just add zeros to it.

Dan Hayden:      Yup. I have a Roth account and I keep saying, "I want to grow that Roth account." I think what I've decided is that with the Roth account, I'm going to sell puts. Then if it's executed and I own those shares, I'll sell covered calls really close to the money. Basically just keep transferring the stock. Take big premium by selling very close to the money. If it hits, okay, I'm back into cash. Now I'll sell that put again really close to the money, take a good premium. If it hits, I own the stock and now I'll sell covered calls. I just want to grow that Roth IRA money so that there's a significant amount there that's all tax free.

 I've segmented it there, and then start with my cash account in selling verticals. Verticals is what ... That's the primary breadwinner I should say. Then I have an account that has a company with a significant amount of shares, and I'm just going to sell covered calls on that one. It's like three different accounts with three different principles.

Allen Sama:        The company that you just spoke about, I believe you told us what it was earlier. Why are you in that one? I'm just curious.

Dan Hayden:      I worked for them, so I accumulated shares over the years.

Allen Sama:        Okay, that makes sense. Are you allowed to sell those if you had to?

Dan Hayden:      Yeah, because I don't work for them any longer.

Allen Sama:        I see. Okay, cool.

Dan Hayden:      Part of me thinks about selling them, part to them thinks about just taking an income each months. It's a volatile stock, that's the problem. It can be tough trading, but if you take chunks and you sell covered calls at different levels, like one close to the money where I might lose this, but okay, so I just cashed in on 250 shares, I sell a little bit further out so that I still own those shares, and then 250 I sell a little higher. I don't bring as much premium in, but I know I'm keeping the shares.

Allen Sama:        That's the thing if you work for a company, you have a little bit of a inside track to see how the company is doing. Are they hiring more people? Are they letting people off? If they're letting a lot of people off, okay there's something going on. If they're hiring more people, if they're expanding, if they're spending more money on marketing. You hear all that news that as a trader ourselves, we might not be privy to all of that unless we really dig into the information.

Dan Hayden:      Correct.

Allen Sama:        To be able to trade a stock that you own because you work there, I think that's a big leg up.

Dan Hayden:      Yeah.

Allen Sama:        Even now I'm sure you still have friends and people that work there that you know. You can stay on top of that information.

Dan Hayden:      Yeah, in some instances. But then again, it goes to show that the market will do what the market wants to do because I've been around where we've had awesome quarters and we got hit by the market. We lose. Nothing's a sure thing. I remember those days where we'd have a blowout quarter and we were down 10 points. It made no sense at all. Yeah, it's good to be affiliated with it, but it's also they can throw you curve balls and make it very frustrating too.

[inaudible 00:45:17] go in thinking about vertical spreads straight up and then whatever else you start accumulating through your puts, sell covered calls on, have a method to start creating your stream of income in three different ways. The way you trained us, I think is a beautiful way to begin growing your stock accounts and making money passively.

Allen Sama:        Yeah, and thank you for saying that. One of my goals is the stocks that I buy, I want to get them for free. I want to get so much money back from them that I didn't pay for them. I got my money back. Then you're playing with the house money, and whatever happens happens. I'm okay because I got my money back.

Dan Hayden:      Yeah, that's exactly it. That's why I think young people should be doing this as quickly as possible because they have the ability to do that, and doing it over and over again, taking in the premium which reduces the cost of the stock. Then you're saying, "Hey, it doesn't really matter because I bought this at this, I've taken this much in, and basically I own the stock for free."

Allen Sama:        Then it doesn't matter if it goes down, it goes up. You're getting a dividend, you're like, "Okay, I'm happy."

Dan Hayden:      Exactly. Yeah. Yup, absolutely. You still have the shares, so do whatever you want with the shares.

Allen Sama:        What would you say is the biggest thing that led to your success?

Dan Hayden:      Well success is ...

Allen Sama:        Well I know you're being humble but seriously, but seriously, to double [inaudible 00:46:43], to double your money in five months, I've never done that. You're doing something different, you're doing something special. What do you think caused it?

Dan Hayden:      For me, it was just finding out ... I needed a method to ... I just wanted a recipe. Give me something that is easy, that I can select stocks that makes sense, and then doing it.

 It was basically providing the methodology, which I have because of these three simple moving averages, and then executing. That's it. It's not rocket science. This is paper traded, so you might get a little bit over ambitious with one trade over the other because it's not your money, but just to me, the most important thing was developing that method, having confidence in knowing if it's above or below that three moving averages, and the stock's trading up, and so is the marketplace trading up, it's a good sign that this is going to be a good stock to trade.

Now let's look at what the returns can be, let's look at the verticals, let's look at the individuals to find the right delta. Having that method to basically weed out what you should be trading.

Allen Sama:        Yeah, a lot of people, when they first hear about it they're like, "It can't be this easy." Then you said the same thing.

Dan Hayden:      I did. Yup, I wrote to you and I said, "There's got to be something else I have to throw in."

 You see my screen, this is from the old days where I'd be looking at volatility, standard deviations, [inaudible 00:48:19]. I tried to come up with the best technical analysis and seeing if the stock anticipated to go up, down, what. You don't need this. This was the olden days where I had all this stuff at the bottom and I've just never turned it off. You could take out all that noise, and basically just look at the charts and have confidence in what you do. You're going to have curveballs thrown at you every so often, but be ready for those curve balls, and get out with minimum losses and you'll come out way ahead.

Allen Sama:        I think that's where asset allocation comes into play, especially with the different strategies. If you're only doing spreads and you're only doing put spreads because the market's going up, but then it drops, you're behind an 8-ball, you're in trouble.

But if you're doing a little bit in the puts, a little bit in the calls, a little bit in the spreads, a little bit in something else, then you can weather the storm. It's not one trade will be doing good, the other trade will be not so good.

The way we talk about it is, every month has the potential possibility of being a very good month. If you have a good month, and a good month, and a good month, and a good month, but then you have a bad month, which is going to happen, if you do it right then the good months will overcome the bad months.

Dan Hayden:      Absolutely. Yup, yup.

Allen Sama:        In the long-run, if you look at it a year, two years, three years down the road, you'll be like, "Okay, I'm up a lot. This really [inaudible 00:49:50]."

Dan Hayden:      Exactly. [inaudible 00:49:51].

Allen Sama:        Some people look at it and say, "I tried it for a month and I lost money on two of my six trades, so this sucks." I was like, "Well, that's the way it works."

Dan Hayden:      Exactly. Even the professionals lose. You just have to know how to minimize those losses, and that's the biggest thing. That's something that I have to do. You can see some of these losses that I have to be more proactive in setting up my losses when I set up my trades. The minute that trade hits, I got to go in and say, "Okay, I got to get out when it's profit of this or a loss of that." That's all in your ... I don't have my notes with me, but it's all in your notes for these losses.

 I brought up this screen here that shows my puts. I have Altria, and I'm okay. I'm okay if own this. My fear when I put a put on, like you just talked about earlier, is suppose something happens macroeconomically between they decide not to lower rates, Iran does something, China does something and it drops heavy like Altria goes below that 47.50 put. Well now I just bought it at 47.50, but it's at 45. That's a hurt.

The only thing you can do to get away from that because you're fully exposed when you do this, is just to start selling calls close to the money to say, "I either get out of the Altria and take a minimal loss, or I'm good because I believe it's going to be coming back, and plus I'm making my dividends."

                                We talked about fear, how as a trader, you're fearful of losing money. Well I'm fearful of having to buy Altria if the market drops hard, or AT&T, the market drops hards, and I'm buying it higher than the market's actually at. That's a fear that I have. But if you stay on the sidelines, you don't do it, you don't get your dividends, you don't get the opportunity to buy these stocks at a discounted rate.

Allen Sama:        That's why we do the paper trading too, because actually do it for a few months and you'll get a better idea of how many times did I have to buy the stock? I did it five times, I never even came close. Maybe this fear is a little bit unwarranted. So maybe if I do it with real money, and I do it for a year, two years, three years, maybe I'll get the stock once or twice.

                                That's why with the paper trading, I'll advise everybody like, "Get in trouble. Put some trades on that you wouldn't to get in trouble with it, and so that you can see, how do I navigate my way out of trouble?"

Dan Hayden:      How does it respond, exactly. Yup, yup.

Allen Sama:        With Altria and AT&T, okay, maybe I'll sell at the money put.

Dan Hayden:      Yup, just to see what happens.

Allen Sama:        Just to see, okay, I have to buy the put at this price. What do I do now? Oh, I bought this stock. Okay, how do I get out of that?

Dan Hayden:      The worst time to trade is when you're in fear, you have something going against you and you're nervous. That's the worst time to place that reactive trade.

Allen Sama:        Exactly, exactly. A lot of this stuff is we're dealing with stocks as well, so if you own the stock, there's a great chance the thing will rally in the next 10 years. Anyway, if you're only trading options then you lose, and the month expires, then that's it. That loss is yours, you got to eat it. You got to make it up next month, the next month. But with the stock, you can always come back.

                                Is there anything else you want to share?

Dan Hayden:      No, I greatly appreciate what you're doing in helping others. I really have learned a lot from you. I do, I do I have the confidence again in getting into option trading and having a good plan for doing that option trading. So thank you.

Allen Sama:        Great, great. Yeah, I'm excited to see how you take it and how far you go from here because you got the foundations down, you got some basics, and now it's time to start doing it.

Dan Hayden:      Yeah, well it's funny too because now that I'm working with this company in doing consulting with them, I have income coming in so it's like, "Okay, well I don't have to bring in income with the option trading as much." That psyche comes into play where, "Okay, when I wasn't working I said Okay, I got to make sure that start bringing in X number of dollars a month." That's why I'm not, I shouldn't say as serious because I do look at the charts and all that stuff. I track it probably a couple times a week, but in January, February, March, when I wasn't working for any other company, I was looking at it, looking at opportunities every day, and I was very, very religious about it.

                                It is that psyche, but all I can recommend to everybody is even if you have a full-time job just flat out, 15 minutes, 20 minutes, an hour if you can just to monitor the trades that you have on, but also to look at new opportunities elsewhere. But get dedicated almost like I have a system now by scanning, by reviewing the chart, by reviewing the delta and by reviewing the return. I have a method, and that way have a method each night, each day to give yourself a couple of minutes to look at the trades and to scan so that it becomes second nature. That's the best thing to do.

Allen Sama:        Yeah, definitely. Like you said with the mindset, when you don't have any income coming in and you have to make your nut, maybe $5,000, $10,000 a month, that's when the stress really this you from the trading. It's like, "Oh my God, this trade has to work. It has to work." That's when you mess up.

                                When you have even a little bit of income coming in and you're not totally dependent on your trades, then it allows you to actually trade better.

Dan Hayden:      That's exactly right.

Allen Sama:        That's very helpful especially when people are getting started.

                                I've seen some people where they jump the gun too fast and they, "I want to be a full-time trader," and they jump to fast into it, and they're like, "I have to make money every month." We had one student who did that and the stress just got to him. He placed trades that he shouldn't have and then he lost. On a mental standpoint it just sends you for a tailspin.

Dan Hayden:      Did he need that money or was this supplementing his income?

Allen Sama:        No, he had quit his job to trade full-time. He over traded I believe, and then he lost some money. Now you have to cut back on your lifestyle when that happens. It's not something that ... He has the skills. He'll be back, I'm sure he'll be back. But it hurts in your mind. You feel really down about it.

                                That's why I love it that you're starting and you're saying, "Hey, my goal is to make $2,000 a month." Well okay, if I can make 3%, 5% a month doing something pretty safe, $2,000 a month, I don't need to have a big ton of money. I can put little bit of money, make my goal, and then once you get to that goal it's $2,000 and you say, "Okay, no my goal is 3,000. Now my goal is 4,000."

                                Then eventually you can actually go and say, "All right. I don't need the consulting anymore. I'll just do this." If you love it, you go do the consulting too. It's up to you, your choice.

Dan Hayden:      This isn't something where your going to make a ton of money tomorrow. It's not the day trading, it's not that heavy, it's not that risky type of a trade. This is something where you get good at it and you bringing in a little bit each month. Then like you just said, you bring a little bit each month, you get good at what you're doing, and then you get the confidence to say, "Okay, I'm going to now trade two contracts. I'm going to trade three contracts."

                                Because if you quit your job and you're getting stressed out because you're losing money, then you must be risking too much because you shouldn't be risking too much. You should have proper money management. This is my own opinion, but you shouldn't have that stress, just like you shouldn't be like, "Hey, I am so good at this because I've had all these ... "

                                I don't consider myself good, I consider myself that I've got a new training system so I consider myself a little bit more confident. But I'm not good in any means. But you shouldn't take chances. This isn't gambling. This is proper investing and trying to create a passive income. That's all it is, is a passive income.

Allen Sama:        As you venture more into the real money world, you know that I'm always here. You can email me, we could do the coaching calls, or the Facebook group, or the community, whatever. You know that there is some support there as well.

Dan Hayden:      Absolutely. Yeah, no. You've gotten back to me, you've slapped me on the hand a couple times. Even going onto your site, I wish there was a little bit more interaction between the members because that's where I learned and I picked up that Excel spreadsheet from your one member. I love reading it because it's like, "Okay, I want to learn more. I always want to keep learning."

                                But yeah, I felt, "Hey, I've got these trades. I've really done pretty well. Should I start doing cash trades now?" You said, "How long did it take you to learn your skill? Your lifelong skill?" We said, "30 years." You say, "Well, it's going to take you a little bit longer to get comfortable with it with the practice trading."

Allen Sama:        Yeah, [inaudible 00:59:35].

Dan Hayden:      Yeah, yeah. The support's there, and you do get right back to it relatively quickly. I think it's on our side now where we have to start interacting a little bit more, coming up with, "Hey, this was successful to me, this is what I was looking for, this is what I got, this didn't work out for me, what should I have done differently?" Things like that.

Allen Sama:        We're working on that. Right now, the course itself, we've only marketed it to our own list, so we haven't really gone to the public with it. We haven't let a lot of people in. We only open it up once a month for a few people, a handful of people, and then we shut it down again because I'm working with people, and we're working it out. But once we do expand it a little bit more, I'm working on a couple projects coming up that we'll definitely open up the course and we'll have a lot more people in. Once we do, then that interaction will grow.

                                Currently I'm working ... Right now my major project is I'm working on a book called Passive Trading. Once we get that book into people's hands, they'll see like, "Hey. Wow, this is awesome. I never knew I could do this." [inaudible 01:00:36] in there from students who are doing really, really well. I think that will help as well.

Dan Hayden:      That's awesome.

Allen Sama:        When we get more people in the group then yeah, it'll definitely pick up. But I appreciate you posting in there and doing stuff. Even on the call, I appreciate you coming on a call, and sharing all your knowledge and experience.

Dan Hayden:      Like I said, knowledge and success, it's ... These net liquidating trades, and overall profit or loss, I can't figure them all out because there's other trades that came into play with it as well. I'm probably 10 grand a month or something like that in the profit. That's pretty good since I started.

Allen Sama:        Yeah. You started five months ago, so yeah, that's pretty good.

Dan Hayden:      It's exceeded what my initial goals were. If I can now taper it down a little bit with my cash because I'm not going to be as aggressive and all that stuff, especially to start out with, but yeah, it's been a lot of fun to learn and that's the best thing about it is that I'm not having somebody else have to tell me what to do. I'm learning it and I'm appreciative of that. Thank you.

Allen Sama:        Yeah, man. You could do this for the rest of your life as long as we get older and we slow down a little bit, and our arms don't ... When your back hurts and this hurts, and that hurts, working a job or doing all that traveling might not be an option. But sitting on your porch, like you said, with your laptop, yeah, you'll be able to do that for a while.

Dan Hayden:      Absolutely. If I can get good at this and then teach my kids how to do it ...

Allen Sama:        Oh, game changer.

Dan Hayden:      A game changer is right.

Allen Sama:        That's one of the things I want to do as well.

Dan Hayden:      [inaudible 01:02:14] because you're taking something that's complicating, making it simple, and teaching others to do that. That's great. Good for you.

Allen Sama:        Because this stuff has been around for a long time. But with the advent of the internet, and the brokers, and now everything's at our fingers. Anybody can do this from anywhere around the world, so it's really opened it up for us as individual investors. I think for our kids, it's just going to get even better.

                                We're limited to a little bit of the U.S. stock system. I think when our kids are older or whatever, they'll be trading around the world, they'll be trading on the moon. It's going to be crazy.

Dan Hayden:      It's true. No, it's true. Anything's possible. It's amazing because if you're ... The times that I've gotten into trouble is the times that I haven't got out of trades because, "Oh, it's going to turn around. It certainly can't keep going." It's going down two or three days in a row. You think it's going to turn around, but if you play by the rules, you have your rules, that's where you don't get into trouble and you're out.

                                You said, "Hey, I'll take this little hit. I've made a little loss, but I'll make it back." Or, "I made it on the front side." Almost like your puts. You've owned these stocks and you've gotten so much premium that you own it for free. How much damage can be done?

                                There's no need to take risks, to take chances. If you follow the rules, when to get in, when to get out, it's all good. You're going to have minimal losses and maximum gains.

Allen Sama:        Mm-hmm (affirmative). Yup. You just play it month by month, year after year. The returns, they take care of themselves pretty much.

Dan Hayden:      Yup, and you get so bored that you just say, "Well, here's Monday again. I got to go make some money."

Allen Sama:        Well that's the biggest thing. That's one of the biggest risks is that you get bored and then you don't pay attention. I've noticed that when I first started out. I'll put on my trades and I'd be like, "Uh, nothing's happening. All right." Then, "Oh, nothing's happening." Then I'll just forget to check them, and then, "Oh, something did happen and I didn't ... Ah, don't worry about it. It'll be fine." That's when you get in trouble, when you get too bored.

Dan Hayden:      That's where I am right now because as I'm traveling with this other consulting, you're bored because, "Well, I've made this much money. If they go wrong, I'll just set up new trades because it's paper money." But I got to get more disciplined in my paper exiting so that ... To me, that's the last part of my training right now, is just setting up the trades as I enter the trades to get out.

Allen Sama:        Well you have Thinkorswim, so they have something called OCO orders.

Dan Hayden:      Correct, one cancels the other.

Allen Sama:        Yeah, most brokers have something like that. If you call them up and I'm sure they'll walk you through how to set it up or they might even have the videos on their website.

Dan Hayden:      They do have videos. Yeah, they do have videos.

Allen Sama:        They show you how to do that. If that's what you're looking for, there is a way to do it.

                                Or if you want, you can just have them alert you on your phone.

Dan Hayden:      Yes, you talked about that last week, which is awesome. You can have them text or ...

Allen Sama:        There's ways to run it if you want to find it that way. Then it's totally automatic. Put the trade on and then just put the orders in, "Okay, I'm done. I don't have to do anything at all."

Dan Hayden:      Yeah. Yeah. I lost, but I only lost a couple hundred dollars. Yeah I gained and I made $500, whatever it is. Yeah, that to me, that's relaxation because you don't have to, in that heat of the moment when, "Oh my gosh, it really turned against me. Now I'm down $300. What do I do?" That's the wrong time to be making a decision. Yeah, if the decisions can be already made for me, all the better.

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For more information on the program Dan is part of and how you can join go to PassiveTrading.com

And also visit us at OptionGenius.com

Jun 30 2019

1hr 6mins

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Rank #6: Teach Your Kids How to Trade - 003

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Imagine giving the gift to your kids of them being able to follow their calling, whatever it is. Maybe they want to be a social worker, maybe they want to be a missionary, maybe they want to be a world traveler. Right now, if they go get a marketing degree or an accounting degree or whatnot, they can't do it. They don't have that freedom. Imagine them having the ability to follow their heart and their freedom, not worrying about money because they know how to go into the markets and just take it out at will. That's what option trading, the way we do it, gives you that opportunity, that ability.

Good morning, Genius Nation! Woo. That was my tribute to Robin Williams and Good Morning, Vietnam. I loved Robin Williams. He was a great actor. I didn't think he was always funny. He was very funny, not always. Amazing actor. I liked his more serious roles a lot, as well. Recently, we just, on Netflix the other day, I was just flipping through and they said, "Hey, Dead Poet's Society." I was like, "Oh man. I'm going to put that on my list because I'm going to watch that one, man."

I remember that one. That was one of the movies that really shaped or ... It's one of my favorite movies. I don't know how well I have lived up to its message. When I saw it, I was young. I don't know how old I was. We saw it in the theater, with my parents. I didn't get the message. Only later on, did I get it. If you haven't seen the movie, I'm going to spoil it in this. I'm going to spoil it for you today. It's an awesome, awesome movie. "Gather the rosebuds while ye may." I don't remember the poet who said that, but it's an amazing line and it sums up ... That line sums up the whole movie.

Basically, in Dead Poet's Society, Robin Williams is a teacher. He goes to, I think it's a prep school. They're not in college yet, but it's a boarding school for really rich high schoolers. Either that, or it's like some small little college, a liberal arts college somewhere. He is a teacher there. I think he's an English teacher, and he takes the class, and it's all boys. The whole school, it's an all boy school. He takes the boys, and these guys are ... They look pretty rich, they look like nerds, virgins probably most of them. Nothing really adventurous about them. He takes them to this trophy case in this school and there's this picture of one of the older teams that, decades ago, where they were standing there with their little football uniforms on or something. At that time, they didn't have helmets and pads and whatnot, so they're just wearing these little leather caps on their heads and cleats. I think they had cleats.

 He's telling them to look at that picture, to really look in the eyes of the people that were in that picture. Every single one of the people in that picture is already dead. The message that those people, those dead people have, for these young kids, is to gather the rosebuds while ye may. Meaning, to carpe diem or seize the day. Don't let a day go by where it's just another boring day. Live for the moment. Live your life to the fullest, is the message. That's the whole message of the whole movie.

He shows them this in different, different ways. One of the ways that he shows them is by getting them to change their perspective. Think back to when you were in high school or college and whatnot, and you had assigned seating. You would go and you would shuffle into the room and you would go to your little desk and you would sit down. That is the image that you have of the room. That's what you see, whatever's in your vision, that's what you see around. What if you turn it around and you go and you sit at the teacher's desk? Most of us have never done that. If you go and you sit at the teacher's chair, the whole room is totally different. You can see so many different things that you didn't notice before.

One of the things that Robin Williams does, is he has them come to the teacher's desk and then he has them stand up on the desk, which they've never done before. They're all rule followers. They don't break the rules, they're all rule followers. He gets them to stand up on the desk. Standing up on furniture, with your shoes on. That's a big concept. Not only that, but you got to stand up on the teacher's desk. You could get thrown out of school for something like that. He has them standing up and looking around and seeing the new perspective, seeing how everything looks different. That's just one little tidbit exercise that he had them do.

It's a great, great, great message, great, great, great story. One of the things that I definitely, I want to see it again. I definitely want to see it again, because I haven't been living it. We do think that we are living it and we try to live it, but then day to day grind gets to you and you forget. You get tired. One of the things that is so awesome about having little kids, and this probably happens at the older ages too, but you notice it a lot more when they're little, I think, that they grow so fast. They learn so many new things so quickly. It's like every day I come home, and there's something new. We have three kids, six year old boy, five year old boy, and one and a half year old daughter. She's at the age right now where she's shooting up. I still remember the days when she couldn't even walk, where you'd have to carry her everywhere.

Now she doesn't want to be carried. Now, she runs everywhere ever since she started learning to walk, she wants to go everywhere, and she wants to go quick. She learns all these things, and she's learning to talk right now. Every day, it's a different word. It's so cool. Her mom keeps telling her, "You're so cute, I just want to eat you up. Can I eat you up? Can I eat you up?" She goes, "No, no." She shakes her head. Now she's wagging her finger. She's like, "No, no, no. You can't eat me up, you can't eat me up." It's just the cutest freaking thing.

For those of you who have little kids and those of you who have kids, I'm sure you remember this. I go home, I used to work from home. Recently, I just got an office. I used to work from home and I had my separate room there. I had my office room, and I have my library, so I got two rooms in the house that are all mine, kids aren't allowed to go in. When my older son, my two sons, when they were young, when they were born, they were in the house. We had a nanny for a while, for them. My wife was there for the first one, we had a nanny for the second one. Whenever I got bored or whenever I got tired or whenever I heard them laughing or crying or whatnot, I would always run down and pick them up and hug [inaudible 00:06:52] and feed them and put them to naps. It was such an awesome, awesome time.

For this one, I'm not there. We do have an nanny for her, and the nanny's awesome, but I'm not there every day. It was like, "Man." That was the biggest thing of why I didn't want to get an office. I wanted to get an office, it just got too loud at home and I couldn't get any work done. My hours of work were shrinking because I'm not a morning person. I don't really start my day until 10:00, 10:30. I would go upstairs at that time, start working, and then the kids would come home at like three o'clock, and then that's it. Hey, I'm going to go play with my kids, because I could do that. The style of trading I have, it doesn't take that long. For a while. For several years, it was awesome. I had that opportunity to spend with my kids, to watch them every day as they grow up, to learn what words and to teach them.

All the little things that I was teaching them and helping them with walking and talking and eating and wiping your butt and all that kind of stuff. It's just awesome. Now after the time, I just hit 40, and I don't know if I'm going through a midlife crisis or what, but I'm like "Hey you know what? I really need to get this message about there. It's great that I can trade this way, it's great that I can live this way, but if I can put in a couple hours extra more and help other people to live the same way, that would be my legacy. I think my kids are going to be my legacy so I'm not really worried about that. I don't want statues or anything for me. I think helping more people is, for me, the next stage of growth. I've had Option Genius, the website, I've had weekly training system, the website, I've had other things.

 I wasn't really paying that much attention, as I should have, to growing it. It people came into the system, if people came to our website, they had became members, I would do everything I can, or I still do, everything I could to help them out, to teach them, to help them out, to guide them. Now I think it's time to push the limit to open it up, to get more stuff out there and to help more people. For me, that's how I'm seizing the day. I'm making new goals and I'm getting out there, and I'm putting the time in.

I'm still trading obviously, I got to pay the bills, but I am able to, now that I got an office, I'm actually trading a little bit better than before, now that I have an office. I'm in front of the computer more. I'm also helping more people and I'm seizing the day in that sense. I do miss things with my daughter, but I spend time with her when I get home. I spend a good three hours with her every day at home. That makes up for it, I think. She's too little, she's not going to remember anyway.

I noticed that with my older boys, I don't remember a lot of the things that they used to do. I'm getting older or what, maybe there are just too many memories in my head now. I'm not remembering as much. We go back to the movies and I'm like, "I remember you used to say, "Ba-na-na-na-na," like that, man, that's so cute. Really, I'm now looking at the future and what my legacy is and how I'm going to help more and more people, and that's what I want to do. That's why we're getting the word out there. That's why we're doing recordings like this one. That's why we're doing videos. That's why we're doing blog post and more products and more trainings, just to help other people.

Back to my original point with the movie and carpe diem, and it also has to deal with kids. The point I wanted to make is that if you have a teenager or if you have somebody in college or if you have anybody, really, but especially if you have kids. Some pre-teens might be 11, 12, 13 years old. Teenagers, maybe college kids. If you have those, you need to sit together and you need to watch this movie, and then you need to help them, to make a plan or to keep them grounded, because life will make you forget to seize today. I would like you to give them that gift and say, "Hey, you know what? Let's do this together. What do you think about it? What are some steps you can take, maybe on a regular basis, to bring you back and to remember this message?"

One thing I always like you to do is as you are trading and as you are learning to trade, wherever you are on this trading journey, obviously you're probably listening to this because you are trading and you are investing your own capital, teach your kids how to do it. Have them do it with you. They don't have to be masters. You don't have to teach them Fibonacci if that's your thing. You don't have to teach them all that stuff. Give them the basics, show them how it works. Show them how money works. Most kids nowadays have no clue how money works. Most kids who even graduate college still have no clue. The only thing they're taught in college is how to go and be an employee.

Even if you take entrepreneurship classes, even if you take marketing classes and small business classes, one thing is they're not taught by real people who are making things happen every day, small business owners. These kids don't have that frame of reference. Nowadays, with the internet and with all the social media stuff and all this technology that's coming out with the smartphones and the apps and artificial intelligence, the sky is the limit. Kids today can literally change the world and it doesn't even cost that much money. When Facebook started, he didn't pay a lot of money to develop Facebook. He did it himself. He learned to code, Zuckerberg learned how to code, and then he made it himself and then he hired other people that also learned how to do it themselves, and they just built it that way. A lot of apps can be built by kids. They are. There's software out there that can teach you how to make an app.

There was a kid, I was watching these videos the other day. What this guy does is he talks about crypto currencies, which is like bit coin, and Ethereum. There are thousands of them. It's really hot right now, so crypto currency and bit coin is getting very, very popular. It's in the news. What this guy does is he makes a video every day, and he posts it on YouTube. That's what he does. He's went 100% into this bit coin thing, into this crypto currency thing. He spent his time researching it, learning about it, and then he makes a video every day, and he posts it online. He has I don't know how many thousands of subscribers and hundreds of thousands of people are watching his videos, on a regular basis.

The other day, he did one where he talked about how much money he made from bit coin. That was the title of the video, "How I made $100,000 in one year from bit coin." That's what his video was. I was like, "I want to hear that story." I clicked on there, I watched the video, and he was showing how he started with $500. He's a high school kid, he's still living with his parents. He had $500, and he invested in a bit coin and whatnot, but the thing is, that he did not make $100,000 from his bit coin investment.

What he did was he made money, most of his money, probably 95% of that $100,000 that he made, he made from his YouTube channel, where he's making these videos every day, and  he's posting them and then he's telling people in the video that, "Hey, you know what? There's this particular broker, bit coin broker, who's really good. You should try them out." You would have a link. If they clicked on the link and signed up, he would get a commission.

He would tell them, "Oh, there's this other company that's doing really well, you can [inaudible 00:14:42] over here." He would get a commission if people bought from his link. He would tell them about something else, and he would get a commission. He made over $90,000 last year, in one year, from commissions from a YouTube channel, without any advertising, without any knowledge, without any education. He would just go online, read the stuff, and then talk about it in his daily video, and then tell people what to do. Basically, he became like an educator. He became a teacher. This high school kid is teaching other people around the world about bit coin. How is he learning?

He's going on the computer and learning and then he's doing the same thing that the people watching the video could do. He's putting it in a video and people want to watch videos instead of going online, learning themselves. They watch his videos and they learn and they buy stuff through his links, and he makes money that way. My point is that it's incredible, the different ways that kids and people can make money nowadays, online.

That old model of going to college and paying hundreds of thousands of dollars, and getting into debt, it just doesn't work anymore. You're not going to get that big, cushy job that's going to make you 100,000 or 50,000 or 60,000. Even if you do, you have two or $300,000 worth of debt. That's why we have all these news articles every day, "Millennials don't want to buy houses because they have too much debt," "Millennials are moving back in with their parents because they have too much debt and they're not making enough money."

I had a girl who called me the other day, she's graduating from the University of Houston, and she called me. Her mother knows my wife and her mother asked, "Hey, is Allen hiring?" She said, "Maybe, give him a call. Here's the number." The girl called me up, said, "Hey, you know, I'm graduating from advertising. I got a degree, a major in advertising and a minor in marketing. I'd like to come work for you." I said, "You know what? Come on by, let's talk." The girl didn't know anything. She's done. She's out of school. She did her four years in advertising and in marketing, and she did not know the basics.

I asked her, "What have you done? What kind of marketing have you done?" She goes, "I've done SEO," which is search engine optimization. Basically, that's getting your website to the top of Google. I'm like, "That's cool. I know a little bit about that. I've done that before. How did you do it? What was your method?" She's just looking at me, like I asked her some ... Like I'm an alien or something. She didn't have an answer. She told me she did SEO, but she didn't know how to do it. She was like, "Well, we had one project in school, but I wasn't the main person on the project. I was just helping out."

I said, "Okay. Do you know anything about SEO?" "No, no, I don't know anything about it." Cool, so you didn't do anything. "What'd you do about advertising?" "I made logos and I made graphics and I've done that kind of stuff." I was like, "Okay, well that's not advertising. That's graphics. That's graphic design. What do you know about advertising? What do you know about marketing?" She didn't know anything. Her parents have paid thousands of dollars for her to go to school and now she's out, and she can't find a job.

I'm like, "You're pretty desperate for a job." She's like, "Yeah, I really need a job right now." I'm sure there are other people, like bigger companies, that come and recruit at your school, right? Job fairs and whatnot? Have you been to those? She goes, "I've been to those, I've been on interviews, but I still can't find a job." That's the state of where we are today. What I want you to do is not to put your kids into that same position.

A few years ago, we got a testimonial, or an email, which was a testimonial, and I want to read it to you. It was from one of our long term members. Let me pull it up. Basically, this is his words. He goes, "A success story from my daughter, as she has been learning from your ideas. She is currently 14 years old, a freshman of a San Francisco high school. She started to read your free lessons in August of this year. By the help of her Hong Kong uncle, with $25,000, trading in his account, she started selling SBX and Iron Condors, purely from ideas from your membership.

She has been up three months in a row, generating 12.5%, 14.57%, and 15.25%, with margin requirement of $15,000 each month, which is 60% of her 25,000. She has a profit of $6,365. She uses 25% of her profit for her pocket money, and 75% for cash reserve to pay back her uncle. She lets all trades expire as OG, option genius, designed perfect ranges, and far enough strike prices of both SPX and [inaudible 00:19:36], within six weeks of expiration. The option membership is really brilliant." [inaudible 00:19:42] San Francisco, California.

This was a few years ago and she's much older now, she's probably in high school, maybe even in college. Probably not in college, she's probably still in high school by now. No, she was 14 and she was a freshman in high school. She's probably out. She's probably in college right now. I can imagine if this girl, a 14 year old girl, can learn how to trade Iron Condors by following along with me, trading her own Iron Condors and making 12%, 14%, 15% a month, can you imagine the confidence that this girl's going to have in her life? Can you imagine what it's going to be like for her when somebody comes and offers her a job and says, "We'll pay you 30,000 a year ... Or 50,000 a year."

She's going to be like, "I don't want to do that. I can make my own income doing my own trading. I don't need to work in a cubicle." Nobody dreams to work in a cubicle. None of these kids who go to college today, they don't dream of having to work for a big ass company that's going to pay them some decent amount, but they're going to have to work their butts off for the rest of their lives. Nobody wants that. The old American dream where you work until you're 60, 62, 65, it keeps increasing. It used to be 60, where you could retire with a pension and your company would take care of you, and you would just retire, play golf, travel, that American dream is pretty much gone.

If you look at the numbers now, if you look at the statistics, most Americans have ... Over half of Americans today, over 50%, have less than $1,000 in their checking account, saved. That's their savings. It's heartbreaking. The amount of people that are retiring, baby boomers right now, that are living only on social security, that's the only income they have, it just ... It's crushing. It's soul crushing. We get emails every day from people, "I got laid off. I'm 50 years old and I got laid off and I'm trying to get a job but nobody wants to hire me at my old salary and I have all these expenses, and my kids are in college."

I'm sorry buddy, but you're probably not going to find the same job at a different place, paying you the same salary that you were making. Number one, you're 50. People would rather hire somebody out of college because they're cheaper and they can get pushed around. They can work longer hours. They have more stamina. They remember better. It's just a fact of life. We get emails like that every day. What I want is for your kids to not be in that position. For a lot of these people who email me, it's almost too late. We try to help them, but sometimes you can't. If the only income you have is your social security check, you don't have any money to trade. My thing is not for you. If I was teaching you how to get a second job or something, or get young again, you could use that and make more money. To trade, you have to have some money. You have to have some capital.

For your kids, it's a whole different story, because they have their whole lives ahead of them. Teach them to trade. You're doing it. Teach them what you do, teach them what you're learning. Learn with them. Do it as a project together. Can you imagine the freedom that your kids would have, knowing that they can go to any college that they want? Any college that they can get into? The money will not be a factor. Cost will not be a factor. When I got out of school, when I got out of high school, I got into some really, really nice schools. Ivy league schools. I could not go, because I could not afford it. The school that I went to, Florida State, and eventually I had to drop out of, I went there because they paid me to go there.

At that time, tuition, room, and board and everything was about $7,000 a year. They gave me a financial aid package of $8,000 for the year. They actually paid me $1,000 more than I needed. That's why I went there. I hated that place. Nothing wrong with it, it just didn't fit for me. It's a great school. It didn't fit for me. I applied to NYU and I got in. After my first year, I applied to NYU and I got in. At that time, NYU tuition plus room and board, everything was going to cost about $35,000 a year. Right now, it's a hell of a lot more than that. This is 1994, '95, I'm talking about. At that time, it was 35 and they gave me a financial aid package of about 16,000, which is half, about half.

I told my dad, I'm like, "Dad, dad, you can do it, right? You can pay for it? You can work harder in your business or get loans or something?" He's like, "No. Not going to happen. You can't go." I couldn't go. I don't want that to happen to my kids and I'm sure you don't want that to happen to your kid. If your kid gets into Harvard, imagine you telling him, "Hey, son, I'm sorry. Sweetie pie, my daughter, you can't get in there because I can't afford it. You're going to have to go to a local public school," which is not cheap anymore, either.

Imagine that they can go to any school that they want that they can get into, and cost is not a factor. Imagine that they can choose whatever major they want to study, whatever field of study they want to go into, without having to worry about the money. Some field that excites them. Maybe it's robotics, maybe it's teaching. Teachers don't make anything. People who go into teaching know they're going to be poor. Teachers are pretty much poor. If they really love to teach, they can go and do that because they know that they know how to trade, and that they can go into the markets and take the money when they want it.

I have had people come over our friends come over, and their daughters are ready to go to college. It's like, "So, what are you going to study in college?" That's obviously the first question you're going to ask them. Where are you going, that's the first question, what school are you going to, and then what are you going to study? The response was, "Computer engineering." I was like, "What?" I knew the girl. I was like, "I've never even seen you on a computer. You don't seem to be the engineering type. You're more social, you're more active." She was like, "Well, that's the field that has the hottest jobs right now. That's the hottest industry right now with the best jobs."

I was like, "That's how you're going to decide what to do for your life, based on what industry is hot right now?" She goes, "Yeah, because I'm going to have to take out a bunch of loans to go to school, and then I'll have to have a good paying job to be able to pay them off and have a good future. It was really disheartening. It broke my heart. Being a computer engineer, there's nothing wrong with it. Her father is a computer engineer and he loves his life. He loves his job, he loves his life, but I don't know if that's right for her. It didn't seem like she was too excited about it. I tried to talk her out of it, but at that point, it was too late because that was their situation. That was their thing. Your kids don't have to be in that situation. My kids are too small. They're five, six, and one. I can't teach them right now, but I want to. Eventually, when they're older, I will. I want them to have that freedom to do whatever they want.

Imagine giving the gift to your kids of them being able to follow their calling, whatever it is, whatever their calling is. Maybe they want to be a social worker, maybe they want to be a missionary, maybe they want to be a world traveler. Right now, if they go get a marketing degree or an accounting degree or whatnot, they can't do it. They don't have that freedom. Imagine them having the ability to follow their heart and their freedom, not worrying about money because they know how to go into the markets and just take it out at will. That's what option trading, the way we do it, gives you that opportunity, that ability.

Our trades are done month by month by month. You can if you want, but you can have really, really long one one year, two year trades if you want, but most of our trades are short time frames. You can trade for like three months and then stop, take that money out, and go on a trip. Come back, start trading again. Take that money out, go on another trip or go do something else. You can trade in your spare time. Literally, it doesn't take me more than 20, 30 minutes a day to do my trades and I make a very good income from it. A very good living from it. Imagine that. Imagine your kids had that ability. Wouldn't that be awesome? Could you give them a better gift?

Of course, you can give them a few other things like teach them how to be a good person and how to live properly and respect of other people and how to love yourself and love your spouse and all that, love your kids. The gift of financial freedom? Imagine if you started them on that journey today. Even if you don't teach them about how to trade right now, or trade options, at least get them investing. Open a brokerage account for them, put some money in there. Buy an index fund if you have to. Don't buy an index fund, buy an index ETF, like SPY or IWM. Get them involved.

One thing I did with a friend of ours, she passed away now, but she was like my sister. I'm an only child, but she basically ... We became friends, she became my wife's best friend and I was friends with her husband. The kids were like ours, we would treat them like our own kids. She started calling me her brother, her older brother. She had always wanted an older brother. She started treating me like an older brother. She became my little sister. For her daughter, I think she was 10 or 11 years old at the time, I wanted her to get involved in trading and investing, and I wanted to teach her how the world works, how money works, that you don't have to work for money. You want to get your money to work for you. That was the whole lesson behind it.

I opened up an account for her at Fidelity, and it was a minor account with her mom being in charge of it. Every year on her birthday, she would buy stock. I would tell her, "Pick a company and I'm going to buy you $100 worth of its stock." One year, the first year, this girl was ... She was a normal teenager, but she was a little bit materialistic in things like makeup and clothes and shoes and whatnot. She knew about Ulta. She was like, "I really like Ulta. Does Ulta have a share?" I'm like, "I don't even know." I didn't know about Ulta at the time. We looked it up and yes, Ulta did. Ulta had a shares trading. We bought, I don't know how much it was, but we bought some shares of Ulta.

Since then, that stock has gone up like two, 300%. Every year, she would buy one company. I put in maybe ... We did it for four or five years. I probably put in about 500 bucks. Right now, she just went to college, she just left for college. There is over $2,000 in that account. She was an amazing stock picker for not even knowing what a stock was. That's one way of teaching them. If you don't want to teach them options trading, get them invested in stocks and start with a little bit instead of giving them a big birthday gift or something, that's their birthday present. You can even do that for all types of events, for weddings. Have a smaller wedding, and put that money away for your future. Crazy concept, it might work for some people.

Now that I think about it, I think I've changed my mind. My kids aren't too little. They're five, six, and one. Maybe not the one year old, but the five and the six year old. My six year old already beats me at Chess. I think he could understand how the stock market works. I think it's time to start trading with them, teach them the basics. They won't understand what a [inaudible 00:32:18] is, but teach them the basics. I think they'll get the hang of it. I think they'll be interested. I think they're already interested in what daddy does. They don't know what daddy does, but they're interested. They ask me questions and stuff. I think it's time to bring them on board and to learn. I can't imagine how awesome that would be for them. Crazy.

Folks, that was my message for today. Carpe diem. Teach your kids to trade as you would learn yourself, as you get better. They might even be better traders than you are, which would be awesome, right? Give them that gift. Remember to always trade with the odds in your favor.

Nov 05 2017

33mins

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Rank #7: Trading In A Corporation With Brian Canter - 37

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Should you trade in your own name or a Corporation?

How do you protect your assets? Do you even need to?

In this episode I talk to individual investor Brian Canter who explains why he trades inside a Corporation, how he set it up, the benefits and pitfalls.

This is an episode every serious trader needs to listen to.

Resources:

Moore Research Center - mrci.com Momentum Structural Analysis -olivermsa.com Anderson Business Advisors - andersonadvisors.com

Jan 15 2019

37mins

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Rank #8: How to Know If You Will Succeed As a Trader - 010

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Hey there, Genius Nation. How is everybody doing today? I am excited about this particular episode because I am going to share something that took me several years to figure out. Basically, what I want to share with you is how to know if a individual trader or investor is going to succeed or not. Because let's face it, everybody wants to be a trader, everybody wants to be an investor, but not everybody is cut out for it, not everybody has the ability or the stamina or whatever you want to call it. Everybody doesn't do it. Everybody doesn't succeed. Now, I don't know why, well, maybe I'll tell you why, but I don't know the exact reason why everybody doesn't have this particular trait that I'm going to be talking about today.

It seems to be something that should be there, but until you realize what it is, until either you figure it out on your own or somebody actually shares it with you like I am about to do today, a lot of people don't get it. They don't wrap their head around it, and so for that reason, I think that they give up. It's a shame because I think that when it comes to our finances, people just don't want to take responsibility, but you are not like that, and that's why you are on this podcast and that's why you're here listening, so let's get to it.

Now over the years, I have had the privilege to work with tens of thousands of investors. We've dealt with people on the phone, we've dealt with people in coaching, dealt with people in our membership site, dealt with people on email and maybe even met several people at live events. And most people come to us not knowing much about options and passive training or selling options. They don't know about it, they want to learn, they're excited about it, they're amazed at all the benefits. They're amazed at how simple it is to get started

Dec 11 2017

25mins

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Rank #9: Interview with Jeff Stanton - 013

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This is going to be a special edition because not only am I here by myself but today I am joined by Jeff Stanton.

It's going to be our first ever interview podcast. So in the past all the other episodes that we've done I've basically been talking to the mic and I've been talking about whatever topic interests me and we go on and on and try to help and try to share my knowledge.

But this time I've actually been lucky enough to get Jeff on the phone and I'm going to be asking him some questions. Jeff is a professional trader who lives out in New Jersey right now.

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Jan 02 2018

56mins

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Rank #10: Interview With Trader Dale Hefner - 016

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Dale Hefner is a 81 year old retired business owner in Amarillo Texas.

He has fun spending time with his wife, going into town, and trading options.

Listen in as he shares how he turned a $4,000 account into $21,000 - a $17,000 gain in just 12 months!

Allen:  So, 2011 that was the Option Genius that you signed up with?

Dale:  Yes.  I was originally started and I started doing spreads following you on the Rut, SPX, ETF’s, and during the Iron Condors and the spread.  Didn’t do as many Iron Condors as you were doing, but I did do some.  And then I went to doing the spreads and I had good luck of spreads, but I had many, many spreads back then and still do and I had been exposed to the oil field industry some years back and I started looking at that and then all the sudden out of the clear blue you, you announced that you were going to start Blank Check Traders and I was elated when you did.

I thought, well, this-this is going to be right down my alley and you haven’t let me down or any of your students from the way I can read on the Facebook page.

Allen: Yeah, well we try not to [laughing].  So, do you do this, you’re still working or your full time trading or how long, how many, how long does it take?

Dale: I’m more or less, well, I guess you could call it full-time, I have nothing other than that to do that pays.

Allen:  [laughing].

Dale:  And, I probably make three to four trades a month.  I think last year I made a total of 30-31 trades and after I took my losses off of some of the trades I made I think I made it about $17,000.

Allen:  But like… So, Dale, but how long… how long does it take you to do the trading in time wise?

Dale:  Well, I don’t I try not to stay in a trade over 20 days if I can.

Allen:  Okay.  No, but I’m talking like in a minute.  Does it take you two hours a day? Four hours a day?

Dale:  Oh. No.  My gosh no.  Uh, you know I’ll get up, I’m an early riser, I get up at 5:30/6:00 o’clock, I have my coffee, then when the market opens I’ve already got my screen up.  My think or swim platform up, maybe read up on fundamentals, things of that nature then, uh, then I start watching the market and if it looks pretty non volatile I may go into town, spend some time there, I may go over to my old business office and spend some time there and then that afternoon I might check it and see if I need to make an adjustment or get out.

Dale:  I’d say if I spent a total of an hour a day that-that would be, uh, probably extravagant.

Allen:  Okay.  Alright.  And I do have a personal question for you because I know that we get a lot of folks who are retired or looking to retire soon and I often get this comment from a lot of people that, you know, “Hey Allen I’m in my 60’s” or “Allen, I’m, you know, I’m close to 70 and I just don’t have, I don’t know if I’m going to be able to learn something new.  It’s going to be complicated, I’ve never done this type of trading before.” What-what would you say to that.

Dale: Well, you just almost to the verbatim said some things that some of my friends and associates that I know ask me.  They said how are you doing retiring what you are doing with yourself.  And I get around to tell them that, you know, that I met you on the internet a long time ago back in ’11 and that I’m selling options and that intrigues them and then I get to tell in them about it, then you can see some of them get impressed about it and some of them get very skeptical and you said it well, I don’t know if I can learn it and I just tell them, frankly, what is there to learn, really? I said, hell, you can spend a few hundred bucks and I can put you on to a young man that if you follow his advice and follow his webinars and you can follow hiss trades along with it, you know, if you want to go with ETF’s or Indexes or whatever, but I said I’ll just… I’ve made it my goal to learn the commodities market.  I love it and that’s why I’ve told you in the past in past conversations that I feel like I’ve met my that I’ve found my niche.  I’m 78 years old, I don’t have to make a lot of money, but it sure is nice to have a 25, 30m $45,000 or more coming in.

Dale:  And for people… and for people that get bored during the day I think it would be, you know, there’s times that I come here and look and if it’s snowing outside or bad weather outside, this is a contradiction maybe, but if I got my screen up I’ll come in and check it once every hour. Just for something to do, it gives me something to do.

Allen:  [laughing] Yep. Well, I mean if you’re making that much and the time you’re spending on it, you know, per hour you’re doing pretty well, so, you know…

Dale:  I’ll put it this way, had I known that it was like this and that I could, find someone like you that could explain it in terms that I understood, without making it, uh, you know, sound like it was, you know like some people they bring the Greeks into it and all that.  Well, I’ve studied the Greeks and-and rightfully so, you need to know something about the Greeks if you’re going to play options, but, I just… I think it’s the greatest thing that ever happened.  I wish it happened to me 20 years ago.

Allen:  [laughing].

Dale:  I’d of probably retired had it of happened and I had the fortune of-of-of meeting you, the good fortune of meeting you 20 years ago I’d probably retire 10 years since.

Feb 06 2018

29mins

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Rank #11: Why Options Were Really Created - 008

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Welcome Genius Nation. Welcome to another edition of The Option Genius Podcast. So glad to have you here. You know, I gotta tell you. Today I'm going to be talking about something that is near and dear to my heart, because, well, I love options. If you can't tell. The guy behind OptionGenius.com, having traded options for years and years now, and really getting out there, and evangelizing options, and telling people, "Hey, you know what? You need to be trading options." I do it because, they have literally changed my life for the better, and I really feel that they are great for all types of investors.

If you're going into retirement, if you're going to try to create your financial future, and be financially free, and talk about the different types of freedoms that we really aim for at Option Genius, they are ... If you're going after those with a gun, right? Well then options are a bullet in your gun.

The problem is, that most people out there are being told myths about options. They're being told, or they're getting erroneous information. Most people lose money with options, and most people are afraid of options because they're told, "Hey, those things are risky. You better stay away from them. People lose money on those." Why? Why is that out there? It's because there's so much false information.

Well, maybe not false exactly to say, but it's been told by people who don't really know the whole story. I mean, you could read any kind of article in most of these magazines that talk about finance, you know? There's so many of them out there now. But, when they talk about alternative investments, or they talk about ways to make passive income option selling, selling options, selling premium, none of that is ever discussed. Because, it's taboo in a sense, or it's too complicated, or too advanced, you know? It's a shame that people, common, every day normal people are not told this stuff.

http://simonsaysoptions.com/stocks

http://www.weeklytradingsystem.com

http://www.optiongenius.com

Nov 21 2017

25mins

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Rank #12: 2018 Predictions - 014

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Around the end of every year and beginning of the next, the world is flooded with folks giving their predictions about what will occur in the coming year.

Some of these actually come true. But most are just for fun. These fortune tellers think that something might happen and because of that something else might occur. Mostly these folks are just looking for some free publicity. Which is why I hate predictions.

Don’t give me a guess. Give me some real information that I can use to make an educated guess

So what I like to do instead of to look at trends. Long term trends. I am a more Macroeconomic guy than micro if you know what that means.

And one of the folks I look up to is Jim Rogers. This guy started the Quamtum Fund with George Soros and made billions.

His whole philosophy is to see where the money is sitting in the corner and go pick it up. No need to fight for it or work too hard.

Sounds pretty good to me. So then how do we use this info

Well you look at what has been happening in the world, compare it to history and see what you see.

Stop looking at the minutia, the day to day news and look at the big picture.

These are the Top 5 Trends that will shape 2018.

Resources and links mentioned in this episode:

Jim Rogers

Bitcoin Episodes:

Episode 006 – Bitcoin Scams You Need To Be Aware Of

Episode 007 – How To Invest In Bitcoin

Contact help@optiongenius.com for your questions

Download the Free Option Trader's Treasure Map:

http://optiongenius.com/map

Join Our Free Facebook Group called The Option Trader's Alliance:

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Jan 17 2018

20mins

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Rank #13: How To Make 400% With Financial Journalist Wayne Duggan - 51

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Okay. So Wayne, I see that you have a book that you have written about trading in the stock market. And the title of the book is "Beating Wall Street with Common Sense", which is an interesting title by itself, but then it goes on. It says, "How I Achieved a 400 percent Return from My Dorm Room". And so I saw that book, and I was like, "Hey, that's really cool". I bought it. I read the thing, and I looked you up and it turns out that you are actually a writer as well.

Wayne: Yep.

Allen: Yeah, so, I mean-

Wayne: Yeah, I'm a journalist.

Allen: The funny thing about the book was that, I think it was the first line of your book, or the first sentence is, "I am not a writer".

Wayne: I know, it's ironic, because at the time I wasn't. But the book kind of jump started my whole different change in career for me. So I can't use that line again if I write another book.

Allen: So why don't you tell us about that. How'd you get 400 percent and how'd you get into the whole stock market game?

Wayne: Well, I talk about this a little bit in my book, which is that growing up I've always been kind of a numbers person. I was a big baseball fan, I was hardcore into baseball statistics, and I always had a fascination with the stock market, but I didn't really know much about it. And then when I went to college, I majored in brain and cognitive science, which is essentially a combination of psychology and neuroscience. So I didn't really take any finance courses or anything like that. And, as we all do in college, you have some boring classes sometimes, and I was actually in graduate level courses in 2008 when anyone that was investing at the time knows, because it was obviously a lot going on in 2008, so I actually started reading up and learning about the stock market for the first time, and decided I wanted to dip my toes in and invest. And, like any new investor, I obviously made a lot of mistakes, I tried to learn from those mistakes, and I was fortunate enough to where I timed a good entry point. I like to think I had some decent insights into some good stocks to buy, and fortunately it really worked out for me.

Wayne: And I talk about all this in the book, and one of the things I wanted to do with the book is make sure that I don't hide my mistakes, even my embarrassing ones. Because I think that's important, I think it's... everybody's going to make dumb mistakes when the start out, and you shouldn't be ashamed of that, you should just make sure you understand why you make them and try to learn from that.

Wayne: So with the book... writing a book was always on my life bucket list, so I wrote the book, I actually tried to get it published through a publisher, but I had no experience writing as I said in the book, and that was one of the things I consistently heard from publishers was that, we really like the book but we're looking for authors that already have an audience built. So they were like, you should start a blog, you should try to get some freelance work, and maybe the next time you write a book we'll be more open to the idea of publishing it, and so I kind of started writing for Motley Fool, Seeking Alpha, websites like that. I had some success there, and I ultimately kind of ended up changing career paths. Now I write full time for benzinga.com and I contribute for US News and World Report and Investor Place.

Allen: Cool. So I definitely want to ask you about the mistakes that you mention. But before we do that, how did you get 400 percent, and over what time frame?

Wayne: I think it was over about... well first of all, I can't take full credit for it. Because the first stock I ever bought was in December 2008, so that was a pretty darn good time to start buying stocks. So obviously if you bought just about anything in December 2008 you would have done pretty well over the next few years. I think the time frame... I don't remember exact, I think the book I wrote in 2011, so I think over about three years I generated more than a 400 percent return. Which I think is pretty good, nothing crazy, but I mostly took the approach of trying to identify high quality stocks that got slaughtered during the downturn and that I thought got unjustly punished and I think my largest profits came off of buying big bank stocks.

Allen: Yeah, they were beaten down a lot. Most of them were like...

Wayne: Yeah, I think I got Bank of America in early 2009 at point during my trades, I think I bought it at two dollars and 75 cents a share or something like that.

Allen: So basically, it was really really good timing.

Wayne: Yeah. And I like to think that wasn't an accident.

Allen: Did you trade options at all? Or was it all stocks?

Wayne: Initially I didn't. I think my first big option win came in 2011, and at the time I was just wanting to learn about options, I didn't really have any experience but I was always interested in it, so much like trading stocks a couple years prior I sat down and researched and tried to teach myself about options. My option trading, I always did it purely as speculation. I was buying calls, inputs, which I know is opposite of what you recommend, and also for my experience, the opposite of the way you should approach options unless you're doing it the way I did which was pure speculation, fun, gambling, lottery ticket type stuff. Which is what I was doing at the time.

Allen: It says here that you did it when you were in college. So how did you get the money to start?

Wayne: I started small, which is another thing that I would recommend for anybody that's starting out. It was just some money that I had put away, and it wasn't a ton of money. I think when I first started I had maybe 2000 dollars or something like that. It wasn't anything big. I really just wanted to learn the ropes and I think it's... that's one of the pieces of advice I'd have for any new investor, is if you're in your 20s and you're thinking about stocks, but you think oh there's plenty of time to do this, I'll learn it whenever, I think it's good to get in when you're young, make your mistakes early, make your mistakes when you can afford to lose a little bit of money, and then, by the time you really have real money to work with, you kind of know the ropes and know what to do and what not to do.

Allen: That's well said. How old are you now, by the way?

Wayne: I'm 35.

Allen: 35. Oh man. You still got a lot of stuff to learn.

Wayne: Yeah, I feel like I'm fortunate that I started relatively young. Because again, even if I had lost everything at that point, I think when you're 26 years old, you got plenty of time to recover and you're not throwing away your retirement savings or anything like that. You're not derailing your financial future. So I always tell people, definitely start young.

Allen: You won't believe how many stories we hear from people that are in their 50s and 60s, and they come to us and they say, "Hey I just got started and I lost a bunch of money". Now it's not too late, but if you had started earlier or if you had been doing it a little bit safer, you would have been in such a better boat.

Wayne: Absolutely.

Allen: So Wayne, how have you been doing since then? So that was a few years ago, the market's been in a really nice bull trend. What do you do now, how do you invest now, how's it going?

Wayne: I've been doing so so lately. And to be honest, I have not been trading much lately. Once I started working full time doing financial journalism... I found that I had a lot more time on my hands when I was screwing around in school then I do when I'm working eight or nine or sometimes 10 hours a day with three different jobs. I've kind of... most of my money, honestly, is in CDs right now, but I have a couple of speculative investments, Alibaba is my biggest position and a couple oil services stocks that are pretty beaten down that I feel like have been unjustly punished. I really don't, I'm literally... my Merrill Lynch account is probably 90 percent cash or CDs at the moment.

Allen: That's really interesting, because you are in this market all the time. You're learning, you're hearing the noise, you're hearing, oh this stock went up and this stock went down instead of doing this instead of doing that, but you're not even inclined a little bit to jump in and say let me make a fortune off of this stuff.

Wayne: Well, I feel like it's always a good time to buy and hold an S&P index fund as long as your timeframe is 10, 20, 30 years, something like that, but I honestly don't see anything out there, or very few things, that just smack me in the face and that they're under-priced or look cheap or undervalued. If I did I'd buy, but I honestly don't see much out there. I also think it's kind of just a weird time, after at 10 year old bull market and interest rates are so historically low... there's just a lot of screwy things going on and I'm not inclined, I'm not a professional investor, so I'm not inclined to always have my money all in all the time to have food on the table. So I'm just kind of on the sidelines until I see another opportunity... probably another 2008s not going to come along anytime soon, hopefully not at least, but at least something where I say, "Okay this looks like a no brainer".

Allen: Okay. So you're totally value. You're into beaten down stuff like you said, and just wait until it comes back and you'll wait until it comes in.

Wayne: I'm mostly value. I talk about in my book, I'm a firm believer in exploiting the psychology of the market. So I'm kind of an investor sentiment, contrarian investor as well. So contrarian investors, when the market's great and everyone is saying stocks are great and everything, that's not the time contrarian's like to buy things. So these days, everything seems like it's on cruise control, I like to buy when there's blood in the streets. And there hasn't been much blood in the streets for nearly a decade.

Allen: Interesting. That's a different way of looking at it. Because a lot of people they always feel, yeah I have to be invested, I have to have my money in there, it goes up seven, eight percent a year, 10 percent a year so I need to take advantage of it. But you're saying that you don't need to do that.

Wayne: Like I said, if you're trying to trade for a living, then you need to be trying to profit. But if you're trying to do it for retirement or like I do kind of as a hobby more than a profession, yeah, I mean... if I go to the mall and I'm walking around and I see something on sale that I like, I'll buy it. But I'm not the type of person that goes to the mall with 100 dollars and leaves with zero dollars every time, no matter what's there. So, I got the cash, if I see a stock that looks cheap, I will jump in there. But if not, I don't feel the need to always be hunting down things to buy.

Allen: Interesting. So, now you mention investor sentiment, and psychology. Can you go into that a little bit? How would somebody find that out or how relevant have you found... obviously you rely on that, but how important is that?

Wayne: Well, it's one of the more popular contrarian indicators of how a stock performs. In my experience generally, if you're trying to beat the market then you can't be doing what everybody else is doing, because by definition if you're doing what everybody else is doing you're not going to beat them at that game. So you need to be doing something different, you need to either be seeing something before everybody else sees it, or you need to be seeing it differently than everybody else sees it. Nowadays, with high frequency trading, institutional investors, in my personal experience I feel like it's extremely difficult for an average retail investor like myself, to be faster than the market. It's very, very difficult.

Wayne: So I have to, my only window of opportunity, is identifying stocks where I see something differently than everybody else sees it. And it think one of the things that has tended to happen in this digital age is that people are impatient. So I think back in the day people would buy stocks, it would be common for people, even traders, to buy stocks and be willing to hold them for six weeks or six months or nine months or even a year or two, while their thesis plays out. But I think over time, just has society has sort of sped up and the digital age has sort of encouraged instant gratification, I think people don't even a lot of the time, they don't think nine months or 12 months down the road anymore. If something's not going to work today or tomorrow or next week, it's not even on their radar anymore.

Wayne: So I think those are time where... I'll use Alibaba as an example. If you look at the growth numbers that Alibaba's putting up, without any knowledge of this trade war that's going on, if you just think about the economic growth rate in China, the fact that they have the billions of people, the fact that the government basically restricts international competitors from coming into the Chinese market, that company's been absolutely tearing it up. And they're into all the high tech fields that Amazon is into the US. And yet, the stock has been stagnant for a while now, and it's because investors can't see past this trade war.

Wayne: And personally, I believe the trade war is coming to and end sooner rather than later, because it seems like it's hurting both the US and China, and I think Warren Buffet said this in his shareholder letter or an interview at the annual Berkshire investment meeting or something. But basically, when you have two rational actors, and there's a conclusion that's in the best interest of both of them, they're eventually going to make it there. And I don't know what the terms of the trade deal are going to be, and I don't know if it's coming next month or a year from now or whenever we get the election over with or whatever, but I believe a trade deal is coming at some point. And I'm personally hoping that completely shifts investor sentiment on Alibaba and that people start taking a closer look at those numbers.

Allen: Okay. That's a cool way to... do you sell options while you're waiting or no?

Wayne: I don't. And I figured you'd ask me about this, and I will say this, if I had more time on my hands slash wasn't so lazy, I definitely would be doing it. It's something where, after working a full week where I'm seven AM to five PM stocks and options and trading all day long, at the end of the work week I don't even want to look at my porfolio, I just want to relax. So yeah, if I lose my job at some point I'll definitely start selling options.

Allen: All right. So then, what were some of the mistakes you alluded to earlier, that you think that ordinary, common, everyday individuals are making that they shouldn't. Or that you can protect them from, just letting them know. What do they need to know?

Wayne: There's a lot. Maybe I should just answer just in terms of buying options. Because I think, and if you're preaching selling options then I like to think you'll probably be on board with all of this, but when I first started thinking about options and how if you buy options it basically gives you leverage where you can theoretically make really large returns on stocks that aren't super volatile, I thought well geeze this is the golden ticket and I thought that, well, I've had success buying stocks and holding and ultimately my thesis plays out and I've profited off of this. But, the time factor with options, the reason why it's smart to sell options and not buy them, is because you have to get two things right when you buy a stock - you have to get the stock right and you have to get the direction right. When you buy options, you have to get three things right - you have to get the stock right you have to get the direction right, and you have to get the timing right.

Wayne: And I think most people are predisposed due to their personalities either to be too early or too late when it comes to timing their investment thesis. I tend to be too early, I tend to think things are going to happen before they actually end up happening. So what I found early on in trading options is like, oh, I'll use Alibaba again as an example, oh, I believe a resolution to this trade war is going to happen. If you had asked me in December when I thought it was going to happen, I would have definitely said I thought it would have happened by now. By June, I definitely would have thought there would have been a trade deal.

Wayne: So maybe back in December, I would have thought, oh, there would have been a trade deal by June, I'll buy June call options out of the money on Alibaba and by the time June 15th rolls around I'll be good to go. Well, nothing's really changed about my thesis, I still think that a trade deal is going to be reached and Alibaba stock's going to go higher, but if I had bought those call options back in December I'd be out of luck. They would have been expired, completely worthless. So the shame in that is that your thesis can end up being right, but if you don't get the timing right, you're completely screwed and it doesn't even matter, it's as if your thesis was just completely wrong.

Wayne: So I think that's what I would say to anyone looking to consider buying options rather than selling them, is you're basically playing... the stock market goes up over time, historically. So if you're just buying generic stocks you at least have kind of of advantage in the sense that the economy is growing. But if you buy options, call options or put options, you're at a tremendous disadvantage in the sense that you need something to happen just to break even on your trade. You're starting off in the hole because of the time value decay and I think people overestimate, they tend to have too much confidence in their ability to predict timing, and I think a lot of people get burned on options like that.

Allen: It's like a ticking time bomb. It's just tick tick tick every day.

Wayne: Absolutely.

Allen: Cool, the one thing I wanted to mention to everybody watching your book, when I bought it I thought it was going to be basically your story. Which it is, it's your story. But I think that's about half of it. The other half is you actually talking about investing and all the jargon and what goes on in the stock market, basically from A to Z level. And I think that if somebody is new to trading or new to stocks or even options, if they pick it up and they read it they'll learn a lot more than normal.

Allen: Because the stuff that you are talking about, I know for me it took me several years of not only just trading but watching CNBC a lot to understand all of the ways, how everything works together and how does this react to this. There's no guide for that, it takes a long time to understand, okay fed's going to cut, what is doveish, what is hawkish, what is doveish, they keep mentioning these words I don't know what that means. But in your book it covers everything, and I was like oh man I wish I had this so much sooner, it would have made so much sense.

Wayne: It's, and I thought long and hard about how I wanted to approach the book at the time, because I feel like there is certainly a jargon to Wall Street, and it can be incredible intimidating if you're starting from scratch. And it was even to me. When you start out, it's like learning a new language. When you start out your first day of French class and people are speaking French, you're not going to know the first thing about what they're saying. So I tried to write the book that I would have wanted to read when I first started out. I remembered how intimidated I felt and I remembered how ignorant I was and I... obviously when you're first starting out trying to learn something new, you're going to be ignorant at first, everybody is. And you're going to make mistakes at first.

Wayne: And so, I tried to tell my story, like you said I tried to tell my story by also tried to work in things that I learned. And yeah - a lot of your listeners that are advanced enough to be selling options and making profits, maybe they'll learn a thing or two from my book, but maybe they got past that point a long time ago. But, maybe they would like to read about my story.

Wayne: But I think the perfect audience for that book is someone who is a bit intimidated to start out and they may not necessarily want to read a book written by someone who has 20 years of experience at a hedge fund. Maybe they just want to read a book about someone who was a random person, an average college student like they are or they were, and started from scratch the way they're starting from scratch, and know that like, yeah, it can work out. It won't be perfect, it'll be bumpy, but it can work out and here's the story that proves it.

Allen: Yeah. And then, the other thing that you talk about is common sense. So, that's the title of the book, "Beating Wall Street with Common Sense". And it's, you mention it and it should be common, but it's not as common as you think. And I think that's part of what makes a market, me and you could look at the same thing and I'll be like, "I want to buy!" And you're like, "No, I'm going to sell it". So how do you say common sense? What is common sense in the stock market?

Wayne: I think the best way to explain it is... and I've written about this for my job, is I think that unfortunately we are predisposed to... human nature has a lot of inherent biases, psychological biases, and when you're talking about hard earned money, your retirement savings or just a few thousand dollars that took you however many hours to earn, it's very emotional to see your account going up or down every day. And we have deep rooted, biological predispositions to avoid losing things that are valuable to us. So I think one of the most important lessons to learn for a new investor is to control your emotions. Because I guarantee you your emotions will almost always have you making the wrong decision in terms of trading, because you will be most fearful at the time you should be buying, and you will be most greedy at the time you should be selling.

Wayne: And so, I think the common sense part to me is, the market may seem random sometimes. But the market is just a collection of individuals and institutions run by individuals, and the decisions they're making, they're basing those decisions on human logic. And so, when a stock is going up or down, on any given day those movements may be random but on a longer time frame there's a reason why a stock is going down or up. It may not be logical, it may not necessarily be correct, but the reason that it's going up or down is because people have certain beliefs about that stock, and they're buying it or selling it in response to that.

Wayne: So if you kind of remove yourself from trying to think about why the stocks going up or down and you think more about why would somebody be buying or selling this stock right now, and think about it more from a psychological perspective, then that sort of gets you to where you can think, okay, well when is this person that's selling this stock... why is somebody selling Alibaba right now? Oh they're selling because they're worried about the trade war. Okay, that's why Alibaba stock is going down. Okay, well what can change that will make that person say, oh, well now I want to buy Alibaba stock? Then you think oh, well if the trade war comes to an end then that person may completely change their mind.

Wayne: So that's not... you can dig as deep as you want to into financial metrics and numbers, and as a value investor at heart I'm a big fan of value investing metrics. But I think in terms of how the market moves, the market doesn't necessarily move because of a stock's price to earnings ratio. It moves because people have certain feelings or thoughts about a stock, and they're buying or selling it in response. So you really need to, as much as it's good to understand all the metrics, I would advise people to take a step back and think, whether I agree or disagree with what's happening, why is it happening? What are people thinking about this stock and what will change their minds at some point in the future?

Allen: That's interesting you say that as a financial journalist, I want to go to that. Because one of my questions I was going to ask you is, as a journalist you have deadlines, and you have to write about certain stories, you have to put out a certain amount of content. And every day, the market might be up five points or might be up 15 point or oil drops one percent or two percent, there's always a headline. There's always an explanation, right? So how do these financial journalists come up with these thesises, of why something happened? Like you just said, we don't really know why it happened it could be some people think this way or some people that way, there's no survey, people are not telling everybody why they're doing things. But how do these journalists come up with these headlines and say, market moved, or this stock moved, or this happened because of this today.

Wayne: I would like to think that good journalists, they don't write definitively. They say well, the S&P was up one percent today, and then I'll reach out to traders and be like, what are you hearing what are people saying, why do people believe that the market is up today? Or a lot of times, I'll reach out to economists or analysts and I'll get their opinions, and then when I write my story I won't present it as my opinion of what's happening, I'll present it as this is what traders are saying is happening, this is what economists are saying is happening, this is what analysts are saying is happening. And then, I may or may not draw a conclusion, oftentimes I will, but I don't present it as, all right I'm god's gift to earth, I've come to save the day, this is my journalistic opinion of what's happening.

Wayne: I don't think that that's necessarily helpful to people, I think people want to know a collection of sources, or even just one source, if one analyst puts out a note saying this is what happened today, we may do a quick summary of that or whatever. But for Benzinga and US News, they don't so much care about my opinion. For a stock picking site like Motley Fool or Seeking Alpha, I mean they make that clear that that's more opinion, editorial pieces. But in terms of my journalist jobs, they actively don't want me putting my two cents in there. They want sources with expert experience that are going to be the root of all of our stories.

Allen: Okay, cool. That makes sense. Because a lot of the times I'll read something, it'll be like market was up six percent today and it's because the fed announced that they're going to do this and this and this. Or China said this and this. And then the next day, it's going to be like oh the market is down five percent or two percent today because China did this and this and this. Wait a minute, you just used that same excuse yesterday for the market going up. So it's really hard as an individual to figure out, okay what is happening really? So the next question is, how does an individual trader or someone at home, how do they use the news? What would you suggest in that?

Allen: So, a lot of the times, one of the things that we do is we teach people how to do backtesting, which is a piece of software where you go back in time and you only look at the chart, you only look at the stock. You don't know what's going on in their market, you don't know what the news is, you don't know the headlines or anything like that. So you don't have that noise basically, is what I call it, the noise of what's going on. You're only trading the chart, the stock, the numbers in front of you. And most of the time, people who do that, they actually do better with the backtesting than they do in real life trading, even though they're using the same plan or the same rules. So how would you suggest that we use the news or... and obviously you're not going to tell me never to listen to the news, because that's your job, but how do we take advantage of the news?

Wayne: Well, if you're day trading, I think you need to think of the news as... every headline is a catalyst in the short term. If you're investing for the long term which is more of what I do, you used a good word, I think the news is mostly noise. I think it's good if you're a longer term investor to make sure you always keep abreast of what's going on with the stocks you own, because you don't want something coming out of left field. You don't want to just not pay attention for a week and then you come back and all of a sudden a week ago, there was an SEC investigation into your stock and it's down 40 percent. I think you need to always keep up with the news, but someone that, if I was advising someone that's not trading in the short term but more investing for the long term, I would say read the news but don't lose sleep over it.

Wayne: If you read a headline that fundamentally changes your investment thesis, then you should think about maybe trading or adjusting your position. But some quarterly earnings report that wasn't very good but you still think the company has a great long term future ahead, that's just noise, honestly. Or the CEO steps down. Well, if the CEO is 88 years old with health problems, that's understandable, that doesn't change anything about your long term investing thesis. If the CEO steps down because he was was arrested by the Department of Justice or something, maybe that's a red flag.

Wayne: I think most of the day to day news, this is coming from a journalist, we want to write about stocks that people are reading about, but it may seem like a certain company is in the headlines all the time, but that doesn't necessarily mean that more stuff is going on at that company, it just means people care about that company and that's what people want to read about. So I think the news is important, I don't think it's the end all be all in terms of investing, especially if you're a long term investor. Just think of it as part entertainment and part information and don't stress out too much unless something major changes with the company.

Allen: Okay. And then, you mentioned that you do work, or you have done articles in the past for Motley Fool and Seeking Alpha. So I was wondering, you mentioned that you had just gotten out of college and you had started writing for those. What are the requirements for those? Because sometimes people read that and they take it as gospel or they take is as somebody who actually has done dozens and dozens of research, or years of research into something where their thesis is so airtight. Can anybody write for those or, how does that work?

Wayne: It's been a while since I've written for either, but honestly back in the day there wasn't too much of a screening process. I think at the time I think you submitted sample writing and the editors just read it and decided whether or not it made sense to them. So I would absolutely take everything you read online that is recommendations to buy or sell stocks or trade in any capacity, I would take it all with a certain degree of skepticism. In fact I wrote a story for US News less than a month ago specifically about cannabis stocks, and about how there's a lot of misinformation out there online specifically about cannabis stocks. So you need to always... when you read something online, always in the back of your head need to understand the credibility of the source.

Wayne: And people have their favorite news outlets and ones that they don't like. But regardless of which ones are your favorites, legitimate news outlets are not just going to straight up lie and deceive people, because they'll open themselves up to all kinds of lawsuits and whatnot. But, there are plenty of nefarious websites out there or message boards, or people who are self interested or even paid by the companies, that will straight up lie about what they believe about a company. And it may not even be that they're just straight up lying, it may be that they own shares of a stock and they're completely blind to a different way of looking at things because they're along that stock, so the company can do no wrong and everything's always rosy and obviously that's a very biased opinion.

Wayne: So anytime you read someone telling you buy this stock or sell this stock or option or whatever, you always need to remember, who is this person, why are they saying this, what are their qualifications? Because you don't want to be blindly following anybody regardless of their qualifications, but people... certified analysts, people who have backgrounds in finance or backgrounds in journalism or whatever, they at least have some degree of experience. You're right, I wrote that book about my experience in the market, and my first professional writing gig was with Motley Fool. They like to think of it I think as more just like a crowd-sourced... like my articles weren't Motley Fool's opinion of the stock I was writing about, I was just one of hundreds of writers they have writing. So it's more of a platform than I was writing, speaking on behalf of Motley Fool. But yeah, people should be careful out there for sure.

Allen: I mean I do remember, even during the dot com bubble, 1999 and 2000, at that point everybody was going gaga over, this time it's different, oh these dot coms are going to change the world. And a lot of the journalists were the ones that were banging on the drums the hardest. Yeah, everybody's got into this, you got to get into Lycos, you got to get into all these other sites, companies that went out of business, pets.com and all this stuff. It seems like those people that were those journalists, they disappeared for a while because nobody wanted to hear their things any more because everybody hated them. But now they're actually back, and I see them on the news and I see them on the different financial channels, and they're still giving advice as if they knew what they were talking about back then so now, why should I trust you now.

Allen: Then the other thing is on the TV shows, the guys who come on from the different hedge funds or the money management companies or the banks and whatnot, a lot of them are basically, they're talking their own book. If they're the market maker or they're the company or they're the bank that's taking a certain company public, there's no way they're going to say anything negative about that company on air, or even that whole industry. Just going to be saying good stuff. And that's the thing, when we're watching that as an individual, we don't know where their conflict of interest is, we don't know what's going on behind the scenes. So I really appreciate you saying that. As a journalist it takes guts to come out and say that.

Wayne: I'm... journalists... I feel like your title in life, your profession says something about your experience. But it doesn't make you infallible. Whether you're a journalist, a doctor, a lawyer, a teacher, everybody's just people. And people make mistakes. And in terms of accountability, I always thought this was crazy because I'm a big baseball fan, if I'm watching a baseball game on TV, if I'm watching the Red Sox and a batter comes up and steps in the batter's box and I don't know who that guy is, the first thing you show when you get in the batter's box is a line across the bottom of the screen showing all his statistics, how he's performed, what's his batting average, what's his on base percentage, how many home runs how many RBIs does he have. I don't understand how these people come on CNBC and all that shows up is their name or where they're from. And maybe they've been on CNBC 200 times, and they've made 200 stock picks, and they've gotten 190 of them wrong. You wouldn't know!

Wayne: And it seems to me it would be so super easy to keep up with these analysts and journalists and pundits that are on TV and what stocks they pick and how often they're right, how often they're wrong. Show their name, and show the percentage of times in the past they've been right or wrong. Because I don't know about you, but if somebody's only been right 15 percent of the time they've been on CNBC talking about stocks, I probably am not going to really care what they have to say, honestly.

Allen: Well you know the reason they don't do that is most of them are wrong a lot of the time, and nobody would watch it.

Wayne: I know, that's true. If they were good at picking stocks they wouldn't be on CNBC.

Allen: There are certain people like... I used to watch the show Fast Money. I still do, still record it and watch it from time to time, and they've had a couple guys on there that were regulars, that every time they say something it's like man, you have no clue what you're talking about, and I would go and say let me try and see if I can do the opposite of what that guy just said. Because he's such a...

Wayne: That's a real thing.

Allen: And yeah. A lot of people do that. Jim Cramer comes to mind, a lot of people are like I'm going to take the opposite side of him.

Wayne: People give Cramer a hard time.

Allen: It's tough for him to be him. But I do credit him in a sense, that there's a lot of time when the market is moving in big moves, and I really can't figure out why, I don't know what's going on. And the news doesn't help, the headlines don't help, but on his show, he actually gets into the meat of it sometimes because he's been in that world. So he'll be explaining it, "This happened and this happened so the hedge funds are thinking this and this, or that's why they're moving a lot of stock". Or "This happened overseas that was not reported and that's why such and such is happening", or something like that. And in the past he has helped me out in that sense, to make sense of what was going on.

Wayne: I'm actually a big fan of Jim Cramer, I know his stocking picking track record is questionable. But what I think he's great at is I think he's great at educating people, I think he's great at entertaining people. I read a couple of his books when I was first learning about the market. I don't remember which ones, but I thought they were incredibly helpful. I think in another life he may have been a great teacher, because I think he has a talent for breaking things down simplistically. And again, he's been wrong plenty of times, we all have. So I get the criticism. But I think his show is good, I think his audience, there's a lot of inexperienced investors and traders in his audience and I think he helps educate them. And I'm all for education in any respect.

Allen: I think part of it is his, he's set up for failure in a sense with his show. They want quick answers, if someone calls you up and says, "Okay Citi Bank, what do I do?" And if your only choices are buy or sell, you're probably going to be wrong. You can't go into a long term explanation and say, "Well they have this and this going on, so don't buy right, now wait for this to happen then you can buy, or sell if this happens", he doesn't get that chance to do that.

Wayne: And I feel like I would not want to make 25 stock picks a day and be expected to get all 25 correct every day. That's pretty crazy, so I agree he's got a tough gig. But I daresay he gets paid very handsomely for it, so I can only have so much sympathy for him.

Allen: So Wayne, what do you have going on right now for you? What's exciting you, what's happening in the future?

Wayne: I am actually really enjoying life. That's probably lame to say. But I'm really happy with where I'm at right now. I've been telling myself at some point I want to write another book in the future, because I think it's been eight or nine years since I wrote my first one. But like I said I've got a full slate, I'm a staff writer for benzinga.com, those guys there are all really great to work with, I'm a regular contributor for US News and World Report, which again, my editor's awesome, the team there is awesome, and I've been contributing to Investor Place, and once again no complaints. They all treat me well and when I started out to write that book, it was hobby. Investing was a hobby for me, the stock market was a hobby. And I had no plans on being a professional journalist or writer or anything else. So I feel lucky every day that I'm one of the few people that was somehow able to finagle my way into having my hobby be my career at least for as long as it lasts. So, I'm just trying to enjoy myself and yeah, I'm having a blast. I have a blast every day. I wake up and get to write about the market.

Allen: Do you go to the office, or you work from home?

Wayne: I work from home, one of the many things I love about my situation. I live in Tampa Florida, and I can some afternoons if I'm not on a deadline, I sneak out and write by the swimming pool in the beautiful weather. So in terms of what I got going on, I don't really have any major plans in terms of projects or anything I'm working on, I'm just enjoying life.

Allen: That's sweet. So if our listeners want to get a hold of you or ask you some questions, where can they reach you?

Wayne: Well I have a blog, it's tradingcommonsense.com. And you can contact me through the blog, I try to be pretty good about getting back to people if you're patient for a day or two. My book is on Amazon, "Beating Wall Street with Common Sense". If you read it an it helps you or you were entertained or both, I'd love it if you drop me a review. I think it's only like two dollars or something, the book at this point. I just really want to get the message out there and yeah. I'm on US News and World Report, Benzinga, and Investor Place.

Allen: Awesome. Then your website is tradingcommonsense.com?

Wayne: Yep.

Allen: Awesome, I appreciate you taking the time and it was informative to get behind the scenes with a real journalist and see how you guys think and how we should actually use that information. As well as common sense. So thank you so much.

Wayne: I appreciate you having me on, it was good talking to you.

Allen: Thank you Wayne.

Jul 19 2019

28mins

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Rank #14: How Much Do I Need To Make $X? - 011

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So, the question really is, "How much do I need to make X?"

Basically, I get this question all the time. For example, "Alan, I want to make $5000 a month. So if I sell options, how much money do I need to make that much?"

And I mean, really, that's your question? How am I supposed to answer that. There's no way I can answer that. I don't you. I don't know how good a trader you are. I don't know how long you're doing this. I don't know how much risk you wanna take. I don't know what strategies you're gonna use. I don't know if you're gonna adjust or not.

There's no way to answer that question. It's like a one-line email and they're like, "Thanks. Let me know." And based on my answer they either sign up for our Option Genius service or they don't I mean, it's kind of crazy.

I think so much of it has to do with the individual. Because I have seen two traders be given the same exact trading plan, and one of them makes a lot of money from it and the other one loses money.

The same exact rules. Like, hey, this is how you get in, this is what you do, this is how you adjust, this is how you get out. Everything. Give 'em the same rules, two of them. Let them do their thing. One of them will make money, one of them won't. But even simple than that, I have seen it where we have people who take the same trades that I'm doing and they lose money. Now I don't know how that happens. I mean, obviously I lose money too, so I'm not talking about a losing money trade. I'm talking about a trade that I won on, that I made money on.

Dec 19 2017

17mins

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Rank #15: The World’s Richest Options Trader - 42

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Good day to you My fellow options trader and individual investor. This is Allen Sama coming to you with another edition of the Option Genius podcast. Thank you very much for listening. Thank you very much for supporting us. Thank you very much for accompanying me on this journey as we learn about options, about selling options, about passive trading, about making money while we sleep. It's amazing. I didn't think it was going to happen, but this month marks the 10th year anniversary of Option Genius. Company started 10 years ago, had no clue where it was going to go, what it was going to do, but it's amazing the thousands and thousands of people that we've actually been able to help over these past 10 years. And the really exciting thing is that we are just getting started to really ramp it up because, in the past, options unions were started as a lifestyle business, meaning that we didn't really want it to get very big.

We wanted to stay small, just like one website and one service and that's it. But slowly, slowly it's grown. And now, it's at the point where we're like, "Okay, we need to really get this message out there. Get other people to know what we're doing and how it's working and overcome all the obstacles that people have to a safe retirement." Not worrying about money. Not worrying about expenses and all these bills and all this stuff that people ... it's just, life is too short, and then we have to worry about all this money stuff. Right.

I really appreciate you listening. Thank you for sticking with us for so long. And if you could do me a favor and just rate and review the podcast. Five stars is better than four, but if you could leave a review for us, that would be amazing. It's easy. It's free to do whatever podcast listeners software that you use. Just rate it and review it in there. That's how other people find us. That's how other people learn about the podcast and start listening and then, hopefully, we can help more and more people get the word out that, "Hey, people need to be selling options," so I appreciate that.

Now, today's episode is going to be a little fun one. Video games. Totally, totally, really tangent, right? I'm not even trying to transition in a proper way, and I'm just like, "Oh, leave a review. Okay, now I'm going to talk about the video games." So look video games, all right, I've played them since I was little, and I love them. I still play them. I was an introverted only child, lots of time alone in myself. So you got to stay busy, right? Not that time. Nowadays, the kids, man, everybody's playing online, so you can play with people thousands and millions of people in the same game all over the world. But back in my day, it was just you and the computer. I still remember my Super Nintendo system. I spent, I don't know, countless hours with that thing. It was very fond memories. Very lonely memories, but very fond memories.

Nowadays though, I still play, but I play on my phone, and the graphics and everything it's just much faster on the phone even though it's a lot smaller, but you can play anywhere you want, and you don't play the big long games anymore they take hours and hours and hours. Those you used to play on the computer. But the little games that you play on the phone they take two or three minutes at a time and whatnot.

The companies that make these video games they make incredible, incredible amounts of money. If you haven't looked into this or if you don't know about it, I mean, it's unbelievable how much money they make. Millions and millions of people are playing these games, and it's not just one or two major games. There's like a lot of these games and millions and millions of people are playing them, and they actually spend money on these games. And these companies are making hundreds of dollars, hundreds of millions of dollars in revenue every single month. It's incredible.

Now, the way these games normally work is there're two ways that they make money. The first one is the most logical one is where people can pay the game maker, whoever made the game to advance, so these games are pretty long, and they're complicated. You have to have certain equipment, and you have to have certain space to be able to play in the game. You have to have land, and you have to have resources and upgrade your equipment, upgrade your characters and all that stuff. You can actually pay money to do that. Some games they have diamonds that you can buy. Some have ruby's or coins or whatever they're called. But in almost every single game, if you want to go faster in the game, you want to progress through the different levels faster, then you can actually put money up, real money, pay to get these coins, ruby's, whatever, and then use those in the game to buy stuff with it. That's the one way, and that's the way a lot of people do it.

But there is another way that most of the recent games came out with. Now, the older games, they were out a couple of years ago or a year ago, they didn't have this other facet, but the newer games now they are adding more and more ads to their games. Now, the ads are not intrusive, so they're not in the game. You're playing a game and then just an ad shows up in the middle. No, people hate that. And those are games that people don't play anymore but now if you want diamonds or rubies or coins or whatever, you can watch ads and get those.

For example, let's say you want to, if you have time, you'll watch a 30-second commercial, and they'll give you five rubies for that and then you're allowed to do that every hour or two. So every time you watch you get five, five, five, you just add those up and eventually then you can spend those. For the people who don't have the money to spend on the games or who don't want to spend the money on the games, like me, you can actually buy ads, and so this is overcoming one of the obstacles that these game makers had there where kids were playing and kids didn't have money to buy and the parents wouldn't give any money to buy stuff in the game. But now they can actually watch the ads and these game makers are making money from all these people that are watching ads. And it's incredible. It's a two-way revenue source. It's amazing. Who knows, maybe my next life I'm going to be a video game maker. That'd be pretty cool actually.

Most of these ads are from Facebook right now. That's just the way Facebook has really tapped into video ads and most of the games that I've been playing lately, they have these Facebook ads built in. Why am I telling you about video games? I'm leading into something. Okay. It's just part of the story. So I'm playing my favorite video game. Right now, it's called Hustle Castle. That's just the name of the game. And this little thing pops up, "Hey, you want to extra turns or spins or whatever? You can watch this video." So once in a while, I watch a video, especially when I have nothing else to do or I'm waiting for something else to happen in the game if I have 30 minutes to kill, I'll go watch an ad. So I say, "Okay, here, let me watch this ad."

And this guy comes on, nice looking guy. He has a video, he's in this private jet, laughing and smiling with a bottle of champagne or wine or something. Then he's driving this exotic sports car. I don't know what it was. Maybe it was a Ferrari Lamborghini something, who knows, but he's driving his car around and whatever. And then he's meeting all these other people and they're all well-dressed. They're all laughing and they're smiling and they're walking around, I don't know where they are, in some big office building or something or whatever. And then he starts talking and he goes, and most of the time my phone is off, the volume is off. So I don't know what he's saying, so I just ... The ad was over or whatever the first 30 seconds of the ad was up and then I could skip it. So I just skipped it. And then that ad just kept coming over and over and over again. So I was like, "What is this guy talking about?"

And then one time I had the audio was actually on, the volume was up. So he started talking and he says, "Hey, I am the richest option trader in the world, blah, blah, blah, blah, blah, blah," whatever else he was saying. And I was like, "You're the richest option trader in the world? Oh, that makes sense. That's why you're in the plane and the car and all that stuff. Okay, cool, fine." And then that intrigued me because he'd said he was an options trader. So I said, "What's this guy doing? Let me see what this guy's all about." Now, obviously, you don't believe them right away but let me check it out.

I go over to his website and it turns out that he is a option day trader and the whole point of his website and whatnot is because he's going to teach you how to make millions like he's made, supposedly, but he's doing it through day trading. Now, for those of you who have never done it, day trading stocks or Forex or commodities, futures is very, very hard. Most people lose a lot of money because you're competing in that market against high-frequency traders. You're competing against real good professionals that know what they're doing. You're competing against Wall Street with its hundreds of trillions of dollars and resources and everything. To be a day trader you're competing against all those people. So it's very difficult to make money doing that but this guy, the guy in the ad, he is an options' day trader.

So I mean you take the hard difficulty level and you multiply it by 10 because we already know right, on this podcast, we already know that buying options is a loser's game. But this guy, he's taking the risk to extreme because he's buying and selling options in seconds or in really, really short timeframes. But he's buying the options. You can't be an option seller realistically and make a lot of money day trading. You have to be a buyer. Now, I don't want to judge. I don't know. I didn't look into his numbers and whatnot. So maybe he is making a lot of money and I hope for his sake he is and I hope for his students or whatever that people are paying him, tens of thousands of dollars to teach how to do that same thing. I hope they're learning something that they can actually get their money back.

But guess what? Day trading is nothing more than a job, right? Are you with me here? Do you understand what I'm saying? Basically, you trade. Okay. Hopefully, you make money and that's it. If you're not trading, you're not making anything. And that to me that sounds really sucky because I want to make money in my sleep. I want to make money no matter what I'm doing. And I don't want to be stuck to my screen looking at my monitor, looking at this chart and that chart, what's happening in the news and having my attention span all over the place.

So while this guy was filming his commercial, right, he wasn't making any money. While he's flying in his little private jet or whatever, hopefully, it's his, he's not making any money. While he's renting his exotic cars to show off, I mean, you know what I mean? Sorry. I mean, driving his Lamborghini, he's not making any money. Me, on the other hand, as I record this option I'm sorry, as I record this episode, my options, the ones I've sold, they're decaying. They're making me money even as I'm doing whatever I do in normal life.

Theta, which is another word for time decay is just a lingo, just a jargon that we use in options trading. The theta decay of my options is working in my favor, right? I don't need market volatility. I don't need news to make my stocks go up or down. Heck, all I really need is a laptop. Or you could do it on a phone too, but I prefer the bigger screen. Getting old, eyes are it's harder to see now, so I prefer my laptop and I really would prefer my desktop. But you could easily do it on a laptop as well. It's just simple. So you have this, the commercial guy, the day trader options guy, and then on the other side you have me, which is the opposite. Right? I guess compared to him I would be a country bumpkin or I'm just laid back and I don't want to trade a million times and, and I'm still making a ton of money, but I guess it comes down to really what you want.

I mean, sure. Yeah. It'd be great to have a private jet. Right? Well, I mean, I don't really fly around that much. I like to stay with my family at home. And since I use my credit card for most of my purchases anyway, whenever you go out, you go to dinner by buy jazz whatever. I use my credit card. I have so many points and miles that whenever we do go on vacation, my points and my trips are free anyway. True, I've always wanted a Ferrari. It'd be really cool to have a Ferrari. I always wanted one but then when you think about it, realistically, where am I going to put the three car seats and the boosters for my kids? Right? We've got three kids, they're all still in boosters and car seats. Where am I going to put them? I don't have any room. So having a Ferrari and exotic sports cars is not really practical.

Our house, yeah, we could buy a bigger house, but it's already huge enough as it is. I mean, heck it has six rooms and we barely even use two of them. They're just for storage. Right. So, I mean, I think that if you want to take big risks. If you want to aim and, and go for the home runs and grand slams and get rich quick, then day trading options might be something that you want to look at. Like I said, it's super dangerous. It's super risky. You're going to lose all your money most likely but it might be for you. Let me just keep in mind that you're playing a loser's game in which most traders will lose. Most traders are going to lose their shirt and quit doing that. So I mean realistically the best way to make money in day trading is to sell day trading coaching. I said it, there you go. The best money to make money in day trading is to teach other people how to do it.

I mean I really don't know if the guy in the commercial is the richest option trader in the world or not. I mean I hope he is for his sake. Right. I mean, you wouldn't want to be lying or anything. I mean, he seemed like a nice guy, but at what cost? What are you willing to give up for the money? That's a personal thing. I'm sure if you're younger if you're in your 20s you might say, "Yeah man, I want to do day trading. I don't want to work. I don't want to, I don't want to do anything. I just want to be trading all day long and make millions of dollars and have my own plane and Ferrari." And for those type of people, if you're that age, if you have nothing to lose, then yeah, maybe that sounds awesome.

And I think that those type of commercials when you see them where they're appealing to that get rich quick type mentality people, they're aimed at those type of people. Younger, nothing to lose, not a lot of money. People gullible enough to pay tens of thousands if not hundreds of dollars, thousands of dollars to pay for coaching programs but that's not me. And I don't think that's you either because I mean I don't want to be the richest guy. You can't take it with you anyway. Right. I mean if it were me and I had a lot of extra money, I was thinking about it the other day,

A couple friends were talking and they're, "Yeah, the lottery Mega Millions, whatever is up to something." And I'm like, "Oh, cool." And they're like, "You going to buy tickets?" And I'm like, "No, man, why am I going to buy lottery tickets? That's crazy." And they're like, "Well, you never know. You could hit, it's only a couple of bucks, you can put it in ... And I'm like, "I don't even know what I would do with the money. If you give me, tomorrow if somebody calls me and says, "Hey, you won the lottery," or, "Here's $10 million that your rich uncle left you that you didn't even know about." I'd be like, I'd probably look for ways to give it away. I don't know what to do with it. I don't even want it. Right.

I would rather have time to spend with my family, to volunteer, to enjoy my life, to travel, to learn new things, to take different classes maybe. That's what I would want to do. But sitting at a screen, day trading, doing a lot of stuff, that's not it. I mean, that is why I designed passive trading as a way to make me more than enough income, but still have the life I love, so that when I do go on vacation right, and we do, our family goes on lots of different vacations and we love going on vacation. But when we do that, I make money the whole time, right? I'm not stressed out that, "Oh, my God, I'm on vacation. I'm not making any money. I got bills to pay. I've got to pay for the Ferrari payment. I can't go on vacation and I need money to make." No, that's not this kind of stress that I want.

There're a lot of people say that the thing like, "Oh, I want to be a trader. I want to trade for a living." Oh, that's great. That's wonderful. That's a very aspirational thing. But they look at it and they say, "You know what? In order to survive, I need to make $10,000 a month and I need to make it from my trading each and every month." Well, that kind of stress is going to put you in the hospital because if you have to start over at zero and you have to make 10 grand every month, and if you don't make it, then you're eating into your capital. That is going to, I mean, you're just going to be bitting your teeth and grinding your teeth all night long. You won't be able to sleep because that's crazy, crazy stress, right?

But if you follow the things that I've been sharing with you guys in this podcast in these different lessons and the stuff that we teach at Option Genius, you will be able to set yourself up in a way where you get to enjoy trading. You do it in a way that's passive, doesn't take a lot of time. You earn a lot more money than you do in almost any other investment out there. And you get to do it without a lot of stress. And then eventually, yeah, you do get to trade for a living if you want to. You will be able to build up your accounts so that the theta decay and the income that you get from your stocks and your selling options portfolio will equal whatever you're making as income right now, so it's definitely easy to get there.

But to make the jump from, you know, "Hey, I'm going to quit my job today, and I need to duplicate my income right away." People, that's the dream that these type of commercials, the riches option traders, the day trading commercials, the trading academy's and whatnot, those are the things that they get you. That's how they sucker you in. That's how they get you to pay for the dream because that's what they're selling. They're selling you a dream. Realistically, if you could learn all that stuff on your own, but they're like, "Okay, we're going to give you a shortcut. We're going to show you a shortcut." Well, I mean, I don't know how they have the time to do all of that because every time that the Mr. Day Trading Option guy is teaching the class, he's not making any money from his trades. So yeah, if he's making money from teaching, then he doesn't have to trade. And I think that's the thing, right?

And that's what people ask me all the time like, "Allen, if you're making so much money, why are you teaching people how to do it?" Because I got plenty of free time. Like I said, I'm recording this episode. My options are decaying, and I'm making money just like Warren Buffet says. I mean, it's his favorite and one of my favorite quotes of his, and he's saying that if you do not find a way to make money in your sleep you are going to work until the day you die. And that's what I'm going to leave you with. All right? If you do not find a way to make money in your sleep, you are going to work until the day you die. Folks, keep the odds in your favor.

Mar 01 2019

21mins

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Rank #16: What is Passive Trading? - 50

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To celebrate episode 50 I thought I would do something special. As you may know, I am writing a book to introduce the masses to the art of Passive Trading. And while the book is still being finished, I thought I would give you a sneak peek.

So here is Chapter 1 of the book. But keep in mind this is in rough draft form. It still has to be edited.

I am sharing it because, well, I am too excited not to.

This episode answers the question, "What Is Passive Trading?".

Can't wait for the book? Check out our Passive Trading Formula Free Webinar! (click here)

Jul 07 2019

53mins

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Rank #17: How To Make Money With Options - One On One Coaching With Keith Burau - 43

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This is a special episode because it is a recording of a one on one coaching call with a student. The questions he asked are probably the same questions you have about trading options.

How much can I really make?

How do I get started?

What do I need?

We cover a lot in this call. So listen and learn. And if you think you need a trading coach to help you become a better trader, then email us at help@optiongenius.com

Allen: Okay, all right, so Keith, how you doing?

Keith: I'm well, thank you. Thank you very much for talking.

Allen: Good, no, no, no, thank you. What I wanted to do is if you could tell me a little bit about your background, tell me a little bit about yourself, and then after that, then we can go ahead and jump into your questions.

Keith: Okay, I'll try and be quick.

Allen: Just so I get a little bit of a feel, so where you're coming from.

Keith: Okay, I could ... I'm the one who'd probably sit there and tell you, 35-40 minutes, my background, but I'm not going to do that. I'm going to try to be really concise and get to the point. I have a full-time ... I have a wife and four kids, teenagers, a full-time job. It happens to be very luckily a good job. A really good job with a fine schedule. I say that for a reason because I've been training for years, like over a decade with no progress. Maybe because I don't need it. It's not like I'm hungry. I don't need it like I want to get out of my job or anything like that. I've just delved into it for years thinking some day I'll get it. Some day I'll figure out the niche I want and someday I'll ... too much time has gone by. I like spending time learning but I feel like now I'm wasting time. I need to actually do something productive.

I'm 48 and I'm thinking I want to take my retirement account that's being managed by a firm in New York who's not really doing the job. They have been up until like I said recently. Just like everyone else. They're doing well I think with their niche, but I can look at the numbers and say okay, this isn't gonna do it. This isn't gonna be my retirement. It's not gonna happen. I've got to do something more active myself. That's why I'm thinking, okay I've got to either stop or get moving. I've had some bad losses in the past. I don't really need to go into those. It's just one of those things that a lot of traders have gone through. I don't need to bore you or want to get into that. Enough where I'm like okay, I've had enough. I've got to do something. Like I said, I'm 48. I'm looking into what's the future gonna hold. What am I gonna do when I retire? What's my next leg gonna be like? There's education, kids education kind of a little bit of a factor.

My brothers, we talk to each other a lot about things we use to practice together, but I moved away and I still talk to them a lot. We talk about ideas a lot. They're getting into some things business wise after their dental career to account for what are they gonna do in retirement. I look at what they're doing as pretty cool. I know this trading thing will work and can work. I know it can. I just haven't gotten it off the ground. Now I feel more like I have the need to. I don't again, think I've gone into as much detail as I wanted, but I don't want to take all this time just to tell you my background meaning to take up your time. A typical story. I'm not really unique. As far as trading goes, basically why I haven't been successful number one is rules. I know the rules and I don't follow them. I follow the rules in my business. I'm very disciplined in my business with overhead and all that stuff. For some reason trading, I did at the casino.

If I ever go to a casino, which is rare, I'm pretty disciplined. I don't have a gambling problem. But with trading, for some reason that's different. I don't follow the rules. I don't do what I'm supposed to do and I've been trying to figure myself out. I think that part of this too is I've got these kids that I'm busy with. I sit at the computer for a while and I like doing it. I feel like I got to figure out a niche that doesn't involve me at the computer a lot so I can hang out with them and do my thing with them and then when they're gone, maybe learn more. Along the way I want to keep learning. Basically, where's my niche? I'm going from one method to another without fulling trying it out. I'm floundering. I finally settled on I want to day trade. I love that. I can't do that. I've got a job and other things to do. Anyway, hopefully I've kept that as concise as possible because it's a lot to that. I've got to the conclusion where okay, it just seems to me like the iron condor/oil trading is what I want to do. Again, I'm trying to keep this-

Allen: Don't worry about it. Just let it out.

Keith: ... concise for you.

Allen: I'm trying to figure out what your goals are. I'm trying to figure out what is the mental blockage here. Why haven't you done it before? The more you tell me, the more it'll help. So don't worry about it.

Keith: I've just done all sorts of trading. I've tried all sorts of things, but I don't stick with it. I see another method comes through, I'm like oh let's try this. I see something else come through, oh let's try this. In doing that, I guess I wanted to try out a lot. I took a lot of webinars. I actually probably know a decent amount. If you show me a chart and say tell me what you see, I actually know. I think I know a lot . I can't really put it to work. I thought of you recently because finally I think I know what appeals to me. I know what I want my niche to be. That doesn't mean I can't switch it. At least if I land on something that appeals to me that will work, then I think if I want to delve into something, that's fine. At least don't do that until you've gotten off the ground there.

Traders that are making money and traders that are losing money. Simple as that. I'm not on the one side. As soon as I get on the one side, even if it's a little bit with some form of consistency, then oh okay I can branch from there. What appealed to me was and basically it's this whole building an account thing. All these investment opportunities out there that people are getting into that I hear about that I'm thinking, wait a minute. Trading, it just seems like trading is a lot simpler way to build an account than starting some business. It takes some discipline in that. I just think from what I hear about you and other people on the up and up as far as options trading, that it's very doable. I thought about you because what appeals to me is iron condor trading on the indexes in oil trading.

It's almost like right now I don't want to do any stocks. I just want to keep it very streamlined. Basically I'm here to ask you. I've got some ideas, but I wanted to find out from you if they would work or if that's how you'd do it. Basically like I said, I've done scans for stocks. I've done all sorts of things. They just seem to make me be stretched to thinly with my whole life. I thought, if I could just streamline this to what I think will work, I can still definitely be ... it's not like I don't want to learn. I want to learn, but I think I want to learn and learn my method and get really good at that and not try to just learn about other things before I've landed on this. Again, what appealed to me is I've been on and off oil. Do I do it? Do I not? Do I do it? Do I not? Finally I thought, you know what? Yeah. I want to tackle the oil thing. I think I want to tackle the iron condor on the indexes thing. My question to you was, what would you, as far as let's take the iron condor thing.

I like the monthly butterflies, the monthly calendar, the monthly double diagonals, I've learned those from another source. They're the monthly workforce trade that you just kind of rinse and repeat. You're a big iron condor guy. I guess in order to find out what I would like to do works, would work, if you took ... that's why I'm gonna ask a pointed question. If you took an iron account, let's just call it a hundred thousand dollars because that's just a round number. You just traded iron condors off the XPS and the [rustle 00:09:21], they might be long balled, they might be shorter ones. If you just said, okay I'm dedicating this account to iron condors where I'm not white knuckling anything and just following the rules, what could you do a year percentage wise? You Alan.

Allen: Is that your question?

Keith: Well, that's one of them. What am I gonna do with my chunk of money that I just transferred to an IRA? That's one of them. Iron condors and oil but I just have some ideas on how I would do it. You might say, no, no, no. That's not how-

Allen: Let me come back to that. I'll get you the answer, but let me come back to that. Before we go any further, I have to tell you and everybody listening, first of all, thank you for letting this be recorded. I wanted to record this because like you said, you said you're not unique. I believe that you are unique. Everybody's situation is a bit different. The boat that you're in, the situation that you're in, there are a lot of people that are in a very similar situation. The questions that you had asked me in the email originally I thought of that. I was like wow, there are so many people that are thinking the same exact thing. If we can get this as a two way conversation. You having questions, I'm sharing my experiences and trying to lead you in certain directions. I think it would be beneficial for everybody that's listening. Then I have to preface it and say that I'm not a licensed financial planner. I can not give you specific financial individual advice. It's about telling you hey do this or buy this or securities or what not. I can get in trouble if I do any of that.

We are going to basically give you some advice in a sense of what I would do if I was in your situation. What I do because I am in a similar situation to you as well. Maybe I'm a little bit further down the line. I have my answers or what I want to do. What we need to figure out is exactly what you want to do. Then get you on the right path so that you can learn exactly what you need to do so that you can get it done. That being said, I do have some questions for you. The four teenagers that you have, are they going to be going to college any time soon? How old are they?

Keith, you there?

Keith: Yeah. Yep. Can you hear me?

Allen: Yes. I can hear you.

Keith: Somehow I got dropped.

Allen: My question to you is I want to start off with talking about ... not talking about. Just I want to get a bit more details. How old are your kids?

Keith: Senior, freshman, freshman, seventh grade.

Allen: College is taken care of or you're still gonna be paying for that or they're doing scholarships and doing their own or how's that gonna work?

Keith: I'm not worried about college right now. I've got college taken care of without trading, without trading. I brought that up because it's just something I'm obviously involved in right now and dealing with. Mainly I'm thinking about a future as in retirement during retirement.

Allen: Are any of those kids financially minded? Would they be interested in trading?

Keith: Yeah, I think so. That brings up a good point and I'll be quick about it. Part of the reason why I want to learn this too is because I want to pass it onto them to some extent. I just feel like it's a great opportunity. If I don't learn it, I feel like I'm doing them a disservice because I know a decent amount about it and if I don't actually land myself somewhere, I feel like I won't be able to teach them what I think I should or lead them where I should. So yeah, I think they do. Some of them, yeah.

Allen: Cool. Because you told me that the following of the rules is an issue for you. That's really a mental thing. I think in the past it's because you didn't really take it that seriously. It wasn't that important. It was great, hey this is cool and all, but you lose interest very quickly. I think we really need to dial down on the goal or the why. Why are you doing it? If you really need to figure that out, what is the actual goal that you have? Is it to retire from your job? Is it to have a certain [inaudible 00:14:58]? Is it to buy a house? Whatever it is, we need to make that more concrete. Once it is more concrete and you review that every day before you go into your trades or before you go to work or while you're brushing your teeth, you look at that goal, that is gonna solidify that in your brain this is important. I need to pay attention to this. That's one of the tricks you can use to help you start following the rules.

The other one that you can do is, and I talk about this in one of our training camps program. You can get somebody to trade with you. If it's a child or a spouse that's interested, that's great. They don't have to be completely interested, but they have to have ... how do I say that? They have to have authority over you in a sense where you give them some basic information about what you're doing. They don't have to know intricate details. If you're trading iron condors, they don't need to know what are your strikes every day and what is a deuton and all this stuff. But they need to have a sheet where they come in every day at a specific time or they text or whatever and they ask you specific questions. What is your [inaudible 00:16:26] short strike? It could just be them just reading off a sheet. When are you gonna adjust? Are you close to being ... what is your rule for this? What happens if the market goes up one standard deviation? What happens if the market goes down? Then you have to answer them.

To them it doesn't matter what the answer is. They're only job is to make you go through that process every single day that you're in the trade so that you follow the rules. After you supplement trade or after you lose on a trade, then they're gonna come back with a separate sheet and say, why did you lose? Give me a specific reason. Then you have to come up with that reason. Then eventually they'll see a pattern. If you keep losing trade after trade for the same reason, they're gonna be like hey dad what's going on. You have to answer to them so you can't just blow them off and say, hey son I'm not answering you today. I didn't focus on my trade, well I'm not answering you. No. That's part of the discipline you have to instill in yourself if you want to do this seriously.

When I did it, I was just like you. I didn't check in on my trades. A lot of times if there's not much going on, the markets are not moving much, I don't check in on my trades very much. Then I have somebody else that asks me. It's like, hey what happened? How is this trade doing? How is this trade doing? How is this trade doing? I have to actually go in, log into my computer, log into my broker's account, check everything, and then make those answers. For me, it's a livelihood thing. It's not just for fun. If I mess up, that's money that's not gonna come into the household for that month. I had to figure out a way that okay, I know that this is a problem for me. I lose interest just like you do. These trades are boring because there's not so much excitement every day that's up and down, up and down, getting in and out. There's no dopamine hit every single day. You see it, oh okay. It's moving. Oh yeah, hey market's up ten points. Oh market's down 20 points. Okay my trade is fine. I don't have to do anything.

Day after day after that, you forget about it because it's not a routine. You really need to build a habit. If you can build a habit of checking your trades every day, then that's great. If not, you need to use a hack like getting somebody else to come in and ask you these questions. Does that make sense?

Keith: Yes.

Allen: Cool. If you can find somebody like that, that'd be great. Somebody that's already trading. Somebody that's a spouse or a child that is interested or not even interested but they'll be like, yeah I'm gonna hold your feet to the fire and I'm gonna ask you these questions every day at a certain time frame so that you have that reliability. Even if you forget, even if you fall down on the job, they come in and they're like okay. What are the answers? You just answer them and that's it. It takes roughly two or three minutes of your time every day to just go through them and say, this is what's going on. If you need to do something, then you do it. Most of the time we don't follow our rules is because we don't make the adjustments that we need to. If it's in black and white and the person is standing right there, you're like according to my rules, I need to adjust. Okay well then go ahead and do it. That is something that I would look into as well.

You are from what I checked in our records, you have both of our iron condor course and you have the blank check, which is the oil options course. Correct?

Keith: Yes. Yes.

Allen: Yes, okay. Have you been through both of those?

Keith: Yes.

Allen: You face another problem that's very common where people get sidetracked. Once you get on one email list about options, somehow you get on a hundred different lists about options and trading and this and that. A lot of these other companies, they'll sell your information and they'll sell their list to other people. You're just bombarded every single day. Bombarded. That's their job. That's the company's whole main goal is to get you to buy more, and more, and more stuff. You got to clean the clutter and you got to get off all these email lists. A lot of them, most of them. If it's not providing you value, if it's just sending you offers to buy stuff every day, then you need to get out of it. One of the things that we focus on is what is the one thing or the one strategy that makes the most sense to you? If you told me I'm looking at oil and I'm looking at condors so I'm gonna take a step back and say, no. Right now you're not allowed to do that. You're allowed to pick one. Whether it's a simple credit spread and not even the condor, or if it's a condor, or if it's the oil, but you can pick one.

If you need to go even simpler than that, then let's go simpler than that. Let's just do a covered call. Let's get consistent in that so that you build up your confidence and you build up the account. Say, okay I'm doing this right. In the beginning, I don't know how much cash you have available, but until you are consistent for at least three or four months, I would even say you do this and you do paper trading. You don't put your real money in because as you mentioned, you're doing different things. You're not focused. I don't want you risking your money until you do have that focus, until you have figured out what is my goal. Why am I doing this? You make it a must. This is not a I'm just dabbling kind of thing. It's like, okay you had a realization. You woke up to the fact that hey I'm 48. Time is running out and I'm not gonna have the money that I need, that I want to retire so how do I do it? Well you have all the tools. You have all the courses. You have access to everything that you need. You've already paid for it so you don't need to buy anything else.

You just need to find the one strategy that makes the most sense to you and then just plug in and just single minded focus. Put the blinders on. Just go at this and forget everything else. Do not worry about anything else. Do not read all this other crap, all the emails that come in and all the financial media ads and all that stuff. Just focus on one thing that makes the most sense that you think that you can learn or get good at consistent the fastest. Once you have that one and then you put real money at it, you'll start seeing it and you'll start feeling good. Then and only then would you want to break out and say okay, now I'm gonna add strategy number two because I want to diversify or what not. Some of these you don't really need to. In both of these, iron condors on indexes and the oil trade, we have people that are trading these with hundreds of thousands of dollars and that's the only thing they do. I got a friend who lives on Lake Tahoe. He does one-

Keith: I know who you're talking about, yeah.

Allen: He does one massive iron condor trade every month. Now, it doesn't stay as a familiar iron condor with four legs. He's always adding lines and subtracting and adding contracts and subtracting contracts. He's more into it. He's looking at the Greek. He's managing by what the Greeks are telling him. It changes, it morphs. It starts off as an iron condor and he does just one trade every month. That's how he has his lifestyle living in Lake Tahoe, which is pretty expensive. Then we have plenty of our students in the blank check course, which are only doing oil and are making a living doing that. It's definitely doable, it's possible. I don't think your there yet. You told me that you've been doing this for ten years. You know enough about it. We have this thing called the option continuum which is from option zero to option ten where option zero is you don't know anything about options. Option ten is you're a professional money manager managing money for other people using options.

I think you're somewhere in level six or level seven where you know enough to be dangerous. I think that's level five, but you've been studying this so that you don't need a lot of hand holding. You can figure it out. You know the lingo. You know the jargon. You put on trades, you have experience. What we need now is just a little bit of discipline and just picking on one. Just focusing on one and the discipline to stay in that one thing until you go further. Does that make sense?

Keith: Yes. Mm-hmm (affirmative)-

Allen: The other thing that you had asked me in the email was how I manage my stuff. Up til maybe two or three years ago, I was doing everything. I was doing oil. I was doing more and more oil. I was doing the condors that do all the option genius stuff. Simon puts on his trades for our Simon Says Advisory. I do all those as well. Then we also do the weekly trades. Then I have my own retirement accounts that I manage in which I own stocks in those. Then I do cover calls on those, I do naked puts on those, and then credit spreads on the stocks that I own. I was all over the place doing lots of different things. I got to the point where I hit ... I'm 42 now. This was roughly when I was hitting 40 or a little bit after 40. It was like, okay what do I want to do with my life? I'm spending time trading all this stuff. What comes after you have all the money? With your job, you have enough money coming in so you're not worried about it. What comes after that? What's the next step.

For me, I decided the next step was gonna be to help other people and tell more people about options. Also, I wanted to create a way where I could still have the income from the options but not spend so much time on it. And not have the big risk. We don't talk about this much in options, especially if you're an iron condor trader. The biggest risk is a big bear market or a flash crash market. When the market is down 20, 30% in a month, that's gonna kill your iron condor unless you're very quick to the trigger and you're really good at it where you're buying ports and hedging all your positions and what not. As an option seller, we make money in calm markets. If the market is going up, we're fine. If the market is going down, we're fine. Markets going sideways is fine. When we get hurt the most is when the market changes direction very quickly. If it's been going up and up, and up and then boom one week is just down 10%, that's gonna kill a lot of our positions. Or just the opposite. It's going down and then it just V shapes recovery back up. That's gonna kill a lot of positions.

How do you remove that type of risk without letting go of the gains or the benefits of options? That's when I came up with something that I call passive trading. I've been working on that, moving over my retirement accounts and transitioning that into my other stuff. We're working on a course. We have a course right now that we've created based on these strategies. We're working with a bunch of people that are in the course right now and trying to get them results as soon as possible. We haven't released it yet but basically the idea of that is we want a foundation. This really depends on how much money you have. If you had 500, 600 thousand dollars or more, that would be your end goal. This is how much money I have, I need to have enough money out of this so that I can live comfortably, retire early, whatever the goal is. If you had this larger amount of money, the foundation would be in dividend paying stocks. Good, high quality dames, dividend paying stocks.

Then we would trade around those positions. Meaning we would do iron con ... not iron condors. We would do cover calls and we would do naked puts and we would do credit stripes on those stocks. It's a matter of picking a handful of names. Four, five names that we want to own, getting good dividends from those, reinvesting our dividends into the same stock, and then using options to boost our return on those. If we're getting a seven, 8% return from the stock, we're getting 3% from the dividend, so that would be like maybe 10%. We're adding another 10% a year from our options. We're getting not 10% but we're getting 20%. We're doubling what we could make if we were just in the stock itself. That literally takes maybe ten minutes a month. You're breaking it down and you're making it just cookie cutter. These are the stocks I own. These are the only ones I'm watching. These are the only ones I'm gonna be trading. This is the trade I'm doing, so all I need to do is just if I'm doing covered calls, all I need to do is either roll a call or let my current call expire and sell another one.

If you're doing puts, it's the same thing. Either do another one or just roll it. Do another one or just roll it. That to me, is the easiest way for anybody to get started with options and to really ramp up their money. If you don't have that money in the beginning, you don't have four or five hundred thousand dollars to put in the stocks, then we also talk about you can do what's called the poor man's covered call, which is you're using long options or I'm sorry. Leap. Leap options and then selling covered calls on those. Or you just do credit spreads on the same stocks that you want to buy until you have enough where you can actually start buying those and investing in those. What I found, especially in, what was it? This past November when the market ... or was it December? I forgot when it was. November, December time frame, market dropped like 20%. I wasn't really worried because my stocks are losing, yes, but my options that I'm selling on these stocks are all expiring. We've had a good bull run for the last several years. Starting in January, I remember I was selling calls on all of these stocks.

They're all going up, up, up. I'm still selling calls, again so I'm enrolling them higher, and higher, and higher, and higher, and higher. Then they all went down and then finally all those options expired. I had this big really nice windfall and then now that their stocks are going back up, then I'm repeating the same process. Does that make sense?

Keith: Mm-hmm (affirmative)-

Allen: That is something you can do as well. That is what I'm focusing more and more on. I'm still gonna be doing oil because I love it. I'm still gonna be doing iron condors. More and more my money is going to the sense because I'm looking at the future. I'm looking like when I stop doing option genius, what do I want to do? What do I want to do with my life? I want to be in a position where I have the money coming in. I don't want to give it to a money manager and make four or 5% after all their fees and what not in a good year. I want to still be able to manage it, own good quality stuff, have good income, at least 20% a year. But I want to spend ten minutes a month. This is what I found looking at a thousand different things. This would be the simplest way for me to get the result that I wanted without putting up a lot of time. I think that was one of the things you asked for. How do you trade without spending a lot of time on it? If you don't have the time because oil is very fast moving and you got to watch it daily.

Iron condors can be laid back. It's like playing poker. Somebody told me this about poker. They're like, poker is hours and hours of boredom and then 30 seconds of super much excitement where you have to be on the edge of your seat. That's what an iron condor is. Most of the time it's gonna be very slow, very methodical, very easy to do. Then when the volatility spikes, you have to be ready to change your mentality as well. That's when a lot of people get lulled into a sense of security where they don't move fast enough when the volatility strikes. That's when they get hurt with iron condors. That's the biggest drawback to the condor is that it puts you to sleep. Then when it's time to wake up, you're groggy and you're not moving fast enough. Based on that, I would say you have already two things that you have an interest in. I showed you a third one just now if that's the way you're going. Really what I would like you to do is just pick one of those, focus on it, spend some time on it, spend two, three, four months putting on these trades. Just really getting that experience and just doing it over and over, and over again so that it's second nature. Not paying attention to anything else. Does that make sense?

Keith: Yeah. Mm-hmm (affirmative)-

Allen: Because even if you were to ... I would even say go as far as not even paying attention to the news. If you're doing the iron condors on the indexes, forget the news. Don't even watch CNBC or Bloomberg or whatever. Just watch the charts. Watch the volatility and trade based on your trading plan accordingly. You'll do probably better that way in the beginning without all these other instances coming in. A lot of times we don't adjust properly is because oh hey, there's a meeting coming out from the fed in two days. Even though I need to adjust right now, I'm gonna wait for that fed meeting. By then it might be too late for your trade. Forget the news, forget all these other advertisements and stuff. Pick one thing, focus on it for three or four months. If you have to get help, get somebody to help you out and come and ask questions for three or four minutes a day just so that you have to go through the mental process of looking at every single one of your trades every single day.

I know you have the time. You said that, right? You have the time, so it's not like you can do it during the day. You don't have to do it at night after the market closes. That's a benefit. If you could do that, if you could do those three or four things that are laid out, I think within six months you'll have a much better idea of how much and how much you can actually do from this. Your question earlier was, if I was only trading credit spreads on indexes, what is a normal return that you could get? I think it really depends on each individual and it depends on the trading plan that you use. Now for option genius, my trading plan is a little bit more conservative and more hands off because we go out a little bit further in time and further away from the money. You can also come in closer to the money with less time, get a much higher premium, get much more greater percentage and then be out of the trade faster. That model, you have to watch it more and you have to be able to adjust faster.

It really depends on how much time you can put into it and what your temperament is. If you're willing to take the risk a little bit for a bigger gain, then you might want to go for a shorter time frame. If you want to be more conservative and just be more hands off and just look at it once in a while, then the further away from the money is better. Now I know I've been throwing a lot of stuff at you. What are you thinking?

Keith: A lot of what you say makes sense. I understand it. What you said real quickly about the news, it's funny how you listen to the dudes and listen to these events and then later on you look at the charts. It doesn't seem ... the charts still generally speaking seem to do what they were gonna do. It's odd how the news definitely can effect the movement, but overall it seems like you can't look at a chart and look back and go, where was the news? It's just like the chart is gonna do what it's gonna do. I've heard that from somebody else. They go, I don't care what synopsis for the day, I don't watch that. They end up being fine because they end up almost being influenced by pre announcements instead of just going with their plan. That was interesting that you said that too.

Allen: That applies only to the indexes. That applies to the indexes. That applies to all the financial news about, oh the chair wars we got going on and the wall stuff and everything else. That stuff is just secondary noise. If you're watching a stock, if you're trading a stock, then you have to know when earnings is gonna be.

Keith: Yeah, that is a definite. You're right. I was just thinking about the XPS or the [rustle 00:39:02] when you said that. Just non stock, just indexes. I think that sounds good. I had some more targeted questions about the condors and the oil. I can ask you those later too if you like as it relates to a plan that I was thinking about. I'm not sure how you want to-

Allen: Yeah, that'd be fine. Are you in the Facebook group for the oil?

Keith: Yeah. yeah.

Allen: If you want to put them up there, that's fine. If not, we'll have a group coaching call coming up this month. Towards the end of the month you can come on there and as there. That'll be fine. If you want to send them to me in advance, and then we can do that on the group coaching call. That'll be fine.

Keith: Okay that sounds fine. Can I ask you some after we're done with this? Or do you want me to ...

Allen: Yeah. If they're specifically, then I would rather do it there. If you have anything about which one should you pick or how much can you make or any of those type of general questions, then we can do it now.

Keith: I'll ask you those now then. Here was what I'm thinking before I called you. First of all, for oil, it seems like you're going off a ten thousand dollar account on Facebook when you're putting your trades on. Your two calls or your one put. Generally speaking, what are you looking to do per year when you trade the blank check plan? What's the general idea?

Allen: I go into each month and it doesn't matter the account size. I only use that as an example. I had separate accounts that are much larger. For this reason I want to have ... I do this with option genius as well. I'll have a separate account for that with ten thousand dollars so that I can tell people how many contracts I'm actually doing. I always get that question like, how much do I allocate? Do I allocate the whole ... if I have ten thousand, do I put all ten thousand into this first? No. I have ten thousand as well, I'm doing two contracts. That's what you should do. Obviously there's a lot more money sitting in the account. We're gonna save that for adjustments or other trade. That's why. If somebody has 20 thousand, then they can do double what I'm doing if they want to follow along in that way. That's the only reason. I go into each month with blank check looking for or trying to get, or wanting to get 10% and that's 10% on the entire account, whatever is in that account.

If it's ten thousand, I want to make a thousand bucks every month from that account. We don't get it all the time. There are months that we're gonna make less. There are months that we're gonna lose money. Overall, if I can get 5% I'm very happy. I feel that it's a wasted month if I lose money. Unless it's something that came out of the blue that I couldn't ... because oil it moves much faster. It can move to the point where we really couldn't do anything even though we followed all the rules. We took a small loss and we got out and we're done for the month. We'll make it up next month because it doesn't stay volatile very long. It doesn't stay volatile forever. We can easily make that up in the next month. In that sense, it's very important that we don't try to, how do you say this? We don't try to win on every single trade because sometimes you don't want to be in it because it's just too volatile. You have to be aware of that as well.

Keith: That's good to know.

Allen: It's in the rules as well. Part of the rules we talk about, these are the adjustments that we make. If we're doing an adjustment, that's fine. If you're forced to do another adjustment, then you're on the wrong side. We did something wrong either the market changed and it went against us, or we didn't read the chart properly and we're on the wrong side. That's it. If this second adjustment doesn't work, we're done for the month. That's how you limit your losses.

Keith: That helps because it helps me look at opportunities. Let's say you've got a hundred thousand dollars. Do I give it to a private lender? Do I invest in this realty or this? A lot of colleagues and friends or doing that with some success. I look at that like for instance at the blank check trader [inaudible 00:44:00]. If I could learn to do even 3% a month, that's 36% a year. That's double what anyone else is doing. That leads me to believe, like jeez, I need to learn how to do this because it's very streamlined as opposed to running a business or doing a new business venture. That's why I was trying to get out of what you're looking to get per month. If I even lowered it to 3%, you probably would say, that's a brief. I don't know. If I say your goal is 3% a month, if that's the case, that makes me feel like yeah, I do need to tackle this because that might be the low end. That's still better than anything else you're gonna do by giving your money to somebody else. The other question I had about iron condors was I always wanted to do a situation where ...

Like where's the sweet spot? It seems like it's a 45 day ish pen delta iron condor. That seemed like it reoccurred in some other people's teaching methods also. Let's just say that's the case and I'll ask you if that's true or not in a minute. You take a 45 day iron condor, pen delta and you've got a hundred thousand dollars, I'm using a round number. Say well I'm only gonna put a third of my ... let's say you're doing 50% of your money is in the market out of this hundred thousand dollars because you need to save some for adjustments. I don't know if that's a good rule too. I just talk to myself. 50 is half, half. Then you do a third of your position, meaning I'm gonna put on iron condor today and then ten days I'm gonna put on a second one. Then another ten days, they're all gonna be 45 days out. Then another ten days I'm gonna put on another. I'm basically putting on three a month and then every ten days let's just say they went to [inaudible 00:45:55]. Every ten days I'd be taking one off. I stagger them.

Then with watching your iron condors from hell video, I thought to myself well jeez. Or even two a month, I forget how I did the math. Let's say you did two a month so you had to split your position. You're actually doing ... you're staggering. You're having a same day expiration but you're putting, you're staggering them two weeks apart. I thought if you could win on one, your goal and you could scratch on the other and not really lose, on that money you'd be making 10%. You notice you'd be making 10% a month on half of your accounts because half of it is sitting on the sidelines. That would be 60% a year on your account because 10% a month times 12 is 120. You're only doing it on half of your account. Does that seem reasonable or is that way up in the clouds? A 60% number sounds high, but then when you break it down and say I'm gonna win on a one and scratch on the other every month. Even if I don't have an iron condor from hell video, it seems like that iron condor method might fly. Yes or no I guess.

Allen: It's more tricky when we're talking about iron condors because there are so many different ways to do it. I would say that if you take a look at it, because we like to think of okay, what can I get in a month? What can I get in a year? You're like, if I can get 5%, then that's 60%. Okay, that's great. Are you gonna do 60% every single year, or does the market change? Obviously I think the market changes. There are going to be some months or some years, if we take a little bit longer time frame. If we go after ten years or 12 years, or 15 years, there will be some years where you're doing iron condors and you're going to make over 100% a year. Then they're are gonna be some years where you're actually gonna lose money. You're looking at a month to month picture. Year by year it's the same thing. There are gonna be some times where you're just gonna hit it out of the park. Then there are gonna be some times where you're actually gonna be negative for the year because of market volatility and it just unexpected stuff going on in the market.

Two thousand whatever, a little financial crisis. That was a horrible time for iron condor people because it just kept bouncing up and down and up and down with no rhyme or reason. At that time it was a great time to be out of the market and just be like, okay I'm gonna stay on the sideline until the fix comes down to something a little bit more manageable for my iron condors. What could you normally expect? It depends on the trading plan and what it is. Then the other thing is you mentioned the 4510 delta. That is very common. That is a lot of people talk about that. Putting on the trade, I think that one is pretty conservative. You have a very good chance of making a good amount of money with that. Then also in that iron condor course, I talk about it where putting on the trade is super simple. You go to XBS, 45 days of expiration look for ten delta, boom sell it, done. Anybody can do that. The point of what separates the winners from the losers is how you adjust and what is your methodology for adjustment.

I had a friend, he's in real estate. One of his real estate buddies was like, oh man I just got to tell you about this iron condor thing. It's so awesome. He knew that I was trading options. He learned a little bit from the guy and then he learned the strategy and then he came and asked me about it. Basically it's the same thing. It's you do an iron condor XPS, 45 expiration. I think it was 40 days or something. Ten delta, you put it on, and then you just don't do anything. It's either gonna win or it's gonna lose. I told my friend. I said I think that doesn't make a lot of sense because you're losing control of the trade. The reason that we're managing our own money is because we control it and we can use our brains. If you're just putting on a trade and then not doing anything, even if you can tell, look this trade is gonna be 100% loser, then it doesn't make a lot of sense because in the iron condor it's very, very, very, very crucial that you don't have those 100% losers. Because they're very hard to recover from.

One of those is gonna mess up your whole year. We use the adjustments so that we can keep our losses smaller and get out at a quicker basis. His whole thing was, that was a strategy. Just put it on and he got it from these famous guys on ... they were with Think or Swim. Now they have their own brokerage. That was what they used to preach. That you put this on and you just don't let the percentages work in your favor and don't worry about it. My friend, he did it for a few months. He was like, this is working great but he's very analytical. He goes, you know what? I want to test if this actually works over the long term. He found somebody. He hired them and they went back in time I think about 15 years. They put the trade on every single month on XPS and rut. The did both. XPS and rut for like 15 years. Can you take a guess of what the results were? If you did that without touching it on both of those for 15 years, what do you think their results were?

Keith: I got to believe they're gonna be ... I'm about to be safe. Maybe break even at best just because I've gone to max and lost on a couple. I know that, that blows out. That takes nine trades or ten or 11 winners out of your way. I know that, that ... I don't know. Break even or losing money?

Allen: They broke even. It pretty much broke even. After all the fees and everything, they lost money. Yeah, you're right. After doing that for years, he's like, what the hell? He's like this iron condor stuff doesn't work. I'm like, well yeah do it that way it doesn't work. You do it my way, it's a little bit more work, but yeah you can actually do something with it. To me that was eye opening. I was like, this is really cool. This is real legitimate data. What he did to do that was he back tested. That is something that I would advise you to do as well. If you have the time and if you don't want to wait, get a back testing software and go back the last ten years, 20 years, whatever, take your trading plan, your iron condor trading plan and just trade it month after month, after month on the software day, by day, by day and see how you would do. The one I use is called option net explore. I think it's 600 or 700 dollars a year for it.

You can buy a shorter time from if you want. The thing is that you can actually trade one month of iron condor in five minutes or less.

Keith: That's cool.

Allen: Because you go to a specific date and it looks just like your broker software. You type in I want to sell two of these, buy two of these, sell two of these, buy two of these. Commit the trade and then you just walk through it day by day and it shows you the charts. It shows you the deltas of your options, the prices, everything. It tells you. You can even look at the chart before you put on a trade. Say okay, I think it's [inaudible 00:54:08] whatever. This is how I want to do it. Then you just walk through it day by day, by day. Then when your trade gets to an adjustment point, then you can just adjust it. Of course, it's not real time pricing but it's close enough. You adjust it and you commit it. Then you keep going through it. You do that for five or six years and you'll realize this particular trading plan either works or it doesn't. Most of the time you'll find out that the trading plan works. Some of the times you'll find out that you take the same trading plan and you start doing it for real in real money and you start losing money.

You're like, what the heck happened? That happened to me a lot too. It was working on the back testing. Why is it not working now? There's a couple reasons. Number on, maybe it's a different market. Most likely it's because you are doing it differently. When you're doing the back testing, you're not looking at the news. You don't know what's going on. You're just looking at the chart. You're just hitting the button. What happened the next day? What happened the other day? You show me the price, you show me the price, you show me the price. That's how you're trading. You're not looking at anything going on around you. Your focused on the trade. It's not like a day goes by where you're not looking at the trade because you're just pushing the button day by day, by day. You're examining the trade every single day. You're completely focused on it. You're not watching the news and you're completely focused. You're just gonna trade better naturally because of that. That goes back to the stuff that we were talking about originally.

Keith: That's interesting.

Allen: Having the discipline.

Keith: That's interesting actually. That goes back to are you gonna be consistent and do it how you're supposed to do it every time? Period. Just rain or shine are you gonna do your consistent rules. Is there iron condors that you can still lose on? I watched your video on iron condors from hell. It almost seemed like you could almost trade your way out of any one of them. At least for extremely small loss or scratch. That way you let all your winners run and you pretty much lose on little or none. Is that not true? How does that work? I saw you winning on ... coming up even at least on all three of those. I thought, well jeez. If he can come even on those, you can probably scratch trade at least every iron condor.

Allen: The point of that video was I took three of the worst ones over the years of us doing option genius. I wanted to walk through them. Actually I used this specific software that I just mentioned, option net where I go through it day by day. I wanted to show and expose what is going through my mind. Which adjustments do I use, why do I do it, and I wanted to verbally just go through it day by day so you guys would have a feeling and understanding of what is he thinking while he's making adjustments. Why is he choosing that adjustment over something else? Sometimes I looked at two or three different adjustments. I can do this, I can do this. Which one am I gonna do? Okay I'm gonna do this one. Why? Because of this, this, this. You have a better ... like as if you were sitting right next to me every day.

I don't want you to feel that you can't lose. I lose on iron condors. It's part of the game. You're gonna lose. It might be something that you don't control. It might be a different circumstance. For example, it was recently on one of our trades for option genius. We had an XPS condor and it was doing fine the whole month. The whole time it was doing great. Everything is fine. Two weeks before expiration, XPS starts to move in one direction. That put my calls, I think it was my calls at risk. All right, what do I do? I only got two weeks left. Not a lot of time. I can either adjust it to the next month, which is a possibility or I could just get out of it now. At that point, I got out of it now which was a 5% gain or something and I didn't want to take the risk. If you had not done that, because it was not at an adjustment point. If I'm just following my trading plan without thinking about it, I would've just sat there and said oh hey I don't have to adjust yet because it's not at a whatever, 20 delta, 25 delta, whatever the plan was.

If that thing kept moving up, and up, and up, and it got to that 25 delta, now my trade is sitting at a loss and I got three days left until expiration. Great. What do I do now? Then it's the only option.

Keith: Okay, it's not automatic then.

Allen: No. Then the only option is okay I got to take it to the next month. Buy me some more time, which is something I didn't want to do. In those cases I'd be like, okay do I take it to the next month or do I not want to trade it at all because something has shifted in the marketplace? Let me just take a small loss here and get out of it. Then I will wait until things calm down to get back in.

Keith: That's a good point because I didn't know whether you would say, no, no you got to live and die by the rules. Because if you do that, you're gonna start cutting your wins. I guess you really do have to be judicious because you don't want to cut your win. You want to let them run, but you definitely want to do what you just did. The question is, how do you know when to do that? Maybe that just goes back to, hey it's got an automatic gain. You've got to have experience and just make some good judgment calls. Make sure they're conservative I guess.

Allen: When you're trading with a different account and different trades, you also have to look at say how do I do the rest of the on everything else. In that particular account, I had already done two trades that had already made me 10% each. Here's the thing. I have two trades done that made 10% each. Now I have this one trade that's up 5%. I can either take my 5% and have a very nice month and I'll be done. Or I could roll the dice and try to make another five, 6%. If I lose on that, then I'm gonna wash everything I already made. What's the risk reward in that scenario? Sure, I'll take the burn on the hand in that sense instead of I can make another 5% on this trade, which to my overall account might make an extra 1%. If I lose on this trade, I could lose 20% on this trade. That means for the overall month I break even. That really sucks.

Keith: That goes back to the philosophy that I learned.

Allen: Burn on the hand is better. What really hurts people is when they have a thinking where they're going into a trade and they're saying, you know what? On this particular iron condor I can make 12% but I'm gonna get out when I'm up 6%. I've seen a lot of people teach this particular strategy and it hurts because your purposely limiting yourself in how much you can make. You're gonna have months where the month is awesome. XPS behaves beautifully. You don't have to touch it, you don't have to do anything. Those are the months where you have to take the maximum. You got to get 10%, 12%, whatever you can make. Then there are the other months where it's a wild child and it's like, bouncing up and down. You're like, man if I could just get out of this with a break even, I'd be super happy. Or even losing 5%. Those are the months both of those are on the different ends of the extreme.

If you're going into the thing and saying that I'm only gonna take 6%, even though I could get more because it's so calm, I'm gonna get more. If you only take 6%, then when you lose 20%, then it's just too hard to overcome the math.

Keith: That makes sense too. Yeah, I can see that side also. I guess it just takes ... that's a big question that you answered today. It's like, can I do this and just follow the rules and make a little less? I guess if you truly follow the rules to the T too much without using any judgment, then that's disadvantageous too. I can see how you're saying, all right that's another reason for just concentrating on one strategy because then you really become good at it. Instead of being decent at two or three strategies, being really good at one. You might be doing better financially and with less stress. That supports that point very well I think.

Allen: Exactly. Another thing is we're not algorithms. We're not computers. You have the ability to not just focus on that. You can use your own methodology. You can use your own brain. That's why I've never seen a bot or a trading software that does iron condors or credit spreads that has actually worked over the long term. You have to use your common sense sometimes. Then the other sense was if you're picking one. If you're picking XPS to trade or rut to trade condors on, or if you're picking oil on, those are very specifically chosen where it's only one thing. Even when I told you about my past trading thing, I didn't tell you that I'm in 25 different stocks. No, I was like I've narrowed it down to a very short list of things that I want to own so that I don't have to watch everything. I don't have to focus on everything. Even if you're only trading oil, that's one thing that you watch. Everything else it doesn't matter what's going on in the world. It doesn't really matter. I'm just watching my oil. That's what I'm trading and that's what's gonna work for me.

Or if I'm only trading XPS. That's why I don't like doing condors on stocks because they move around too much and the news effects them. Indexes, ETFs, if you don't have the money, those are the best for trading condors. Even then, if you want to focus on one, XPS or rut, or if you want to diversify, then you can do both. Then add the other indexes. Even though all three of them, they trade pretty much close together. A little bit here and there. They normally trade pretty close together. Even if you just do one of those, you should be fine.

Keith: Do you also do oil directionally on your own, on the side? Or do you on your accounts just trade larger, but the same philosophy as a blank check?

Allen: Very rarely will I play it directionally. Very, very rarely.

Keith: That's good to know too because there's times where I want to but I can see how it works sometimes. It'll burn you sometimes. I'm trying to figure that out too. That helps. I'll have to let the dust settle in my brain and take in everything you're saying and develop a plan based on all that, which I think I can do. The only thing I might do is trade on contract. If I'm doing instead of paper trading, at least have some skin in the game by even doing a contract in the spies on our entire condor. At least the max losses are still small. I'll never get there, but at least doing something. [crosstalk 01:06:46]

Allen: Then you got to watch it. Then you have to have the discipline to stick with it, follow the rules, and watch it. That's the habit I want you to develop. The simplest way to do that is to [crosstalk 01:06:57]

Keith: I think I will if I have money to gain. I think if I have money in the game, the skin in the game, I'll do that more.

Allen: That's what I used to say. I found out that wasn't always the case.

Keith: Really?

Allen: Yeah. You get bored. Even if it's a hundred bucks. All right, got a hundred bucks. Big deal. We spend more. You're going to dinner, you pay more than that. It's like, it's not enough. You have to know yourself. I can't tell you yes or no.

Keith: You're right.

Allen: You think you can do it? Go for it. I would prefer you focus on one in the beginning because your goal here, it doesn't ... I don't care if you're trading oil or condors or what-you-ma-call-it. It doesn't matter. You're only goal is to be consistent. To be profitable on a monthly basis and to be consistent. If out of 12 months, you're positive eight months out of the year and you lose four, but you come out way ahead, that's great. If you're losing one month and then making money and then losing money and then making money and then losing money, that's not what we want. That means you're out of control. You don't know what you're doing. The odds, putting them in your favor, trading high probability. You're gonna win a certain amount of time anyway, even if you have no clue what the hell you're doing. If you're not consistent month after month, profitable or at least break even, that means you're doing something wrong.

That is what I would want all of my students to get to. That level of consistency with one strategy. Then once you get there, okay fine. Now I want to branch out into something else. Go for it.

Keith: That makes sense too. It's also a little bit liberating to know that I'm gonna let go of everything else and just focus on one thing. It really is. The streamlining, at least to me, is liberating. I don't like to have all those balls up in the air. Especially when I don't know where they are.

Allen: It's so much less stress and so much easier just to manage. It's really, it is. Like you said, it's liberating. We got some people that trade, 30, 40 trades a month selling options. I don't know how you do it. I can't do more than ten, 12 trades at a time. I can't follow all of them.

Keith: I've done that before. You lose track of some. I wasn't even watching this and it's down. I totally see that. You really have to narrow it down and if you want to eventually branch out, fine. It's got be gradual. I can see how just throwing yourself in the lines and went too early. That's good advice. Thank you.

Allen: Cool. Anything else?

Keith: Gives me good perspective. No. Like I said, I'm all over. I may have a question here or there later. I at least want to take in all you're saying and develop a plan. Try it for a few months and then call you with questions once I've actually done something and had a track record with something.

Allen: If you're really cool, we could do a follow up and maybe four or five, six months from now. We'll do a follow up. Say, okay where were you Keith? Now what'd you do? Where are you now and what's going forward?

Keith: That would hold me accountable. That's good. That really is good. That's good.

Allen: Awesome.

Keith: Well we'll keep in touch. I really appreciate, yeah. This is very helpful. Very helpful.

Allen: Awesome. Great. Again, thank you for letting it be recorded. I think we touched on a lot of different things here. I would expect you to even listen to it a few more times. Anybody else that is in a similar boat as Keith, go through this one again and again. There might be a sentence or two that I just mention and I just glanced over. There was a lot of depth for somebody who actually knows what they're looking for in this particular interview. Keith, this was fun. Thank you so much.

Keith: Thank you. Talk to you soon. I will correspond soon. Thank you.

Allen: Okay. Great.

Keith: Bye.

Mar 20 2019

1hr 3mins

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Rank #18: Improve Your Cashflow with Chris Miles - 41

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Today, I have an awesome guest with me. I have Mr. Chris Miles from moneyripples.com. And I am bringing him on because I've learned a lot from him in the past from his audio course and his podcast about how to actually get more money out of what we already get. Right? So, you know, if you read the book of "The Richest Man of Babylon", the idea is to pay yourself first.

Well, Chris goes much farther and much deeper into that. And he's all about cash flow. I would say that he is a finance advisor without being a financial planner type of thing. So, he's not gonna tell you what socks to put your money in or what mutual funds to put your money in. But he will actually help you keep more of your money by finding ways to save it, by finding ways to save on your taxes, by giving you ideas that up 'til now have been privileged of the rich. You know? Because the rich, they're not afraid of loop holes. They know all the loop holes because they can afford to pay for advisors.

Chris is the advisor to the every man. Is that right, Chris? Is that a fair portrayal?

Chris Miles: Yeah. I would say I'm kind of like an anti-financial advisor, if anything. I'm an absolute mutual fund hater. You know? I believe that if everybody's gonna invest in anything, they're gonna invest in things that they could control and do themselves, which is what you're teaching.

Resources:

http://moneyripples.com/

 

Podcast Transcript

Allen: Hey there, Option Nation! How you doing today? This is Allen back with another interesting episode.

Today, I have an awesome guest with me. I have Mr. Chris Miles from moneyripple.com. And I am bringing him on because I've learned a lot from him in the past from his audio course and his podcast about how to actually get more money out of what we already get. Right? So, you know, if you read the book of "The Richest Man of Babylon", the idea is to pay yourself first.

Well, Chris goes much farther and much deeper into that. And he's all about cash flow. I would say that he is a finance advisor without being a financial planner type of thing. So, he's not gonna tell you what socks to put your money in or what mutual funds to put your money in. But he will actually help you keep more of your money by finding ways to save it, by finding ways to save on your taxes, by giving you ideas that up 'til now have been privileged of the rich. You know? Because the rich, they're not afraid of loop holes. They know all the loop holes because they can afford to pay for advisors.

Chris is the advisor to the every man. Is that right, Chris? Is that a fair portrayal?

Chris Miles: Yeah. I would say I'm kind of like an anti-financial advisor, if anything. I'm an absolute mutual fund hater. You know? I believe that if everybody's gonna invest in anything, they're gonna invest in things that they could control and do themselves, which is what you're teaching.

So yeah. I started out being the traditional financial advisor 17 years ago and I did that for four years. But, it didn't take me long to realize that even after decades of advice, people were still not any better off financially. They follow that, kind of, crappy advice.

And I learned with people that were like friends of mine, they were millionaires and things like that, they didn't believe that advice. They thought that advice was stupid about saving for the long haul and diversifying in all these different funds, which really isn't diversification. Right? It's just putting your money all in the same kind of asset class and just hoping and praying that you're in it for the long haul, however long that is. Even if you lose money, oh well. You're in the market so stay in for another 15 years and maybe you'll make your money back. All that kind of crap that you're told by financial advisors, right?

So, yeah. I left that about ... after four years of doing that, I left it, vowed to never do it again, was able to retire in 2006 when I was 28 years old. And then, of course, went through the recession. Actually went from millionaire to upside down millionaire, was in a million dollars of debt when that hit. Was able to dig back out of that without going through bankruptcy and was able to retire again about two years ago. This time with a lot more streams of income and a lot more safe guards in place to make sure that I keep it coming in.

Allen: I mean, I'm interested in knowing how you did that both times. How did you retire twice?

Chris Miles: Yeah, the first time was pretty accidental. You know? It was March of '06 that I went to a seminar that some of these guys put on. And they were talking about how financial advisors basically suck. And I was the only financial advisor in the room by the way.

But I couldn't deny the truth. I mean, when they said, "Hey, high risk create high returns. So if that's true, how is that 90 percent chance of losing create a 90 percent chance of winning? That's dumb. No, you want lowest risk possible, create the highest returns, right?" And things like that.

So, I've vowed never to teach about money again. I just basically said I'm gonna do mortgages. I'm gonna teach ballroom dancing at the local university. And so, I did! I was starting to do that but then I wanted to get to know more about what these guys knew. So, I started to learn more about what they did and one really rocked my world because there's people still coming to me asking me financial questions, even though I said, "Hey, I don't want to do that." But I was learning different strategies. I learned about leverage. Like, "Hey, could I use the equity from my house to create more returns?" And things like that.

In situations, the focus were on cash flow. That was one of the biggest shift in me was when it was it wasn't about how do you compound your interest and things like that. But how does this actually create real streams of income? Real cash flow?

I remember people were asking me questions and one of my friends said, "Hey, do you like doing mortgages?"

And I said, "You know, I like teaching them but I, seriously, hate doing paper work." I hate when I tell people, "Hey, I'll be like three or four weeks before we're ... we got approvals. We're done here. So hang tight." And then the next day, they're like calling me up saying, "Hey, are we closed yet?" They're calling all hours of the day. That was annoying for me.

So he said, "Well, why don't you find somebody who actually does like doing that?"

In a scarcity world like I was in as a financial advisor, 'cause financial advisors teach out of scarcity. It's always lack and never enough and all that kind of stuff. Well, I never thought about splitting commissions and things like that. When he said that, I was like, "Wow! I could do that." So, I found a guy that was really good at doing the paperwork, didn't mind doing the underwriting but wasn't a big marketing kind of guy. Good guy with integrity. So I just said, "Hey, if I basically spoon feed people to you to where they're ready to do it, I just need your help to do the paperwork. Would you split me in 50/50?"

And the guy's like, "Yeah, of course."

I'm like, "Sweet!"

And so, I would educate people for maybe half an hour to an hour max about ways they can leverage their mortgage and refinance and free up cash flow and stuff. They were like, "Great! Well, who do we go talk to?"

I'm like, "Go talk to this guy." And next thing you know like a month or so later, I get a check for like a thousand or fifteen hundred bucks. I'm like, "That's like a thousand dollars an hour! That's way better!" This is great!

And so, I started doing it with other companies. I even did it with a wholesale jeweler, getting paid five percent on any sale. And I was like, "Hey, these guys are like two, three times cheaper than the malls. Use these guys instead. They're great." Or,"There's other companies."

And between these four or five different companies, I was seriously making four, five grand a month passive income. Like, I was doing very little to get. I was only working a few hours a week to make that money. And that's when it hit me 'cause at that point, I mean this is 2006. I only had two kids at the time. So, it was like by July of '06, I'm like, "Dang! That was only four months after I quit being a financial advisor and I thought I have to work forever and save every little penny and be cheap until I was 40 to be able to retire." And here I am doing it four months later with no real money in the markets. Just purely because of referrals.

So that was the first way I did it. And then I started building it out of things like real estate income and things like that. By the way, at the same time, I was actually stock coaching and teach people how to trade stocks and options. So every money I was making from that was purely gravy. It was just like, "Well that's extra six grand or so a month. I can go and invest myself." I was having fun with it.

So anyway, this last time around though, to be able to hit that retirement nest, I decided to create very multiple streams of income. It's not just from referrals but I was doing it from like my podcast. Can I get paid for advertising and things like that? Could I get paid from certain affiliates? Or could I get paid from monthly programs I have for clients and things like that? Where it's more system based versus me, my own time and attention. Pretty soon, same thing. But this time it wasn't like four or five grand a month 'cause I've got eight kids now with a blended family.

Allen: Wow!

Chris Miles: So, three or four, five grand a month is nothing. For my family, I've got to make at least 15 to 20 grand a month minimum to even make ends meet. So,  that's why it took me until two years to go and do it again even after the whole nest the recession. But yeah, that's really what it was. Investments, business streams, things like that, I found multiple ways to do it and it's awesome. It's ... truly, the key to freedom is creating that cash flow.

Allen: So, how do you classify yourself? Like if someone, "Hey, what do you do?" What would you answer to that?

Chris Miles: Depends on who's talking to me. I mean, if it's a business owner, I'll say I'm the cash flow expert. But in most time, I just refer myself as the anti-financial advisor because I'm basically against everything financial advisors teach.

Allen: Okay. Alright.

So our audience is made up of individual investors with a slant towards selling options. So, we focus more on more passive strategies, covert calls, puts, eye condors, credit spreads sells, those kinds of things where we have the probabilities in our favor. We put them on and then we have the time to go do other things while the trades are working for us. And they're not to the point where we have to sit there all day long, monitor them by cell by cell, like a day trading kind of thing.

Chris Miles: Yeah.

Allen: So, a lot of our people are ... they are already investors so they already have some kind of amount of money to put in. But then we also have a bunch of people who are trying to get in. So they're still working a day job and they're still saving up money and they're still trying to get ... put together an amount of money so that they can go and open an account and start trading.

So for those type of people, could you give us a couple of hints of ways that they could generate more cash flow from what they already have?

Chris Miles: Yeah! Absolutely!

It kind of reminds me of a situation like I actually have one client right now where ... funny enough, he actually is kind of in a similar situation like yourself. He actually teaches people how to trade options. And he came to me, he says, "Okay Chris, I'm great at this." And his strategies more day trading than he does covert calls and things like that. But he's like you know, for myself personally, I love this and I make good money with this but I need other streams of income. Like, I just can't have this. Like this is a good active stream but I want some passive streams too that I don't have to work so hard for.

Allen: Mm-hmm (affirmative)-

Chris Miles: And so, I was like, "Okay cool." We'll see good stuff. And so we started looking at these like, "Do we do things with real estate?" Or how about oil and gas? I'll tell you like, it's especially if you work at another job, you get crapped on when it comes to taxes. It's horrible.

My business owner clients, they love it because we can do all kinds of things ... strategies to minimize taxes. But, using IRA's is a joke when it comes to ... 'cause you don't really save on tax with IRA's. You're just delaying the inevitable. Especially, right now where we have some of the best tax benefits right now. We're at some of the lowest taxes we've ever had in the last century. It's kind of tough to say, "Oh yeah, let's delay tax until later 'cause yeah, tax are gonna keep going down, right?" All that kind of stuff.

So people, most time when they come to me where they've had ... they make several hundred thousand a year at their job or they're doctors and things like that. They're looking for options to do. Definitely, options can be great, but a lot of times we would look for other things too of like, "Hey, can we do oil investments where we can write off everything that we're investing that year to bring your income down and stuff." And heck, you're like, "I want to get out of these stupid self-directed IRA's because they're telling me what I can and can't invest in."

Cool! Well, maybe we can do some things to offset that. Maybe we do like conservation easement strategy where we donate land and you can write off four times whatever you donate. And that offsets the penalties and taxes if you're not 59 and a half. Like things like that. That's kind of stuff that I usually run into with situations like this. It's ... the biggest thing is like how do we keep as much money as possible and how do we get the money working for us as much to generate that cash flow?

Allen: Mm-hmm (affirmative)-

Chris Miles: And yeah. I think it's fun.

Allen: Okay. I mean, yeah. It sounds like ... so one of our earlier episodes is, we call it ... I called it the five finger strategy where you have to have five different sources of income if you want to be truly, financially independent. Because when you're trading, if that's the only thing you're doing, if you're trading options or whatever. If that's the only thing you're doing, then you have that stress on the top of your head all the time. That I have to make enough to pay the bills. And it's not like where you're working a job where you go in and you know that you're gonna ... you're in the office, you're gonna get paid no matter what as long as the company is still in business.

So being a trader is kind of like a sales person or a real estate agent or something like that where you have make the money in order to get it. There's that pressure on you all the time. If you do diversify and you have other streams of income, whether it's real estate or whatever, you can ... it takes the pressure off of you. And then you actually trade better at the same ... in the same regard.

Chris Miles: Exactly! Yeah, and that's kind of like why that guy came to me too. He's like, "Okay, I'm rocking the options world but how can I get some pressure off of me?"

And even though from a business standpoint and I tell this to business owners all the time, even people that I'm like network marketing. Like, I'll get people network marketing. They're like, "Oh, I'm set for life 'cause I've got", they might have hundreds of thousands of people in their down line and they're making what they refer to as residual income. And I tell you, I've watched those same people lose their businesses, like lose everything. And I tell them like, "How powerful is it if you can work because you want to, not because you have to?" That you've got other streams coming in and you say, "Hey, I don't need to do any more business. I don't need to do this. I'm just doing this 'cause I think it's fun."

I think that the way investing should be. I think that's the way everything in our life should be is like, "Hey, I'm doing this because it's fun." And I'll tell you my experience, even with the people I had trained to do, trading with stocks and options, and any other type of investment, any time somebody said, "I think this is just fun. I don't care if I even make money. I think it's a bonus I make money." Whenever they say that, I'll tell you like when I follow them over the years, they just get better and better at that investment or in that business. They just ... things work out.

For some people, they're just doing it for the paycheck. It's like, "Well, how's that different than having a job?" That sucks. So, it's true. You want to have multiple streams of income. You want to take that pressure off yourself 'cause you never know. Things might change. You might have to make ... you have to call an audible. That's what happened to me. That's what I did wrong before the last recession is that I was kind of banking ... in fact, I cut off a lot of those strategies, a lot of those income streams right before the recession. 'Cause I remember I was coming out of retirement. I was starting to teach people how to gather a rat race. And I remember the guys I was working with, his partner said, "Hey, well we can't have you doing these other side activities. We need you focused here." So I'm like, "Alright. But to be a team player, quote on quote, and for the mission, alright, I'll cut off these streams of income", which was so dumb. It was idiotic to do that. And it got me from a place of freedom to a place of bondage.

Cash flow is really the key to freedom. 'Cause when you have more cash flow, there's more options. And when you have more options, that's when you have freedom.

Allen: Right.

Now, so you don't think that ... you've always just said that, "Hey, you hate financial planners." So you don't think that they have any value at all?

Chris Miles: No, not at all. In fact, I think most financial planners have a good heart. Their hearts in the right place. What's wrong with financial advice is that they've been sold a bill of goods. And they're taught to regurgitate it back to you. Think about it. A bank, if you look at the rules of a bank. What does a bank want you to do when you give them money? They want you put money as often as possible, give them as much as possible, keep in there as long as possible, take out as little as possible and then take all the risks yourself. I mean, that's basically what a bank will have you do.

Now, what are we taught to do with investing from the traditional point? They'll tell you, "Hey, put in money all the time, like every paycheck. Put it in all the time because you need that money going in. You need to start stuffing in lots of money and live on the interest." And they'll you, "Hey, put in as much as possible 'cause man, look how much it'll accelerate. And as long as possible, man that miracle of compound interest? Oh it's awesome." Like, "Imagine what your money will look like in 20,000 years!", "Seven percent off the S&P 500 index off the spider." That's after all the fees they've taken out by your financial advisors and stuff.

And then they're telling you, "Yeah, don't take any money out. Like you gotta live on less than an interest." And it always seem dumb to me. I was like, "Wait!" Most time you see right now, most is biased. They'll say don't take out more than two or three percent of your account." So if you're a millionaire, you've got a million bucks saved up in a 401K or an IRA, they're basically telling you to live below the poverty line at 20 or 30 thousand dollars a year. I mean how is that right? I think that's stupid.

So you have to, I mean really, I actually ran the numbers if someone wanted to retire in the next 20 years and you want to have a $60,000 dollar a year lifestyle which is not great. That's $5,000 a month. And you factor for inflation? Based on the current just typical mutual funds and stuff like the ones that are in the marketplace right now. You would have to save, I'm kidding you not, like adjust for inflation, everything, to pull out what they recommend pulling out, you gotta seriously save about $10,000 dollars a month for the next 20 years to be able to retire at a $60,000 dollar a year lifestyle. And that's just ridiculous.

So it's not that the financial advisors are trying to deceive you but they've been sold everything from banks and financial institutions that are teaching everybody was just supposedly the rules of money. But you've been teaching and what I've been teaching as well is that, no, we gotta throw this thing upside down on its head is that, "No, when we take the investments under our own control. We take less risk, not more. 'Cause the banks want you to take all the risk. That's why mutual funded companies like Fidelity and what not, they're not gonna tell you like, "Hey, we're gonna take some risks for you. If you lose money, we do too." It's like no. They take their guaranteed fees, no matter what. Whether you may get it, they're making money. They take no risk. You're the one that takes all the risk. And that's why you've been taught, "High risk creates higher return." 'Cause they want you to actually believe that you have to take all the risk. And that's just bull crap. You don't.

Allen: Yup. Yup.

So, in your ... like for your clients and what not, what type of financial products do you recommend?

Chris Miles: You know, it really depends. Everybody has their own recipe. I mentioned earlier, we talked about finding things that light you up. What are the investments that you're just like, "Wow, that'd be fun!" It could be ... if it's options trading? Sweet! Let's make that like your active investment. You're totally rocking it and building up your cash and everything possible to make more. Then outside of that, cool, maybe look for passive streams. And that could be in different aspects of real estate. It could be in oil and gas. It could be with different notes or funds. I know funds out there that'll pay you consistently 10 percent a year but paid out monthly. So, if you got $100,000 bucks, they'll pretty much pay you about $830 ... what was that? What is it? Like $830 somewhat dollars a month just on that. You don't have to do anything. You don't have to worry about it. You just let them take care of it. They're investing their own stuff.

Allen: So what type of funds are those?

Chris Miles: That one particular company, that one's one that invest in mortgage, like delinquent mortgages. And they help people refinance and so this is buy-out huge portfolios of mortgages from banks and then try to refinance people and keep them in their home or help them sell their home and split the equity and that kind of stuff.

Allen: Ah, I see.

Chris Miles: So, I mean, and like the one company I've referred people to, they're actually reports of the FCC every year. They're monitored by them. But they're own portfolio usually makes at least 39, 40, 50 percent a year. But they'll pay investors, people that basically loan money to them like 10 percent, paid out monthly.

Allen: Wow!

Chris Miles: Not huge. That's like, for me, that's the low-end of the return scale. I like higher. I mean I know other funds that might do 12 percent or more if you let it reinvest. Turn-key real estate. I have turn-key being hands off, you don't have to deal with anything but you get to collect the checks. I mean, some of those can easily do at least 10 or 12 percent a year. And that's just cash on cash. That's not including the tax benefits or appreciation or the fact that they're paying your mortgage down for you which could lead to easily 20, 30, 40 percent year over year cash on cash return.

Allen: So what would be an example of turn-key real estate?

Chris Miles: Yeah. I'll give you an example. Recently, I bought a property in Memphis, Tennessee. And I didn't have to find the property, I just used a turn-key provider that found the properties and said, "Here's a list. Which one do you like?"

I said, "Well, that one looks sweet. That one's paying 14 percent cash on cash right of return, so I'll take that one." Bob that, after interest rates kicked in a little bit when the interest rates climbed a little bit, it ended up being more like 11 percent cash on cash. So I basically put ... all of a sudden, I put about three grand down. But my cash flow was $270 bucks a month.

Allen: Mm-hmm (affirmative)-

Chris Miles: And then, the next are $120 bucks a month that's going towards paying down a mortgage. But that's like phantom income. That's like filling net worth and that becomes more important when I sell the property down the road.

But the cool thing is actually just recently, we just raised the rent on the renters another $55 bucks a month and they signed a one year lease again. So now it's the ROI's now jumping up. Now it's like $320 or so a month. Now, my ROI's like about 13, 14 percent.

Allen: Nice! How many of those do you have?

Chris Miles: Those ... I've got a few of those, actually. And then we got like things like multi-family. You could do things like fourplexes, you can even go bigger. 'Cause if you got a lot of cash, our thing is you drop them like 30 grand or 20 grand down as a down payment, you've got like $500,000 dollars. That's a lot of properties to buy. So better is you can go look the fourplex route, which you might put down like a $120 grand or something on. And make money off that.

In fact, I just had a deal recently that came across and I was already leveraged from my own money. But there was an offer that came across for a 55+ senior community where I can't remember how many units were in that deal. It was like $2.65 million dollars down payment. But the cash flow was already paid 'cause they were already in it. There was already people paying for it. There were already ... the cash flow was already $311,000 a year. So $2.65 million dollars down for $311,000 a year passive coming in. And the thing that was cool about that is they're still raising the rents. So, they're still trying to make more and more cash flow on that deal.

I actually ended up sending it out to my clients. I'm like, "Hey guys, maybe ..." I knew a few of them could do it by themselves but they probably weren't wanting to go on that big. So, I'm like, "Hey, partner up. This is an awesome deal! That's almost a 12 percent right of return from a big deal like this." I mean from that much cash, that's hard to do.

Allen: Yeah.

Chris Miles: That's not including any appreciation or anything else. That was just purely from the cash on cash returns, you know?

Allen: Uh-huh. Yup. It's just that, I think, for most people and I'm sure your clients included, it's ... unless you're really tapped in, it's really hard to find these type of investments. And then, it's hard to know if it's a good investment or not. Right?

Chris Miles: Exactly. And that's why you have to have the right relationships, the right connections and stuff. 'Cause, yeah, I didn't have to find those properties. They basically found me. That's what's beautiful about it is that there's an over-abundance of deals out there. That's why I tell people like, "Don't just do something 'cause they'll pay you a lot of money. Do something because it actually is exciting to you beyond the money." There's plenty of things you can do ... there's a million and millions of ways to make millions of dollars.

Allen: I'm sure you know that but there's so many people that'd be like, "Well I don't know any of them. I can't find any of them. Where do I find all these deals?"

Chris Miles: Well, you know and that's what I teach on my podcast show. The Chris Miles Money Show 'cause like recently, I had a really popular episode with a guy that he actually had him on my show, I think it was like, five years ago. Like early on. And he was talking about real estate and what not and it was cool. Well, I started to see in some of his emails and his emails started turning towards short-term rentals, like Air B&B rentals. And I had a few clients were like, "Hey Chris, what do you think about doing air B&B? What about buying a property and doing air B&B on it?", which I'm like, "That could be cool."

But this guy, he's like, "Hey, you know what? You don't even have to buy the property. What if you go to a building, like an apartment building and say, I know you got a ton of these units up for rent right now. How about I just rent all these from you. Let's say there's like six of them that are unrented. I'll just rent all these six units from you. I'm gonna sub-lease them to somebody else but don't worry, I'm gonna be doing all the cleaning. It's gonna get cleaned every week. We'll even clean the vents that you won't do, that your own tenants won't do. We'll keep this probably in better condition than any of your other tenants. And you're gonna get paid every single month. And you don't have any more vacancies.

And then you go and you just furnish the place and then you start collecting in like a couple of thousand bucks a month of passive income from the air B&B rentals. And you have your own team that's coming in and that's managing the property so you're not managing it yourself. I mean that kind of stuff is ... that episode right there when he's like, "yeah, you could drop ten grand and furnish a place and you end up making that money back within a year and a half. Then it's just like your cash flowing net at least a thousand bucks a month above and beyond your rent payment." He's like that's ... when you think about that. That's like a 50 percent rate year over year rate of return. That's pretty incredible.

More of an active investment? That's a thing about it. There's so many options out there you can do. It's just a matter of one, figuring out what lights you up. That's a lot of times when I have to discuss with people. It's like, "Alright, let's investigate some of these and see which ones you lean towards." Then, create a road map from there, a game plan to get you out of that rat race so you can quit that job or work because you want to, not 'cause you have to.

Allen: Okay. Now you also have ideas on how to help people with their taxes, right? How can they ... so like, if you were to give our audience some tips on ways that they can reduce some of their taxes?

Chris Miles: Yeah. It depends where you're coming from. If you're already a business owner, you've got lots of opportunities. Sadly, most accountants don't teach you that much what to do. For example, like this year, you're allowed to pay your kids $12,000 dollars a year ... your minor children $12,000 dollars a year tax-free.

So I remember I had a woman in California that she had six kids. And she was only paying them $6,000 a year. When she found this out, she started paying them $6,000 a year, saved her $13 grand a year in taxes. And the cool thing is she's still using that same money to pay for the same crap that she was paying for before; schooling, extra curriculars, all that kind of stuff. College savings, if they want to save for college or whatever. But that's like tax-free money.

So, if you can get yourself in the business owner status and if you're not there, say you're working for a company or whatever. Then, it's like, "Okay, can we get you to do professional investor status?" And that can be tough to do. There's things to do. It might not be you. You might have to get a spouse to do it depending on who works the least. You kinda have to work ... you have to usually work about an average of 15 hours a week to hit the professional investor status. But if you do, you can actually start claiming losses on your taxes. Making money there. There's things of that.

I mentioned a few of those things from the investment world. There's like the oil and gas. You invest a hundred grand in oil and gas this year, usually you can write off at least $85,000 of that. So if you're like, "Hey, I'm making $250,000 a year. I want to get down on the next tax bracket. Cool! Maybe you dump a hundred grand on oil and gas and get the tax write off this year. But then starting in the second year, you start getting cash flow from the investment. Possibly even a 200 or 300 percent rate of return after three to five years on the reposition and sell off their land shares that you're a part owner in and stuff. Or do you do that conservation easement strategy where you donate land, like I mentioned before. You write off four times the amount you donate. So if your land share is $50,000 bucks, you write off $200,000 dollars off your income tax. Things like that.

There's so many cool things you could do. It's just depending on where you're coming from. If you're ... the sad thing is if you're an employee, your options are pretty limited. It's pretty much either you get to that professional investor category or do a few of those types of strategies ... those investment strategies.

Allen: So now, let me go back. You said for the .. you can pay your kids if you have a business. And now, obviously, the kids have to do something in the business where you have to be able to say that they're providing some type of service. Then you also mentioned that you could pay them $12,000 this year. Now, I've heard of that and I'd do it with my children but we pay them six.

Chris Miles: Yeah. That's kind of like until this last year in 2018.

Allen: Okay.

Chris Miles: Yeah, it used to be $6,000 but then recently with the whole Trump tax plan, they said, "Hey, you can actually do twelve with your kids." It's also justifiable, you can't just pay them for doing nothing. You pay them like you pay any adult for. If it's cleaning or if it's helping you with marketing if you're in business and that kind of thing. Obviously, you gotta be a business owner of some sort. It could be filing. It could be computer work. Come on. You have them help you build a web page if they're better at that than other people, you can easily pay them at least twelve grand a year.

Allen: Exactly.

Chris Miles: All kinds of stuff. It just depends on your business, the nature of your business and what you can do. The challenge with me is I've got eight kids trying to figure out how to pay them all that much is pretty tough.

Allen: And this is only for this year or is it for until they change the tax code?

Chris Miles: Until they change it, yeah.

Allen: Okay. So there's no time period that says, "Okay, this will be enacted for the next three years," or something. And then it has-

Chris Miles: Not that I know of. But, like I said, in two years, we have a new president and new tax bill comes through and who knows? But yeah. In the meantime, we can definitely exploit that fact.

Allen: Wow. Yeah, okay.

Chris Miles: That's one strategy.

Another one that's pretty cool that a lot of accountants never teach because a lot of them just ... by the way, if you ever have an accountant that says, "Oh I'm conservative." What it really means is they're saying, "I'm ignorant." 'Cause they just don't know the tax laws. So they're conservatives 'cause they don't want to go and learn any new strategies. So they just tell you the same old crap.

Like for example, there's one and in fact, I had an accountant that told one of my clients, "You cannot do that. That's against tax code."

So I found freakin' articles, even in like New York Times and stuff for like this corporate rent strategy as an example. Where if he had a corporation, especially if you work from home, and heck even if you don't work from home. Maybe you just have a home office, you could actually pay to use your house say for one day ... one day's use. Almost like you would for a hotel. If you've ever booked a hotel, like a meeting space or something like that, whether you had people coming there or maybe you just meeting with a potential client or whatever it might be, you say, "Hey, alright, I'm gonna book this hotel meeting space. Yes, I'll pay for the wireless internet. Yes, I'll pay for this. Heck, why not pay for lunch too or catering." You start to add it all up, it's a lot of money for a day's use for a hotel.

Well, not too uncommon, you could pretty much see like a day's use of a hotel could be easily be at least ... for cross country, it's different state by state but cross country, like $1250 bucks let's just say for a day's use of a hotel. Well, you could do that same thing by renting your corporation, renting your house from you, personally, for that one day. Now, if you know about rental laws like you don't get tax on rent until it passes 14 days in that year.

So, let's just say you only pick one day out of the month that you do something. And it could be something with clients. It could be something not. It could be you're doing a planning meeting inside your own house or whatever. Whatever it might be, you basically use your home for that day's use of business purpose. Well, if you did that for 12 days a year, that's fifteen thousand bucks that you've been paid personally from your corporation. So that's a write off from your company. You're getting a company write off. But that income is income tax-free because you haven't surpassed the fourteen days.

So depending on your tax bracket, if you're in a pretty high tax bracket, that could save you at least five or six grand. In fact, I had ... I tested it once. So, I actually ... I had an accountant who forgot to count it and I said, "Hey, hey, go back. This thing right here, this expense, this income is actually should not be counted as income 'cause that was 11 or 12 days of those corporate rent payments." And so he put it back in, he's like, "Oh, let me adjust that." And seriously, it was a six grand savings that year.

Allen: Okay, so let me get this clear. If you have a property that you rent out and you  collect income, you collect rental income on that, whether it's a house or a car or whatever-

Chris Miles: This is actually for your own home you live in.

Allen: Right. Okay, so it's only for your home?

Chris Miles: Yep, just for your home. Not talking about the rental properties. This is just for your own house.

Allen: And if it doesn't exceed 14 days, there's no income tax on that?

Chris Miles: Correct. Yep.

And then, tax usually ... if you go over 14 days, it's passive income tax. You're taxed like you are for real estate but as long as you don't go over 14 days a year, that's income tax free to you.

Allen: Wow. I didn't know that one. Yeah.

Chris Miles: Yeah. It's pretty awesome.

I have actually, I have one friend. He has a bigger home and he's like, "Hey, my accountant has me justifying $1500 a month ... or $1500 for that day's use. So he's like, "I'm going all the way up to the 14 days." So he's basically writing off like 21 grand a year. That's saved him probably at least 7 grand in taxes that year.

And you're still getting paid. That's the cool thing. You're still paying yourself. But rather than paying yourself, you have to pay income tax and social security tax and everything else, you're taking that totally income tax free.

Allen: Hmm. And so how would you ... you have to still report it as income but the accountant should know how to handle that, right?

Chris Miles: Yeah. You have to let them know, of course, that that income is from however many days it were in that year for that rent payment. You just have to classify ... tell them that 'cause if you don't, then they will just count it as normal income.

But yeah. You just have ... and they can use ... if they know the strategy obviously, they'll see, "Oh, there's that rent payment coming out of your business and there's the income. Perfect."

Allen: Awesome. Cool! Yeah, so I think those two tips could save people a lot of money. But both of them, obviously, you have to have a corporation. And I think one of the ... couple of episodes ago, we talked with another one of our traders who had gone ahead and started trading inside of his corporation for an asset protection. That was the main reason, for asset protection, but then he also was able to take out all these expenses as deductions.

And then the losses were also classified as differently than on his personal. That helped out a lot as well.

Definitely, I think, it'd be good for most traders depending on how much they actually have and how much they could actually save. They could probably easily do this and open a corporation and just do all that stuff out of it. That's really cool! That's really cool stuff!

Chris Miles: Yeah.

Allen: Is there a way where people can get a hold of you? 'Cause we're out of time here but I know that we could keep talking and I'm sure you have lots of other strategies as well. But is there a way for our listeners to find you and get a hold of you?

Chris Miles: Yeah. Like I mentioned, you could check out the Chris Miles Money Show that's on iTunes or you could find it online that way. There's also my website, moneyripples.com. That's M-O-N-E-Y-R-I-P-P-L-E-S dot com. Even if you have questions specifically, you might just say, "Hey, let me send an email Chris." You can just send that email to Chris with a C-H. So, Chris@moneyripples.com.

Allen: Cool! Thank you. And before you go, I got one last question for you.

Chris Miles: Yeah.

Allen: So, let's say, you ran into somebody and you really wanted to impress them with your financial knowledge. Maybe this person is a big whale type person and you're like, "Okay, I want this guy as a client. I'm gonna give him one tip that's just gonna knock his socks off." What would that be?

Chris Miles: That's not an easy answer 'cause I always adapt to the person. For me, usually it's mostly listening. All I have to do is usually ask you a series of questions and just find out like where you are and usually, I'll find out something like, "Oh, hey, have you considered this?" So, it could be like conservation easement, like, "Hey, here's a way you can write off four times and get massive savings if taxes are a big pain." Or "Hey, passive income, you want more of that? Dude you can totally rock your world by making passive income over here and doing this kind of stuff."

It's not hard for me. It really just depends on the situation where they're at. I would say, probably for me, to knock their socks off, I usually do less. I usually do less talking, more listening.

Allen: Mm-hmm (affirmative)-

Okay. Alright.

Alright, Chris! Well this has been an interesting conversation. Those of you who are looking for more passive streams of income, that are looking to save money on their taxes even, do reach out to Chris.

Like you said, there are lots and lots of ways to make money. We just have to find them. So, appreciate it, Chris! Thank you for spending some time with us.

Chris Miles: It's an honor. Thanks for having me on your show.

Allen: Alright, take care.

Chris Miles: Alright, see ya.

Feb 19 2019

29mins

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Rank #19: What I Learned From The World's Best Poker Player - 012

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Many of the same skills that you need to play good poker are the same that you need to trade well.

Something I realized was that a lot of people who are really, really good traders were good poker players at the same time, because they had the same types of skills. Currently, the best poker player in the world is a guy named Phil Hellmuth. Phil, and he’s also known as the poker brat. In fact, he’s got a book out called the poker brat.

Now, I don’t know if he is the best in the world. I think he’s probably the best because he has the most rewards, and accolades, and what they call bracelets, and tournament wins, so I’m just going to say that he’s the best. I don’t really care. For the sake of this podcast I’m going to call him the best. Please don’t write in, and email me, and call me and tell me, “Hey, this guy’s not all that, he sucks.”

          I don’t really care, but what we are going to be talking about is what I learned from this guy. Recently I just heard a interview with him where he's being interviewed by somebody else, and there were a couple things that really stood out to me that can actually be directly applied to trading, and that can make you a better trader just by implementing these things.

I wanted to take the time out in this episode to actually go over both of these in a little detail so that you can take away some of the skills that this guy already has that he uses at a world-class level.

Dec 26 2017

35mins

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Rank #20: Why Do Traders Hate to Hedge? - 009

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A few years ago, I wrote a book about hedging. An entire book. Yes. Hundreds of pages on just hedging and different ways to hedge and how to hedge your portfolio. And actually, the book's name is called Protect Your Portfolio, and it's all about hedging and protecting yourself from different ways of losing money and whatnot, while we're investing. By the way, you can get the book at Hedgingstrategies.org. That's hedgingstrategies.org. Yeah. Thank you for letting me do a shameless plug. Yes. You can buy the book there. It is available. So, if you want to get the whole book, go there, of course.

So basically, what I found was, I was interested in the topic. I looked online and there's really very, very, very little on it. I could not find another book on hedging. There was some books that talked about hedging in a little bit. And there was some videos and stuff that you can, "Oh, you know what? If you wanna protect your portfolio, you should buy a put, and that'll protect your stock. Okay, that's great. But, under what instance do I do it? You know? How many days to expiration? What should I pay for it? What percentage should I protect myself? All these different question I had, there was nothing out there.

But, that's not the point of this podcast, this particular version of the podcast. I thought that that particular book that I'm writing on how to protect yourself, was gonna kick ass. I thought it was gonna sell millions of copies. Remember, I'm an optimist, okay? So, I thought it was gonna sell a heck of a lot of copies. But, it didn't. It still, right now, to this day, I have not recouped the money that I had spent on it with doing all the research and all the writing and all the time that it took. You know, as many copies as we've sold, we've sold a bunch of copies, but we still haven't got our money back on this thing. And I can't understand why. And then, I was like, "Wait a minute. Maybe that's why I couldn't find any other books on the topic. Maybe that's why I couldn't find any courses on the topic. Because people just don't care."

And that's when it hit me. You know? Traders don't like to talk about hedging. They don't. I'm betting that this particular podcast is not gonna get a lot of views, or listens, or downloads. I don't know how they judge if a podcast is popular or not, but this particular issue, or this particular edition, is probably not gonna get a lot because I'm talking about hedging. 'Cause people don't like to talk about it, which is crazy, because that goes against all the scientific studies out there that show that people are more inclined to protect their money, than to make more. It's crazy. You know?

Dec 04 2017

16mins

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Sailing Across The Stock Market - 57

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Which is the better way to live: to plan every detail or to let the Universe look out for us?

And which of those makes for a better trader?

"If you want to make God laugh, make plans."

We cannot control the stock market. We cannot control individual stocks, or their reactions to news. So what can we control as traders?

And should we?

That is the question we tackle in this episode.

How to be able to flow with the market but still protect ourselves from volatility and excessive fluctuations.

Books mentioned:

The Surrender Experiment

Where The Magic Happens

Links:

https://optiongenius.com

Jan 13 2020

25mins

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2020 Predictions - 56

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In this episode we review what impacted the stocks markets in 2019 and what we see coming in 2020.

Now keep in mind that these are just my interpretation of things to come. I might be right, I might be wrong. That is not the point. The point is to hone in on trends. If you can spot a trend coming before anyone else, you can make a lot of money. Or even if you spot it in enough time to ride it, you can still make a lot of money.

And as they say in trading, the trend is your friend. So the trends will probably continue. So if we can identify these trends, especially if they are long term, if they have been occurring in the past and they're going to continue to occurring. Then those are things that we can actually benefit from in a financial sense.

The 2020 Predictions have to do with:

  • Volatility
  • How The Markets React To The Election
  • The Automotive Industry
  • Technology
  • Medicine
  • Why Recycling Will Be Stopped
  • Border Changes

https://optiongenius.com/

Link to 2019 Predictions: https://optiongenius.com/podcast/38-2019-predictions/

Jan 06 2020

15mins

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The Candy is Better in That Other Neighborhood - 55

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Happy Halloween or happy belated Halloween depending on when you listen to this. For me, actually it is the day after Halloween, and I was lucky enough to take my three kiddos out last night for trick or treating. Normally the wife does it, but she was sick and so it fell to me. Okay, no problem. We had fun.

We spent about an hour and a half going around. We've been living in the same house now for about 10 or 11 years. With my oldest turning nine in a couple of weeks, that means that we've probably been trick or treating about seven times I think.

We would probably missed a couple of times but we've been about seven times trick or treating since we've been in this house, but we have never tricker treated in our own neighborhood.

It sounds kind of weird, right? Normally you would stay where you are, but I don't know. Our subdivision is never very decorated for Halloween. I mean they go all out for other holidays, but Halloween it's just not a lot of decorated or lights or anything.

I never thought that we would get much candy. You know? If you know about Halloween, or if you have little ones, or grandkids or whatever, you know that the amount of candy you get determines if the night was a success or not. Right?

They don't care if it's cold. They don't care if it is windy like it was last night. All they care about is how many things they get in their little pumpkin. You know?

Last year my wife and her friends, they took all the kids to the quote unquote rich neighborhood. You know, the one with the million dollar houses thinking that, okay, if they're rich, they're going to have more candy. They'll be more generous.

Yes the kids did get a couple of the King size candy bars from a couple houses. Mostly it was the same. Everybody's giving the same little mini size stuff. Overall, at the end of the night, they ended up with less candy than they expected.

They didn't think about it, but it ended up that the reason was that these million dollar houses are so large, and they sit on so much property that it takes forever to walk with these little tiny legs, these five, six year olds to go from one house to the other house.

You end up hitting a lot fewer homes. You're not knocking on as many doors when you have such big houses, even though you might get a little bit more candy from each one. Oh boy.

Well last night I think it was in the lower forties, no sorry, upper forties in temperature. It was very windy. With my wife being sick, it fell onto me. I mean I didn't want to be out for a long time. I just wanted to get this over with. So we stayed in our own area. We stayed in her own little subdivision, and I was pleasantly surprised.

We weren't even done with our own block when my kids, pumpkin started filling up. I mean that's how much people were handing out. Being the resourceful dad that I am, I saw that there was a newspaper on the sidewalk.

In our neighborhood we get these free newspapers. Nobody really buys the newspaper anymore, but there's this free newspaper that they come every week and they throw on the ground.

I took the papers out, put them back on the ground, and I took the bag, the newspaper bag that it comes in. I started taking the candies, the excess candies from the pumpkin's and filling that up so that their pumpkin's would be empty again.

It just kept filling up over and over again, and eventually we had to stop at a neighbor's house. We had to ask him, "Hey, do you have anything we can hold all this candy in?" They gave us those plastic shopping bags that you get when you go to the groceries or whatever to haul all the treasure.

We actually filled up one bag with everything, and then it was so full, we had to actually double bag it, even triple bag I think. It was literally 30 to 40 pounds of candy that I was lugging around.

My kids are bouncing up and down, and I'm holding my three year old's hand, and I've got the 40 pounds of candy I'm cradling in the other hand because I didn't want the straps to break. That's how we were going from house to house to house.

By the time we were done we had enough candy to declare that this Halloween was the best ever. Not because it was with dad and I was more fun. It was just because there was so much candy.

My God, it was the most candy in the shortest amount of time from people that we already knew. That might've been part of it. Since we didn't know the kids, they might've given them a little bit extra. Who knows?

Why am I sharing this sweet story with you? Well, you know me, I always have a motive, right? We always have to tie it back into trading. We take life and then we bring it back.

When it comes to trading, people are always thinking that the candy will be better in another neighborhood, that their own neighborhood is not good enough for some reason and they got to go to another neighborhood where it costs money, or there's an admission fee to get in. Right?

Now, countless times over and over again, traders have told me that they're doing well with one approach, but they want more so they're going to switch to something else.

I just got an email today. The fellow said, "Hey, you know, I've been using this particular strategy and I'm up about 25%. I've learned from my dad how to do this, and he doesn't know very much, but I'm looking to do something else."

My question always is, why? You know? Why stop what is already working? That makes no sense to me. I mean, you can always add to it, right? I mean if you're doing something that works you keep doing it, but you can add to it slowly.

Before you do that, make sure that you are extracting every single Kit Kat out of what you're already doing. Test it. Tweak it. Maximize your gains because the big thing here is that you already know it works. Right? It already works. You already know how to do it.

I mean, sure other neighborhoods look enticing, but it could be a trap, or maybe even an old folks home where you don't get nothing. Just a bunch of scary people looking at you. Right?

I've said this before, you only need one strategy to make a lot of money, and if you've already found something that works, stop buying courses, stop watching videos, and going to seminars. Celebrate that win because that is rare. Celebrate it, and improve the results.

Now, if you don't have a strategy that works, you can check out our website at optiongenius.com, and we'll share some of ours with you. Okay? If you already have something that works, and many of you do, just keep tweaking it and improving it.

If you need coaching to help you with that, then we can help you with that as well. Okay? I still have a couple slots open for my coaching program where we do one on one coaching with people.

If you already have something that might be perfect because you're already making money. You can take some of that money, invest in coaching and maybe double, triple whatever your gains are because there might be something that you don't know, or there's another way to protect yourself.

Same program, same strategy, same concept, but now it's done in a more professional way where you're protecting yourself. That would be the way I would suggest to go.

I know you get emails every day from all these gurus saying, "Hey, I have this amazing course, and I have this amazing thing that never fails, and it always works. It makes 1000000% every year. Look at this stock, I made a 100%. Look at this stock, I made 20%. Look at this stock, I made 50%."

I know they have very good, enticing copy, very good sales letters, and it makes you think that, "Oh my God, this is the Holy Grail. What I'm doing is peanuts compared to what this guy is going to teach me."

You never know, most of that stuff is marketing hype, and gimmicks, and it doesn't work. Okay? I mean, that's just the plain, simple truth of it. Unless they can show you, unless they're actually doing it themselves day in, day out, don't fall for it.

That's like going to trick or treat at the old folks home. They can't have any candy because they can't eat it, so they don't have any laying around, and they didn't go to the store to buy any candy so you're just wasting your time. Okay?

Remember while I go out and eat another Snickers bar, I want you to trade with the odds in your favor. Alrighty? Happy Halloween.

Nov 18 2019

8mins

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Learning to Trade is Like Learning To Snorkel - 54

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Hey there passive traders, it's me, Alan and today I am coming to you from the sunny beach of Cancun. I believe they call it Playa Mujeres because it's the beach of Mujeres. Out there behind me, somewhere over there is the Isla Mujeres and this resort that we're at is actually on the Beach of Mujeres and so we're here on vacation with the family and I just wanted to shoot this quick video podcast to let you know that I learned something yesterday that I wanted to share with you guys and it's really ...

Right behind me in the water, we took our kids snorkeling for the first time, the seven year old and eight year old boys. Sorry about the squinting it's really sunny today, but we took them snorkeling for the first time and I don't know if you've ever been snorkeling, but you get a little mask you put on and you get a little snorkel and you breathe through the snorkel and you look down in the water and you see whatever's in there.

Now, there wasn't much to see out here. There was some fish. You go a little bit further over there, there's some seaweed and stuff. There were some pretty cool fish, a couple of big fish actually. They were really excited about that, but when they first started, I had prepped them ahead of time before we came on the trip. I told them, "Hey, we're going to do snorkeling. It's really cool. It's really cool. You put this thing and you can see all the water and all this different world, all that stuff."

They were all excited. They were wanting to go. When we got here, it's kind of like trading, right? You hear about it, you picture it in your mind. It's like, "Oh my God, this is so cool. I want to do this. I want to do this. Yeah, I'm going to be awesome at it." Then you get your equipment, you get your mask, your snorkel, you get some instruction. "Yeah, this is what I'm going to do."

Then you go do it for the first time and you totally freak out because it's not easy and it's not normal. You're not used to it because you're not breathing with your mouth anymore. I mean, you've got breathing with your nose, you have to breathe with your mouth. Then if you get a little water in the top of your snorkel, then drinking water and then the water is coming in your mask and your eyes are burning from the saltwater. Believe me, we had that same experience.

Basically, we walked them through it. It's the same thing with trading. The first thing you have to do is you have to put your mask on, cover your nose, get used to breathing with your mouth. Open mouth breathing, breathe with your mouth. Once you got that done, you put the snorkel on. You got to make sure it's all tight and snug and then you have to breathe with the snorkel. You're just breathing with the snorkel. Once that's done, then you stand in the shallow water, you put your head down and you just look around, focus on your breathing, don't even worry about what you're looking at, just focus on your breathing, making sure all your technical aspects are right, making sure you're following all the rules, making sure step-by-step you're not making any mistakes. Then once you have all that done, then that's when you get into the water and you go deep and you start floating and then you can go a little bit farther.

First time is going to freak out. You're going to ... It's going to be like, "Oh, it's not happening. It's not happening the way exactly that I planned in my mind." There's a fish and you'll freak out or there's a piece of thing, something touching my foot. All that stuff happens, especially in trading. It doesn't go exactly as you want, but if you go back and you stick to it, eventually you end up like my boys. I mean, they loved it. They loved it so much, they want to go again today and they want to go ... There's some shipwreck off the coast of the Island. They want to go over there.

It blew me away how I couldn't get them out of the water. I couldn't get the snorkel off their faces because they were like, "No, no. More, more, more." There's nothing to see here, but they were so excited and that is how I want trading to be for you. Whatever your issues are right now, if it's not going well, if you don't know what steps to take, if you don't know exactly what instruction you need, it's there where it's available.

You just got to take the simple, simple, slow, slow steps, right? Get your stuff, get all your equipment, practice the easy things. Practice putting on paper trades. Getting on the trade, putting it on, getting out, putting it on, getting out. Practice finding trades. How do I find a trade? What do I go through? How do I make it streamlined as possible? Right? Because I don't want you to just put on your stuff and just jump in the deep water right away. That's what most people do. That's why they get burned. I have a lot of people, a lot of students that told me, "Oh no, I don't want to do paper trading. I'm going to put ... I got $20,000 I'm just going to let it ride on one trade."

You're freaking crazy because you're going to lose a lot of money that way and they do. Then they come back and they're like, "Yeah, I should've listened to you."

Well, that's too late now. You just learned a very, very expensive lesson. Let's not do that. Let's do it snorkel time, right? One at a time, because in snorkeling, you mess it up, what happens? You just stand up. You drink some salt water, no big deal, but what could have happened and what almost happened with my second son is that he almost gave up. He tried it the first time. "Oh man, daddy, I don't like it. This is horrible. I don't want to do this anymore." He threw the mask down and he threw the snorkel down and he just stormed away.

That's what we cannot have happened to you because if it does, then you lose out on a passive income stream that has the power to change your life. I mean, take a look around. I'm here on a weekday in Cancun, enjoying with my family and my trades are still working, right? I mean, you can see ... There are not there many people here, right, because this is a private beach for a private resort. There's not going to be a lot of people here. This is not like the cheapest resort on the place as you can imagine. That's what comes with from trading properly and passive trading and the ability for you to be able to take vacations, not have to worry about your trades as much.

I mean, I checked on my trades this morning. It's actually the same time frame here in Mexico as it is back home for me. I checked on my trades this morning and they're fine. They're doing great. I'm making money, my options are ... They got [inaudible 00:06:13] going on everyday so I'm not worried. I checked it. It's all done, but I got to take the chance and the day, or at least a few hours, to teach my kids a skill or have an adventure with them that they are probably going to remember for the rest of your lives because I remember the first time I went snorkeling and it was with a school trip. It wasn't with my parents, but they were here with their parents and I think they're going to remember that for the rest of their life, which is pretty cool.

I don't know what else to say. I'm trying ... I'm making this video here in Cancun with the beach and everything because I want to inspire you. I want to motivate you. I want you to be like, "Yes, I got to do this right now. I got to get going right now." This is the time. Today is the time. I have a couple of other stories from Cancun. I'll share on them later, but in this one, I just wanted to say, look, every day that goes by is a day that you get closer to retirement or you get closer to that next bill that needs to be paid, right? Today's the day that we need to start so that you can start enjoying stuff, do the things that you want to do, take your families on trips you want to do, adventures. Teach them the stuff that you want to really teach them.

Just take it step by step, just like snorkeling, it's doable. You start off in the shallow water. Step one, step two, step three. Break it down as easy as you can. If you don't know the steps, let us know. We'll show you the steps. Okay? With that in mind, you want to take a look. That's the beach. It's beautiful. Blue waters everywhere you can look. It's gorgeous. Take care and happy trading.

Oct 13 2019

8mins

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Life Is Short and Then This Happens - 53

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It’s the call we never want to receive, but at some point you do. Maybe multiple times in your life.

And when it comes, you know it before you pick up the phone. You know its bad news. Really bad news. And you wish that if you ignore it, things will stay the same. But you know you have to pick it up, and that your life will never be the same again. 

We got one of these calls on Sat Aug 31st. My wife and I had gone to dinner. My wife’s mother was watching the kids and was going to sleep over. As soon as we ordered, the call came…it was my mother-in-law. Someone had beaten up my father in law at work and he was taken to the hospital.

So we canceled the food and rushed to the hospital.

As soon we go there we basically got the silent treatment from the staff. That’s when we knew things were bad. After waiting in the family room a doctor, nurse, and cop showed up.

My father in law was not beaten up. It was a robbery and he was shot. And he didn’t make it. Period. End of story. End of life.

Death is part of life, and there are many ways to die, but for the survivors, it still hurts. It still causes pain. As the word spread we had to deal with relatives coming, people dropping by to give their condolences, and even the media.

Without our friends, we would not have made it. We would not have know how to act or what to do. But thanks to our friends, they just came over, took charge and took care of everything. One family took the kids for one day, another took them for another day. One friend took care of all the food and arrangements from family flying in. Another handled the funeral.  It was amazing.

As a severe introvert, I have never been one to keep in touch with people or to easily trust, but these people have my eternal gratitude.

Death can bring people closer together and is a reminder that all of our time here is limited. For some reason most of us have to be reminded of this over and over.

I am not sharing this with you for sympathy or pity. I am sharing this to remind you that life is short. Sometimes much shorter than we expect. No one even imagined that my fil would be gone. Heck his parents are in their 90s and still kicking. He had genetics on his side. But it didn’t matter.

Whatever you want in your life, there is no telling if you will be around tomorrow to make it happen. So stop putting things off. The people that you love, tell them today. The people that you hate, forgive them today and move on.

The thing that you have been putting of…start it today.

No more excuses – no more… I don’t have time, or money, or education….just take the first step right now, today and move towards your dreams.

My dream has been to start a foundation. But I keep putting it off. No more. I reached out to my mentor and we are starting it together. I will let him to all the work of organizing and running it, but I get a say in where the money goes which is all I want anyway.

They say that everything happens for the best. When you’re in pain that is really hard to see or believe.

But in the end, it doesn’t matter because we have to move on anyway. And live the best life we can.

So again, I say, whatever is holding you back…do something about it. Now, today.

Every day that you are alive is a day that must be lived. Live it to the fullest. No regrets.

I wish for you joy and peace, and may the odds be ever in your favor.

Oct 07 2019

8mins

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Trading For A Living Without Trading - 52

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Alan: Welcome, passive traders, to another episode of The Option Genius Podcast. Today, I want to be talking about trading for a living without trading. Huh? What? Allen, what are you talking about? How do you do trading without trading, but to doing it for a living? That doesn't make any sense. Alan, what you talking about? Well, allow me to explain.

Now, you see trading for a living sounds great. Whether you do it professionally and you manage other people's money and you get a percentage of the profits or whatever, or you trade for your own. You trade your own money and you grow it, grow it, grow it over time, and then you have enough money to earn a decent income from it so that you don't have to work. You don't have to do anything else. You're covering your expenses. We have people doing it both ways, and it just sounds interesting and exciting.

It's like I trade for a living and it gives you a boost to your confidence as well, I got to tell you that. If you feel bad about yourself, but you're like, yeah, I trade for living. Oh, man. You're on top of the world. That's why they call themselves, these hedge fund guys, they call themselves masters of the universe. Because he is a key man. You got your chest stuck out like, I trade for a living! It's like if you're at a party, people come up to you and say, hey, how are you doing? What do you do? And you're like, I, trade for a living! I go into the markets and I bend them to my will to do my bidding, with just my wits and my brains. I make money from thin air. Ha, ha, ha, ha.

Well, I mean, you probably don't want to do it with the evil laugh at the end. But I mean that's the way most people look at it. Unfortunately, most people have, even traders, have a misconception about trading for a living because they normally think of day traders who by definition have to trade for a living because that's their job. That's what they do. If they don't trade, they don't eat. If they have a trade on, they have to go to the bathroom, they can't. They have to wait until the trade is over. They can either pee their pants or if they leave, then they might lose money on the trades and they can't do that. But most professional traders are not like that. They let their assets or their money work for them. They let the markets come to them and they only trade when they feel they have an advantage.

This advantage, it doesn't come every day or multiple times a day. I mean, you take for example, Jesse Livermore. Now he's not famous anymore, but back in the day in the 1920s and '30's, this guy was the major trader. Everybody knew his name. He made millions back then and this is in 1920 dollars. He actually wrote a book about it called Reminiscences. I don't even know how to say this word. Reminiscences of a Stock Operator. He used a pseudonym as the author of that book, but there's another book specifically about him called Jesse Livermore, World's Greatest Stock Trader.

Now I would urge you, if you're interested in stocks and trading and whatnot, even options, you should get both of these books. I love them. I read them from time to time. He's one of my favorite classic traders and you can actually learn a lot from the way he thought by reading his books and understanding what he was going through when he was thinking about trades, when he was ... when things were happening in the markets, how he would react to them. How we would see them.

He was probably one of the first people who ever used technical analysis before they even knew what that was. At that time back then, they didn't even know or they didn't have any understanding that markets would move in certain patterns. And so, he was in his brain without even doing the charting in his brains, he was able to discover these patterns. But, he did not trade every day. He wasn't in the market all the time.

His keys to success, one of them at least was to wait. One of his most famous quotes is that the money is made in the waiting. He was called the boy plunger. So what he would do is he would wait. He had his whole big stock portfolio just sitting there waiting. Not in the markets every day. He didn't care what happened every day. But then, he would notice something happening in the market. He would notice that there is something abnormal happening and then when that happened, he would go all in. Now I'm not saying we need to do this. Eventually he did end up going bankrupt. Actually he went bankrupt several times, but the last time he couldn't recover. I don't remember if he actually killed himself or not. I don't remember that part, but he ended up, he never recovered the last time. But, he was able to make millions along the way If he had put it into other investments, he probably would've been okay, but he didn't, so there's also that lesson to be learned.

But then we have, what he was waiting for, the proper opportunity. He was waiting for the chance where the odds were in his favor. Now he wasn't selling options. I don't even think they had options back then, so he didn't have the opportunity that we have as option sellers and passive traders to wait and to do trades that have the odds in our favor from the beginning. But his thing was, he was a stock trader and so he would wait until the market showed him or a particular stock showed him that he was going to make a big move in one direction or the other. That's when he would go all in for it.

Now, I bring this up today because right now it's August, 2019. When I'm recording this, it's today's the seventh. The markets this month have started off very rough. We're down about 7% on the S&P 500 as I record this. Now, I don't know what's going to happen later on, and it doesn't really matter if you're listening to this much later. You could be listening to this to a year or two years from now. It doesn't really matter. But the fact is that this is going to happen. There are going to be times in the markets where we have big declines or we have big upswings, but mostly the declines happen really, really fast. The bull goes up the stairs, the bear goes out the window. The bear's going to go down a lot faster than the bull makes it up to the top. But in that event, what do you do? Should you be trading in such a market when in one week the market is down 7%, it's down 3%, then it's up 2% then it's down 5% or 4%.

Well, if you can make money in a volatile market or you're a pro short seller, then yes, go ahead and trade. That's your element. That's your thing. You go and you do it. But if you're a at home gamer option seller, then probably not. I had this argument with one of my students in our Blank Check Coaching Program in which we sell oil options. That's the whole program there. We sell oil options. He was upset because he was trading for a living. Doing well at it for several months, over a couple of years. But he was upset when the oil market was not cooperating.

Now I tried to explain to him, I said, look man, you don't always need to be in the market. Every month the market is not going to cooperate. It doesn't matter how good your strategy is, how good your trading plan is, how good of a trader you are. There are times when you will lose money and there's nothing you could do about it. But the reason that we sell options, we know that over time we are going to continue to win. It's a longterm game. Not just over one month or two months but over 12, 24, 36 months, we know that we're going to come out ahead. So yes, this month, August, 2019 might be a volatile month. It might be a down month and you might have lost a little bit of money. But if you're an option seller, we have the opportunity to get back in right next month and do it again and make money and then make money and make money and we'll go recover our losses. Over the long term we come out ahead.

But if you are trading for a living, sometimes you don't have that ability to look at the long term because you've got to pay the mortgage this month. And like the student, he expected to take his expense money out of the market every single month. That's just not realistic. Now you might be sold something otherwise, you might be told oh hey, you could be a day trader or take this course or take this course and we'll teach you how to make money every single time. All your expenses will be paid from the market. No, that's not realistic. I'll tell you the truth, right now the markets are down.

I currently only have one trade on in my trading account. I mean, in my retirement accounts, I still have my covered calls and I have some naked puts on that I sold to take advantage of the situation of this downturn. But in my trading account, I have one trade and it's a small trade. That one trade is not going to pay my bills this month, but that's okay because I knew that this type of event can happen. I built in a safeguard and I have a cushion. I know times like this will come when I don't want to be trading.

You look at any hedge fund, they are not fully invested all the time. Heck, they're almost never fully invested. Meaning they don't always have 100% of their money at risk in the market invested in something. They don't have to make a killing every single month to survive. They play the long game. It's about a yearly return for them. Even though we sell options and we trade and we talk about trading for a living and our expenses come every month, that doesn't mean that we have to look at our trading on a month by month basis. I mean, of course we do because we want to see how we're doing. But if you look at it on a yearly basis, you'll get a much better picture and a much better idea. If you look at long term 12, 24, 36 months, that's how your account grows.

So when people asked me, Allen, how much of my money should I put into this trade or into this strategy? Or how much money do I need to make X every month? I'm not sure what to tell them. It's surprisingly how often I get that question. Alan, I need to make $2,000 a month. How much money do I need? I can't tell you. I mean, we did an episode on that to help you figure out what number. I don't know what it podcast episode it was, but if you go on the list, that's the title of it. How Much Do I Need to Make X? You can listen to that one. I go into that more detail, but every month is different and every person is different.

I don't know. I can't give you a number and say, if you want to make $5,000 a month, well you need to have an account with, oh, let's say $50 thousand dollars and you'll make 10% every month. I can't say that because there might be some months when you do, but they're going to be other months when you don't. That would be a lie. There's too many variables. You need to have your trading money and if you trade for a living, you need to have savings, a cushion that you can tap into when you are not trading or the markets are not cooperating, which they do from time to time. The worst thing to do in this situation is to force a trade.

Because if you feel like, oh man, I have to do something. I have to do this. I have to do something. I have to take advantage of the situation. Oh the market's dropped 7% I don't think it's going to go up anymore. I think I'm going to go short the market right now. Well, when the market drops two, 3% in a day or more, it can turn around the next day and jump up the same amount or even more. If you force a trade, you stand the chance of getting your face ripped off and that's going to double the compound.

I mean, maybe you already lost money because the market went down unexpected. Okay, fine. You lost money. Well, now you're going to double down and say, all right, now I'm going to short the market and the thing's going to rally because that's what markets do. Then you're gonna lose on both sides and then you're going to be even more upset. Then you're definitely going to be on tilt, which means you're not going to be emotionally stable. You're going to be looking at all different kinds of trades and you're always like, aw man, I got to pay the bills this month. I've got to pay the mortgage. Oh my God, what do I do? What do I do?

That's not the way to trade. That's not the mental status you need to be trading. That's not the way, the time, the mental frame that you need to be in to trade effectively, to trade properly. It doesn't matter what strategy you're using. So yeah, if you want to trade for a living, you need to know when not to trade and that you don't always have to be trading. That's the whole point of this episode. Don't force trades. Don't always be trading.

Like that student I mentioned, if you have to always be trading to earn an income, then that tells me that you don't have enough funds to be trading in the first place for a living. You should go up and save more. That's the bottom line. So while the pundits on the financial media are freaking out right now and nobody knows when the markets are going to stop falling. I am just going to sit on the sideline and wait. I'm going to wait for the VIX to calm down. I'm going to wait for markets to calm down before I dip my toes back in the water. I mean, I had my trades on and this month I'm going to lose money. I already know that.

Well not necessarily, the month is still young. But I had my trades on, and the markets turned around and I got out. I took losses and I got out of every single trade except this one. I'm like okay. My losses that I took are manageable. I didn't wait and think, oh, things are going to turn around, things are going to turn on. No, I saw a change in the market and I said I'm getting out. We did that. We did that on all of our services Option Genius, Simon Says, every trade we're out. Now, when the market calms down, we're going to get back in. Then the trades that we put on, hopefully will recover what we lost and hopefully more. Or if not this month, then in the next two, three months we'll recover everything that we got back. That's how you play the long game.

Because yeah, you'll lose a little bit of money in a month or two, but you add up all the wins from all the good months and that recovers and it gives you a good yearly yield. So when you look at the longterm picture, 12, 24, 36 you come out ahead. That's what I mean by you come out ahead that way.

So again, trading for a living without trading means that if you are having to be forced to trade, if you have to be in the market all the time, there's a very good chance that you're going to lose all your money and that you're not going to be able to trade. Just like Jesse Livermore, he sat around waiting for the perfect opportunity for him. For us, we have good opportunities every month, but that doesn't mean we need to be trading. Doesn't mean we need to be in the markets. If we don't understand what's going on in the market. If the market is too volatile for our taste. If our strategy calls for a slow market and we don't have that, we wait. We only trade when the odds are in our favor. That's what it comes down to.

Thank you so much for joining me on another episode. See you next time.

Aug 12 2019

16mins

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How To Make 400% With Financial Journalist Wayne Duggan - 51

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Okay. So Wayne, I see that you have a book that you have written about trading in the stock market. And the title of the book is "Beating Wall Street with Common Sense", which is an interesting title by itself, but then it goes on. It says, "How I Achieved a 400 percent Return from My Dorm Room". And so I saw that book, and I was like, "Hey, that's really cool". I bought it. I read the thing, and I looked you up and it turns out that you are actually a writer as well.

Wayne: Yep.

Allen: Yeah, so, I mean-

Wayne: Yeah, I'm a journalist.

Allen: The funny thing about the book was that, I think it was the first line of your book, or the first sentence is, "I am not a writer".

Wayne: I know, it's ironic, because at the time I wasn't. But the book kind of jump started my whole different change in career for me. So I can't use that line again if I write another book.

Allen: So why don't you tell us about that. How'd you get 400 percent and how'd you get into the whole stock market game?

Wayne: Well, I talk about this a little bit in my book, which is that growing up I've always been kind of a numbers person. I was a big baseball fan, I was hardcore into baseball statistics, and I always had a fascination with the stock market, but I didn't really know much about it. And then when I went to college, I majored in brain and cognitive science, which is essentially a combination of psychology and neuroscience. So I didn't really take any finance courses or anything like that. And, as we all do in college, you have some boring classes sometimes, and I was actually in graduate level courses in 2008 when anyone that was investing at the time knows, because it was obviously a lot going on in 2008, so I actually started reading up and learning about the stock market for the first time, and decided I wanted to dip my toes in and invest. And, like any new investor, I obviously made a lot of mistakes, I tried to learn from those mistakes, and I was fortunate enough to where I timed a good entry point. I like to think I had some decent insights into some good stocks to buy, and fortunately it really worked out for me.

Wayne: And I talk about all this in the book, and one of the things I wanted to do with the book is make sure that I don't hide my mistakes, even my embarrassing ones. Because I think that's important, I think it's... everybody's going to make dumb mistakes when the start out, and you shouldn't be ashamed of that, you should just make sure you understand why you make them and try to learn from that.

Wayne: So with the book... writing a book was always on my life bucket list, so I wrote the book, I actually tried to get it published through a publisher, but I had no experience writing as I said in the book, and that was one of the things I consistently heard from publishers was that, we really like the book but we're looking for authors that already have an audience built. So they were like, you should start a blog, you should try to get some freelance work, and maybe the next time you write a book we'll be more open to the idea of publishing it, and so I kind of started writing for Motley Fool, Seeking Alpha, websites like that. I had some success there, and I ultimately kind of ended up changing career paths. Now I write full time for benzinga.com and I contribute for US News and World Report and Investor Place.

Allen: Cool. So I definitely want to ask you about the mistakes that you mention. But before we do that, how did you get 400 percent, and over what time frame?

Wayne: I think it was over about... well first of all, I can't take full credit for it. Because the first stock I ever bought was in December 2008, so that was a pretty darn good time to start buying stocks. So obviously if you bought just about anything in December 2008 you would have done pretty well over the next few years. I think the time frame... I don't remember exact, I think the book I wrote in 2011, so I think over about three years I generated more than a 400 percent return. Which I think is pretty good, nothing crazy, but I mostly took the approach of trying to identify high quality stocks that got slaughtered during the downturn and that I thought got unjustly punished and I think my largest profits came off of buying big bank stocks.

Allen: Yeah, they were beaten down a lot. Most of them were like...

Wayne: Yeah, I think I got Bank of America in early 2009 at point during my trades, I think I bought it at two dollars and 75 cents a share or something like that.

Allen: So basically, it was really really good timing.

Wayne: Yeah. And I like to think that wasn't an accident.

Allen: Did you trade options at all? Or was it all stocks?

Wayne: Initially I didn't. I think my first big option win came in 2011, and at the time I was just wanting to learn about options, I didn't really have any experience but I was always interested in it, so much like trading stocks a couple years prior I sat down and researched and tried to teach myself about options. My option trading, I always did it purely as speculation. I was buying calls, inputs, which I know is opposite of what you recommend, and also for my experience, the opposite of the way you should approach options unless you're doing it the way I did which was pure speculation, fun, gambling, lottery ticket type stuff. Which is what I was doing at the time.

Allen: It says here that you did it when you were in college. So how did you get the money to start?

Wayne: I started small, which is another thing that I would recommend for anybody that's starting out. It was just some money that I had put away, and it wasn't a ton of money. I think when I first started I had maybe 2000 dollars or something like that. It wasn't anything big. I really just wanted to learn the ropes and I think it's... that's one of the pieces of advice I'd have for any new investor, is if you're in your 20s and you're thinking about stocks, but you think oh there's plenty of time to do this, I'll learn it whenever, I think it's good to get in when you're young, make your mistakes early, make your mistakes when you can afford to lose a little bit of money, and then, by the time you really have real money to work with, you kind of know the ropes and know what to do and what not to do.

Allen: That's well said. How old are you now, by the way?

Wayne: I'm 35.

Allen: 35. Oh man. You still got a lot of stuff to learn.

Wayne: Yeah, I feel like I'm fortunate that I started relatively young. Because again, even if I had lost everything at that point, I think when you're 26 years old, you got plenty of time to recover and you're not throwing away your retirement savings or anything like that. You're not derailing your financial future. So I always tell people, definitely start young.

Allen: You won't believe how many stories we hear from people that are in their 50s and 60s, and they come to us and they say, "Hey I just got started and I lost a bunch of money". Now it's not too late, but if you had started earlier or if you had been doing it a little bit safer, you would have been in such a better boat.

Wayne: Absolutely.

Allen: So Wayne, how have you been doing since then? So that was a few years ago, the market's been in a really nice bull trend. What do you do now, how do you invest now, how's it going?

Wayne: I've been doing so so lately. And to be honest, I have not been trading much lately. Once I started working full time doing financial journalism... I found that I had a lot more time on my hands when I was screwing around in school then I do when I'm working eight or nine or sometimes 10 hours a day with three different jobs. I've kind of... most of my money, honestly, is in CDs right now, but I have a couple of speculative investments, Alibaba is my biggest position and a couple oil services stocks that are pretty beaten down that I feel like have been unjustly punished. I really don't, I'm literally... my Merrill Lynch account is probably 90 percent cash or CDs at the moment.

Allen: That's really interesting, because you are in this market all the time. You're learning, you're hearing the noise, you're hearing, oh this stock went up and this stock went down instead of doing this instead of doing that, but you're not even inclined a little bit to jump in and say let me make a fortune off of this stuff.

Wayne: Well, I feel like it's always a good time to buy and hold an S&P index fund as long as your timeframe is 10, 20, 30 years, something like that, but I honestly don't see anything out there, or very few things, that just smack me in the face and that they're under-priced or look cheap or undervalued. If I did I'd buy, but I honestly don't see much out there. I also think it's kind of just a weird time, after at 10 year old bull market and interest rates are so historically low... there's just a lot of screwy things going on and I'm not inclined, I'm not a professional investor, so I'm not inclined to always have my money all in all the time to have food on the table. So I'm just kind of on the sidelines until I see another opportunity... probably another 2008s not going to come along anytime soon, hopefully not at least, but at least something where I say, "Okay this looks like a no brainer".

Allen: Okay. So you're totally value. You're into beaten down stuff like you said, and just wait until it comes back and you'll wait until it comes in.

Wayne: I'm mostly value. I talk about in my book, I'm a firm believer in exploiting the psychology of the market. So I'm kind of an investor sentiment, contrarian investor as well. So contrarian investors, when the market's great and everyone is saying stocks are great and everything, that's not the time contrarian's like to buy things. So these days, everything seems like it's on cruise control, I like to buy when there's blood in the streets. And there hasn't been much blood in the streets for nearly a decade.

Allen: Interesting. That's a different way of looking at it. Because a lot of people they always feel, yeah I have to be invested, I have to have my money in there, it goes up seven, eight percent a year, 10 percent a year so I need to take advantage of it. But you're saying that you don't need to do that.

Wayne: Like I said, if you're trying to trade for a living, then you need to be trying to profit. But if you're trying to do it for retirement or like I do kind of as a hobby more than a profession, yeah, I mean... if I go to the mall and I'm walking around and I see something on sale that I like, I'll buy it. But I'm not the type of person that goes to the mall with 100 dollars and leaves with zero dollars every time, no matter what's there. So, I got the cash, if I see a stock that looks cheap, I will jump in there. But if not, I don't feel the need to always be hunting down things to buy.

Allen: Interesting. So, now you mention investor sentiment, and psychology. Can you go into that a little bit? How would somebody find that out or how relevant have you found... obviously you rely on that, but how important is that?

Wayne: Well, it's one of the more popular contrarian indicators of how a stock performs. In my experience generally, if you're trying to beat the market then you can't be doing what everybody else is doing, because by definition if you're doing what everybody else is doing you're not going to beat them at that game. So you need to be doing something different, you need to either be seeing something before everybody else sees it, or you need to be seeing it differently than everybody else sees it. Nowadays, with high frequency trading, institutional investors, in my personal experience I feel like it's extremely difficult for an average retail investor like myself, to be faster than the market. It's very, very difficult.

Wayne: So I have to, my only window of opportunity, is identifying stocks where I see something differently than everybody else sees it. And it think one of the things that has tended to happen in this digital age is that people are impatient. So I think back in the day people would buy stocks, it would be common for people, even traders, to buy stocks and be willing to hold them for six weeks or six months or nine months or even a year or two, while their thesis plays out. But I think over time, just has society has sort of sped up and the digital age has sort of encouraged instant gratification, I think people don't even a lot of the time, they don't think nine months or 12 months down the road anymore. If something's not going to work today or tomorrow or next week, it's not even on their radar anymore.

Wayne: So I think those are time where... I'll use Alibaba as an example. If you look at the growth numbers that Alibaba's putting up, without any knowledge of this trade war that's going on, if you just think about the economic growth rate in China, the fact that they have the billions of people, the fact that the government basically restricts international competitors from coming into the Chinese market, that company's been absolutely tearing it up. And they're into all the high tech fields that Amazon is into the US. And yet, the stock has been stagnant for a while now, and it's because investors can't see past this trade war.

Wayne: And personally, I believe the trade war is coming to and end sooner rather than later, because it seems like it's hurting both the US and China, and I think Warren Buffet said this in his shareholder letter or an interview at the annual Berkshire investment meeting or something. But basically, when you have two rational actors, and there's a conclusion that's in the best interest of both of them, they're eventually going to make it there. And I don't know what the terms of the trade deal are going to be, and I don't know if it's coming next month or a year from now or whenever we get the election over with or whatever, but I believe a trade deal is coming at some point. And I'm personally hoping that completely shifts investor sentiment on Alibaba and that people start taking a closer look at those numbers.

Allen: Okay. That's a cool way to... do you sell options while you're waiting or no?

Wayne: I don't. And I figured you'd ask me about this, and I will say this, if I had more time on my hands slash wasn't so lazy, I definitely would be doing it. It's something where, after working a full week where I'm seven AM to five PM stocks and options and trading all day long, at the end of the work week I don't even want to look at my porfolio, I just want to relax. So yeah, if I lose my job at some point I'll definitely start selling options.

Allen: All right. So then, what were some of the mistakes you alluded to earlier, that you think that ordinary, common, everyday individuals are making that they shouldn't. Or that you can protect them from, just letting them know. What do they need to know?

Wayne: There's a lot. Maybe I should just answer just in terms of buying options. Because I think, and if you're preaching selling options then I like to think you'll probably be on board with all of this, but when I first started thinking about options and how if you buy options it basically gives you leverage where you can theoretically make really large returns on stocks that aren't super volatile, I thought well geeze this is the golden ticket and I thought that, well, I've had success buying stocks and holding and ultimately my thesis plays out and I've profited off of this. But, the time factor with options, the reason why it's smart to sell options and not buy them, is because you have to get two things right when you buy a stock - you have to get the stock right and you have to get the direction right. When you buy options, you have to get three things right - you have to get the stock right you have to get the direction right, and you have to get the timing right.

Wayne: And I think most people are predisposed due to their personalities either to be too early or too late when it comes to timing their investment thesis. I tend to be too early, I tend to think things are going to happen before they actually end up happening. So what I found early on in trading options is like, oh, I'll use Alibaba again as an example, oh, I believe a resolution to this trade war is going to happen. If you had asked me in December when I thought it was going to happen, I would have definitely said I thought it would have happened by now. By June, I definitely would have thought there would have been a trade deal.

Wayne: So maybe back in December, I would have thought, oh, there would have been a trade deal by June, I'll buy June call options out of the money on Alibaba and by the time June 15th rolls around I'll be good to go. Well, nothing's really changed about my thesis, I still think that a trade deal is going to be reached and Alibaba stock's going to go higher, but if I had bought those call options back in December I'd be out of luck. They would have been expired, completely worthless. So the shame in that is that your thesis can end up being right, but if you don't get the timing right, you're completely screwed and it doesn't even matter, it's as if your thesis was just completely wrong.

Wayne: So I think that's what I would say to anyone looking to consider buying options rather than selling them, is you're basically playing... the stock market goes up over time, historically. So if you're just buying generic stocks you at least have kind of of advantage in the sense that the economy is growing. But if you buy options, call options or put options, you're at a tremendous disadvantage in the sense that you need something to happen just to break even on your trade. You're starting off in the hole because of the time value decay and I think people overestimate, they tend to have too much confidence in their ability to predict timing, and I think a lot of people get burned on options like that.

Allen: It's like a ticking time bomb. It's just tick tick tick every day.

Wayne: Absolutely.

Allen: Cool, the one thing I wanted to mention to everybody watching your book, when I bought it I thought it was going to be basically your story. Which it is, it's your story. But I think that's about half of it. The other half is you actually talking about investing and all the jargon and what goes on in the stock market, basically from A to Z level. And I think that if somebody is new to trading or new to stocks or even options, if they pick it up and they read it they'll learn a lot more than normal.

Allen: Because the stuff that you are talking about, I know for me it took me several years of not only just trading but watching CNBC a lot to understand all of the ways, how everything works together and how does this react to this. There's no guide for that, it takes a long time to understand, okay fed's going to cut, what is doveish, what is hawkish, what is doveish, they keep mentioning these words I don't know what that means. But in your book it covers everything, and I was like oh man I wish I had this so much sooner, it would have made so much sense.

Wayne: It's, and I thought long and hard about how I wanted to approach the book at the time, because I feel like there is certainly a jargon to Wall Street, and it can be incredible intimidating if you're starting from scratch. And it was even to me. When you start out, it's like learning a new language. When you start out your first day of French class and people are speaking French, you're not going to know the first thing about what they're saying. So I tried to write the book that I would have wanted to read when I first started out. I remembered how intimidated I felt and I remembered how ignorant I was and I... obviously when you're first starting out trying to learn something new, you're going to be ignorant at first, everybody is. And you're going to make mistakes at first.

Wayne: And so, I tried to tell my story, like you said I tried to tell my story by also tried to work in things that I learned. And yeah - a lot of your listeners that are advanced enough to be selling options and making profits, maybe they'll learn a thing or two from my book, but maybe they got past that point a long time ago. But, maybe they would like to read about my story.

Wayne: But I think the perfect audience for that book is someone who is a bit intimidated to start out and they may not necessarily want to read a book written by someone who has 20 years of experience at a hedge fund. Maybe they just want to read a book about someone who was a random person, an average college student like they are or they were, and started from scratch the way they're starting from scratch, and know that like, yeah, it can work out. It won't be perfect, it'll be bumpy, but it can work out and here's the story that proves it.

Allen: Yeah. And then, the other thing that you talk about is common sense. So, that's the title of the book, "Beating Wall Street with Common Sense". And it's, you mention it and it should be common, but it's not as common as you think. And I think that's part of what makes a market, me and you could look at the same thing and I'll be like, "I want to buy!" And you're like, "No, I'm going to sell it". So how do you say common sense? What is common sense in the stock market?

Wayne: I think the best way to explain it is... and I've written about this for my job, is I think that unfortunately we are predisposed to... human nature has a lot of inherent biases, psychological biases, and when you're talking about hard earned money, your retirement savings or just a few thousand dollars that took you however many hours to earn, it's very emotional to see your account going up or down every day. And we have deep rooted, biological predispositions to avoid losing things that are valuable to us. So I think one of the most important lessons to learn for a new investor is to control your emotions. Because I guarantee you your emotions will almost always have you making the wrong decision in terms of trading, because you will be most fearful at the time you should be buying, and you will be most greedy at the time you should be selling.

Wayne: And so, I think the common sense part to me is, the market may seem random sometimes. But the market is just a collection of individuals and institutions run by individuals, and the decisions they're making, they're basing those decisions on human logic. And so, when a stock is going up or down, on any given day those movements may be random but on a longer time frame there's a reason why a stock is going down or up. It may not be logical, it may not necessarily be correct, but the reason that it's going up or down is because people have certain beliefs about that stock, and they're buying it or selling it in response to that.

Wayne: So if you kind of remove yourself from trying to think about why the stocks going up or down and you think more about why would somebody be buying or selling this stock right now, and think about it more from a psychological perspective, then that sort of gets you to where you can think, okay, well when is this person that's selling this stock... why is somebody selling Alibaba right now? Oh they're selling because they're worried about the trade war. Okay, that's why Alibaba stock is going down. Okay, well what can change that will make that person say, oh, well now I want to buy Alibaba stock? Then you think oh, well if the trade war comes to an end then that person may completely change their mind.

Wayne: So that's not... you can dig as deep as you want to into financial metrics and numbers, and as a value investor at heart I'm a big fan of value investing metrics. But I think in terms of how the market moves, the market doesn't necessarily move because of a stock's price to earnings ratio. It moves because people have certain feelings or thoughts about a stock, and they're buying or selling it in response. So you really need to, as much as it's good to understand all the metrics, I would advise people to take a step back and think, whether I agree or disagree with what's happening, why is it happening? What are people thinking about this stock and what will change their minds at some point in the future?

Allen: That's interesting you say that as a financial journalist, I want to go to that. Because one of my questions I was going to ask you is, as a journalist you have deadlines, and you have to write about certain stories, you have to put out a certain amount of content. And every day, the market might be up five points or might be up 15 point or oil drops one percent or two percent, there's always a headline. There's always an explanation, right? So how do these financial journalists come up with these thesises, of why something happened? Like you just said, we don't really know why it happened it could be some people think this way or some people that way, there's no survey, people are not telling everybody why they're doing things. But how do these journalists come up with these headlines and say, market moved, or this stock moved, or this happened because of this today.

Wayne: I would like to think that good journalists, they don't write definitively. They say well, the S&P was up one percent today, and then I'll reach out to traders and be like, what are you hearing what are people saying, why do people believe that the market is up today? Or a lot of times, I'll reach out to economists or analysts and I'll get their opinions, and then when I write my story I won't present it as my opinion of what's happening, I'll present it as this is what traders are saying is happening, this is what economists are saying is happening, this is what analysts are saying is happening. And then, I may or may not draw a conclusion, oftentimes I will, but I don't present it as, all right I'm god's gift to earth, I've come to save the day, this is my journalistic opinion of what's happening.

Wayne: I don't think that that's necessarily helpful to people, I think people want to know a collection of sources, or even just one source, if one analyst puts out a note saying this is what happened today, we may do a quick summary of that or whatever. But for Benzinga and US News, they don't so much care about my opinion. For a stock picking site like Motley Fool or Seeking Alpha, I mean they make that clear that that's more opinion, editorial pieces. But in terms of my journalist jobs, they actively don't want me putting my two cents in there. They want sources with expert experience that are going to be the root of all of our stories.

Allen: Okay, cool. That makes sense. Because a lot of the times I'll read something, it'll be like market was up six percent today and it's because the fed announced that they're going to do this and this and this. Or China said this and this. And then the next day, it's going to be like oh the market is down five percent or two percent today because China did this and this and this. Wait a minute, you just used that same excuse yesterday for the market going up. So it's really hard as an individual to figure out, okay what is happening really? So the next question is, how does an individual trader or someone at home, how do they use the news? What would you suggest in that?

Allen: So, a lot of the times, one of the things that we do is we teach people how to do backtesting, which is a piece of software where you go back in time and you only look at the chart, you only look at the stock. You don't know what's going on in their market, you don't know what the news is, you don't know the headlines or anything like that. So you don't have that noise basically, is what I call it, the noise of what's going on. You're only trading the chart, the stock, the numbers in front of you. And most of the time, people who do that, they actually do better with the backtesting than they do in real life trading, even though they're using the same plan or the same rules. So how would you suggest that we use the news or... and obviously you're not going to tell me never to listen to the news, because that's your job, but how do we take advantage of the news?

Wayne: Well, if you're day trading, I think you need to think of the news as... every headline is a catalyst in the short term. If you're investing for the long term which is more of what I do, you used a good word, I think the news is mostly noise. I think it's good if you're a longer term investor to make sure you always keep abreast of what's going on with the stocks you own, because you don't want something coming out of left field. You don't want to just not pay attention for a week and then you come back and all of a sudden a week ago, there was an SEC investigation into your stock and it's down 40 percent. I think you need to always keep up with the news, but someone that, if I was advising someone that's not trading in the short term but more investing for the long term, I would say read the news but don't lose sleep over it.

Wayne: If you read a headline that fundamentally changes your investment thesis, then you should think about maybe trading or adjusting your position. But some quarterly earnings report that wasn't very good but you still think the company has a great long term future ahead, that's just noise, honestly. Or the CEO steps down. Well, if the CEO is 88 years old with health problems, that's understandable, that doesn't change anything about your long term investing thesis. If the CEO steps down because he was was arrested by the Department of Justice or something, maybe that's a red flag.

Wayne: I think most of the day to day news, this is coming from a journalist, we want to write about stocks that people are reading about, but it may seem like a certain company is in the headlines all the time, but that doesn't necessarily mean that more stuff is going on at that company, it just means people care about that company and that's what people want to read about. So I think the news is important, I don't think it's the end all be all in terms of investing, especially if you're a long term investor. Just think of it as part entertainment and part information and don't stress out too much unless something major changes with the company.

Allen: Okay. And then, you mentioned that you do work, or you have done articles in the past for Motley Fool and Seeking Alpha. So I was wondering, you mentioned that you had just gotten out of college and you had started writing for those. What are the requirements for those? Because sometimes people read that and they take it as gospel or they take is as somebody who actually has done dozens and dozens of research, or years of research into something where their thesis is so airtight. Can anybody write for those or, how does that work?

Wayne: It's been a while since I've written for either, but honestly back in the day there wasn't too much of a screening process. I think at the time I think you submitted sample writing and the editors just read it and decided whether or not it made sense to them. So I would absolutely take everything you read online that is recommendations to buy or sell stocks or trade in any capacity, I would take it all with a certain degree of skepticism. In fact I wrote a story for US News less than a month ago specifically about cannabis stocks, and about how there's a lot of misinformation out there online specifically about cannabis stocks. So you need to always... when you read something online, always in the back of your head need to understand the credibility of the source.

Wayne: And people have their favorite news outlets and ones that they don't like. But regardless of which ones are your favorites, legitimate news outlets are not just going to straight up lie and deceive people, because they'll open themselves up to all kinds of lawsuits and whatnot. But, there are plenty of nefarious websites out there or message boards, or people who are self interested or even paid by the companies, that will straight up lie about what they believe about a company. And it may not even be that they're just straight up lying, it may be that they own shares of a stock and they're completely blind to a different way of looking at things because they're along that stock, so the company can do no wrong and everything's always rosy and obviously that's a very biased opinion.

Wayne: So anytime you read someone telling you buy this stock or sell this stock or option or whatever, you always need to remember, who is this person, why are they saying this, what are their qualifications? Because you don't want to be blindly following anybody regardless of their qualifications, but people... certified analysts, people who have backgrounds in finance or backgrounds in journalism or whatever, they at least have some degree of experience. You're right, I wrote that book about my experience in the market, and my first professional writing gig was with Motley Fool. They like to think of it I think as more just like a crowd-sourced... like my articles weren't Motley Fool's opinion of the stock I was writing about, I was just one of hundreds of writers they have writing. So it's more of a platform than I was writing, speaking on behalf of Motley Fool. But yeah, people should be careful out there for sure.

Allen: I mean I do remember, even during the dot com bubble, 1999 and 2000, at that point everybody was going gaga over, this time it's different, oh these dot coms are going to change the world. And a lot of the journalists were the ones that were banging on the drums the hardest. Yeah, everybody's got into this, you got to get into Lycos, you got to get into all these other sites, companies that went out of business, pets.com and all this stuff. It seems like those people that were those journalists, they disappeared for a while because nobody wanted to hear their things any more because everybody hated them. But now they're actually back, and I see them on the news and I see them on the different financial channels, and they're still giving advice as if they knew what they were talking about back then so now, why should I trust you now.

Allen: Then the other thing is on the TV shows, the guys who come on from the different hedge funds or the money management companies or the banks and whatnot, a lot of them are basically, they're talking their own book. If they're the market maker or they're the company or they're the bank that's taking a certain company public, there's no way they're going to say anything negative about that company on air, or even that whole industry. Just going to be saying good stuff. And that's the thing, when we're watching that as an individual, we don't know where their conflict of interest is, we don't know what's going on behind the scenes. So I really appreciate you saying that. As a journalist it takes guts to come out and say that.

Wayne: I'm... journalists... I feel like your title in life, your profession says something about your experience. But it doesn't make you infallible. Whether you're a journalist, a doctor, a lawyer, a teacher, everybody's just people. And people make mistakes. And in terms of accountability, I always thought this was crazy because I'm a big baseball fan, if I'm watching a baseball game on TV, if I'm watching the Red Sox and a batter comes up and steps in the batter's box and I don't know who that guy is, the first thing you show when you get in the batter's box is a line across the bottom of the screen showing all his statistics, how he's performed, what's his batting average, what's his on base percentage, how many home runs how many RBIs does he have. I don't understand how these people come on CNBC and all that shows up is their name or where they're from. And maybe they've been on CNBC 200 times, and they've made 200 stock picks, and they've gotten 190 of them wrong. You wouldn't know!

Wayne: And it seems to me it would be so super easy to keep up with these analysts and journalists and pundits that are on TV and what stocks they pick and how often they're right, how often they're wrong. Show their name, and show the percentage of times in the past they've been right or wrong. Because I don't know about you, but if somebody's only been right 15 percent of the time they've been on CNBC talking about stocks, I probably am not going to really care what they have to say, honestly.

Allen: Well you know the reason they don't do that is most of them are wrong a lot of the time, and nobody would watch it.

Wayne: I know, that's true. If they were good at picking stocks they wouldn't be on CNBC.

Allen: There are certain people like... I used to watch the show Fast Money. I still do, still record it and watch it from time to time, and they've had a couple guys on there that were regulars, that every time they say something it's like man, you have no clue what you're talking about, and I would go and say let me try and see if I can do the opposite of what that guy just said. Because he's such a...

Wayne: That's a real thing.

Allen: And yeah. A lot of people do that. Jim Cramer comes to mind, a lot of people are like I'm going to take the opposite side of him.

Wayne: People give Cramer a hard time.

Allen: It's tough for him to be him. But I do credit him in a sense, that there's a lot of time when the market is moving in big moves, and I really can't figure out why, I don't know what's going on. And the news doesn't help, the headlines don't help, but on his show, he actually gets into the meat of it sometimes because he's been in that world. So he'll be explaining it, "This happened and this happened so the hedge funds are thinking this and this, or that's why they're moving a lot of stock". Or "This happened overseas that was not reported and that's why such and such is happening", or something like that. And in the past he has helped me out in that sense, to make sense of what was going on.

Wayne: I'm actually a big fan of Jim Cramer, I know his stocking picking track record is questionable. But what I think he's great at is I think he's great at educating people, I think he's great at entertaining people. I read a couple of his books when I was first learning about the market. I don't remember which ones, but I thought they were incredibly helpful. I think in another life he may have been a great teacher, because I think he has a talent for breaking things down simplistically. And again, he's been wrong plenty of times, we all have. So I get the criticism. But I think his show is good, I think his audience, there's a lot of inexperienced investors and traders in his audience and I think he helps educate them. And I'm all for education in any respect.

Allen: I think part of it is his, he's set up for failure in a sense with his show. They want quick answers, if someone calls you up and says, "Okay Citi Bank, what do I do?" And if your only choices are buy or sell, you're probably going to be wrong. You can't go into a long term explanation and say, "Well they have this and this going on, so don't buy right, now wait for this to happen then you can buy, or sell if this happens", he doesn't get that chance to do that.

Wayne: And I feel like I would not want to make 25 stock picks a day and be expected to get all 25 correct every day. That's pretty crazy, so I agree he's got a tough gig. But I daresay he gets paid very handsomely for it, so I can only have so much sympathy for him.

Allen: So Wayne, what do you have going on right now for you? What's exciting you, what's happening in the future?

Wayne: I am actually really enjoying life. That's probably lame to say. But I'm really happy with where I'm at right now. I've been telling myself at some point I want to write another book in the future, because I think it's been eight or nine years since I wrote my first one. But like I said I've got a full slate, I'm a staff writer for benzinga.com, those guys there are all really great to work with, I'm a regular contributor for US News and World Report, which again, my editor's awesome, the team there is awesome, and I've been contributing to Investor Place, and once again no complaints. They all treat me well and when I started out to write that book, it was hobby. Investing was a hobby for me, the stock market was a hobby. And I had no plans on being a professional journalist or writer or anything else. So I feel lucky every day that I'm one of the few people that was somehow able to finagle my way into having my hobby be my career at least for as long as it lasts. So, I'm just trying to enjoy myself and yeah, I'm having a blast. I have a blast every day. I wake up and get to write about the market.

Allen: Do you go to the office, or you work from home?

Wayne: I work from home, one of the many things I love about my situation. I live in Tampa Florida, and I can some afternoons if I'm not on a deadline, I sneak out and write by the swimming pool in the beautiful weather. So in terms of what I got going on, I don't really have any major plans in terms of projects or anything I'm working on, I'm just enjoying life.

Allen: That's sweet. So if our listeners want to get a hold of you or ask you some questions, where can they reach you?

Wayne: Well I have a blog, it's tradingcommonsense.com. And you can contact me through the blog, I try to be pretty good about getting back to people if you're patient for a day or two. My book is on Amazon, "Beating Wall Street with Common Sense". If you read it an it helps you or you were entertained or both, I'd love it if you drop me a review. I think it's only like two dollars or something, the book at this point. I just really want to get the message out there and yeah. I'm on US News and World Report, Benzinga, and Investor Place.

Allen: Awesome. Then your website is tradingcommonsense.com?

Wayne: Yep.

Allen: Awesome, I appreciate you taking the time and it was informative to get behind the scenes with a real journalist and see how you guys think and how we should actually use that information. As well as common sense. So thank you so much.

Wayne: I appreciate you having me on, it was good talking to you.

Allen: Thank you Wayne.

Jul 19 2019

28mins

Play

What is Passive Trading? - 50

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To celebrate episode 50 I thought I would do something special. As you may know, I am writing a book to introduce the masses to the art of Passive Trading. And while the book is still being finished, I thought I would give you a sneak peek.

So here is Chapter 1 of the book. But keep in mind this is in rough draft form. It still has to be edited.

I am sharing it because, well, I am too excited not to.

This episode answers the question, "What Is Passive Trading?".

Can't wait for the book? Check out our Passive Trading Formula Free Webinar! (click here)

Jul 07 2019

53mins

Play

From Struggling Trader To Making A Killing With Dan Hayden - 49

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How do you go from being a struggling trader to making a killing with options? That's what I'm talking to Dan Hayden about.

You see, Dan Hayden is one of our students in our new course that we have released, it's called the Passive Trading Formula. He's been in the course for a few months, and he wrote to me, and was very enthusiastic and was very happy with his results. When I read them, I really could not believe my eyes. I was shocked and I was like, "Man, I got to interview this guy. I got to figure out exactly what he did, how he did it, and I have to share that information with you guys."

This episode is an interview with Dan Hayden and how he is learning. He was already an experienced trader. He knew a lot of strategies and everything, but it was just something in the course that helped him to take it to the next level. Then we're going to help him take it even more to the next level.

 If you are struggling, even if you've known a lot of strategies, even if you've done courses or whatever, but there is something still missing, I think this episode is something for you to listen to. Hopefully you'll get something out of it. Let's go ahead, let's cue the music and get with it.

For more info on the program mentioned in this episode check out our Passive Trading Training HERE.

Dan, why don't we get started and let me know a little bit about you. Who is Dan? Why do you trade options?

Dan Hayden:      Yeah, so my name is Dan. I'm in Upstate New York. I started trading options a long, long time ago just because I wanted to earn along with the normal earnings of the stock market and I wanted to complement my trading.

Way back when, I don't know how, I think it was from my family, my grandfather, I was drawn to the stock market because it seemed like that's one of the ways in order to build wealth. Not to say that I had a lot of wealth, but it's another tool in your bag to complement your normal investing that you're doing with normal stocks.

Allen Sama:        Do you work full-time?

Dan Hayden:      That's when you and I got in touch with each other, because I was actually laid off. I had a awesome job, I was laid off, and I was at the point where I had to decide, "Shoot, do I just retire now? Do I go back into the workforce?" I had an awesome job and loved what I did, but I did travel a lot and it took a lot out of me. Therefore, it hampered my ability to just trade options because I was so busy.

When I contacted you, you had a promotion going for your new program. Right now, I am consulting. I do some work on the side and I am trying to, with your services, and system, and help, and as well as people on your site trying to get back into it, trade, develop a strategy so that I can comfortably earn a couple of thousand dollars each month is my goal.

Allen Sama:        Yeah, I mean your story is very similar to a lot of the stories that we hear. People have been working really good jobs, they're making a decent amount of money, their family gets accustomed to a certain lifestyle. Then because of the economy, or the company, or something happens, and that job and that income is not there anymore, then the question is, "What do I do now?. [inaudible 00:04:01] go back into the workforce?" If I do, a lot of times it's hard to make the same income as you were making before in the same job.

Dan Hayden:      That's exactly right.

Allen Sama:        That supplement income has to come in [inaudible 00:04:14]. Then a lot of people come and say, "Okay, I have money that I have saved up over the years. How do I make the most of it?" I'm really excited that you're taking action.

Dan Hayden:      As we spoke, you and your program has given me the confidence to realize that. All of these services, and I get way too many in my emails, and they're provocative, they stimulate your interest and you're like, "Oh, wow. Maybe I should join this. Maybe I should do this."

 It was great because as I jumped in, it made me realize that I am blocking all of these other emails that come to my inbox, and I don't want to be clouded by they have the best new widget, and they have the best this and the best that. Because you've shown to me, and I have questioned you that these other places are making something very, very easy complicated. Your scanning, your reviewing of the three moving averages, and showing the trend makes it very, very simple to select the trades that are applicable.

Allen Sama:        There are people who are traders and then there are people who are expert marketers. Sometimes I envy them, some of the other companies. They're like, "Man they make hundreds of millions of dollars a year selling their services. I wish I could do that."

Dan Hayden:      Yeah. It's all what you want too. If you're a really good trader ... I always said, if you're a really good and you have something that's really, really a great program, why do you have to charge people right away? Let them get into it and then bill them. If you're so good at trading, why would you even offer this because you can just stay at home, do your trading and make your money there. Why do you have to offer these services?

 That's where the suspicion comes in. I just had one in about a year, a year and a half go subscribe to them. That's when the market turned. I realized that they're not doing anything different than I was doing in selecting the verticals to trade. Their losses were like my losses on my own. It's like, "I can I lose my money on my own without having to plunk down $750 or $1,000, or whatever."

When you and I, when I applied to your program, it was perfect timing because I was down. I was hitting the chops because you never expect you to be laid off. Never in my life had I been laid off before. I'm like, "I had invested and been wise with my money all my life." I was at the point where I could say, "Well maybe I can just stay home and enjoy my family, and relax a little bit and start getting back into trading options."

 It was perfect timing because you lifted me up and got me back into trading. It's been fun. You have a very practical approach to selecting stocks to trade on. I also like your methodology of thinking. It's almost like a cycle. You could sell puts on really good stocks that you want to own and collect dividends, because I have another fund that I do that with. You own those stock and then you can trade covered calls on those. You can bring in, if you are executed and you do now own Verizon with a 5% or whatever it is dividend, and then you start selling covered calls on those so you have more income coming in. Then you're also doing your vertical spreads so you have additional income coming in.

Technically there's three ways to create an income stream and it just made a lot of sense to me.

Allen Sama:        For our listeners, I just want to let you know that Dan is part of our Passive Trading Formula program, our course. That's what he keeps mentioning, the program. That's the one that he's in.

Basically the idea behind that is I got to a point where in my own trading, where I didn't want to spend os much time watching the markets and watching my trades. You can do that in the beginning if you're just starting out with a little bit of money, you have to be a little bit more aggressive, so you have to take more risks. But eventually you get to the point where you're a little bit older or you [inaudible 00:08:47] a little bit more money, and you say, "I just want to do this in a passive way."

The myth is that if you're not as actively engaged, you won't make as much money. Dan has proven that, what would you say, Dan? In the first four months of 2019 or the first five months, your paper trading account was up about 90,000?

Dan Hayden:      Yeah, but I do have to take a little bit of that back because some of that I was called out on and it impacted my results. But I think overall it was $45,000. Clearly ...

Allen Sama:        In about five months?

Dan Hayden:      Correct. Yes.

Allen Sama:        On what type of account? Which size?

Dan Hayden:      I did a paper trade account and I automatically, I think I put in $250,000 into it.

Allen Sama:        All right, that's a really sweet gain. How long do you think you spend every day on your trades?

Dan Hayden:      It's actually changed because from the beginning of the year, I think we got started in January, I had all the time in the world. Then I just got called for a contracting position, so I am working as a consultant with a company right now. I've pulled out a little bit more. I traded a lot for January, February, March, April. May has been a little bit less. I just have to figure out what my time scan is going to be so that I have the appropriate amount of time to be trading.

Allen Sama:        Do you think that the trades that we're doing require a lot of time for you?

Dan Hayden:      No. I think in and this is something that I want to learn more of and I asked on our call last week is that I want to be able to set automatic stops, which I know you're not a big of, but I want to get into a method of basically setting stops right when I set up the trade so that if I do have to fly somewhere, I don't have to be with a computer.

 Time wise, not at all. I started with my watchlist, you'll see two watchlists on the left, I started with mine and then I put yours in as well. I like yours better. Now I'm also just scanning through companies that I know there's no premium to paid on them. I don't even go to them, I just go to the next one. It almost seems like I'm trading the same stocks over and over again. [inaudible 00:11:32] less and less time.

Allen Sama:        Yeah, that happens. You develop some favorites and you like the way they're acting, you like the news that's coming out. Some of them might be on your list. You might trade them over and over again for two, three years. Eventually stuff will change, the stock will change, it'll change is behavior. Maybe a new competitor will pop up, or new CEO or whatever. Then it'll drop from your list. You're be like, "I don't want to trade that one any more. It's not acting the same way."

That's why we focus on that watchlist and say, "These are the same companies I want to watch every month." Then you get a second feel, like a sixth sense that it's not acting properly. Let's not trade it this month. Let's just relax and watch it, and then we'll maybe look at it again next month.

Dan Hayden:      Absolutely. I hope more and more people start getting active in your site with interactions because I've learned of companies that I've never even heard of before that have very good premiums. It's been interesting picking up a stock here or a stock there that you can start to track as well.

Allen Sama:        That's why one of the reasons we have everybody put the homework inside the group itself, because that helps other people. Anytime somebody puts in a homework assignment and says, "Okay, these are the trades I've found that I really like." Other people could look at those and be like, "Whoa, that's a really good trade. I think I'm going to do that one."

Dan Hayden:      Exactly. [inaudible 00:13:03].

Allen Sama:        There was a couple that I found from somebody that put them in and I'm like, "Oh, wow. I didn't even know this one particular stock was paying that much right now." I was like, "Wow."

Dan Hayden:      Exactly. Some with very rich premiums. That's what we're all looking for.

I like it when people, when they communicate. I think people shouldn't be ashamed or nervous about asking questions because everybody is starting out at different levels so that when experienced people can support the young people, or the new people just starting out, it makes for great interaction and a great learning experience in your group.

Allen Sama:        What strategies have you decided to focus on?

Dan Hayden:      I have been doing some naked puts, some selling. Then I started with covered calls only because I have a couple of stocks that I have a lot of shares in and I said, "Okay, I want to build up some income," but I haven't focused on that too much. Most of it has been vertical spreads and selling puts.

 If you're on right now, I guess I'm a simple guy, I got to make it really easy for myself. What I'll show everybody is basically I'll go through here on the left-hand side, and I'll start with my watchlist and the charts. You'll see here that I have the three simple moving averages, the 20, 50 and 200. You can see that I ... You want to go with the market. If the market's up ...

Allen Sama:        On the screen you're showing your Thinkorswim paper trading account, right?

Dan Hayden:      Correct. Yes.

Allen Sama:        Yeah, okay.

Dan Hayden:      Like I said, I think I started with 250 and right now net liquidating would be 484. Clearly it's been pretty nice. I wish this was really money, but this has been really fun.

As you've told me is to develop the confidence to basically start cash trading at the right time, because you did, you were very pointed to me, how long did it take me to learn my trade? Because I wanted to go right in, "Okay, hey. I've been pretty successful. Can I go right into cash now?" You said, "Give it some time, get more comfortable." It's true. Hey listen, we're going to lose some money, but if we win more than we lose, we're going to be way better off.

I'll just scroll through and see which ones are either above the 20, 50 and 200, or below the 20, 50, 200. For example, ADM I'll say no because it's right in the middle and it's just not one to be traded. AGN looks like it's down, so that's something where you could actually do a call. This is Allergan and I think Allergan pays a good premium. What I do is I come right over to ...

For people who are watching this, what I'll do is I set up basically almost three screens going at once. You can do this, and I know Allen, you did this on one of your calls, but you can do this by detaching this layout right there. I detached two layouts. All this is to do is just to make it simple and quick, so that I can scroll through, select ones. Then you see down here on the bottom left and if I'm scrolling all over the place, I apologize, but I have on my scratch pad basically the numbers that I want for my verticals in order to know that I'm at the 10% level. Right away, as easy as it sounds I always like, "Okay, I got to look. Is this 10%? Is this 10%?"

As Allergen showed, it's down. I would look and say, "Okay, let me look at some calls." I'd go to a delta of typically we're working around the 10%, so I looked between seven and 14. Maybe got to the 14, which is 140. I go over to this page and look at the 140, it's /135. Okay and it says it's not available. I don't know why it wouldn't be, but maybe it's just uploading. Not available.

Let's go to the next one. I would scroll down all of these. This one looks good too because it's above the three moving averages. However, it looks like it's dipping down a little bit for AIG. Got Applied Materials.

 This is how I would scroll, as you've educated me in looking for those that are either above or the below moving averages. Altria is a good one. I'm trying to think of some of the goods ones that I like. I can go here. Broadcom, AVGO, that's one that I have traded almost every month and is a pretty good one, so let's go to it.

Allen Sama:        In terms of the credit spreads or the layup spreads, do you follow the rules as laid out in the course or have you modified them?

Dan Hayden:      No, I pretty much follow your rules. I probably have gotten a little sloppy this month because for example, I was gone this week traveling and I wasn't on top of it as much as possible. I'll travel with my iPad and leave my computer at home, and my computer basically is the best one. iPads I have trouble basically executing the trade with Thinkorswim.

Allen Sama:        Oh, it's not the same thing? I know I do it on my phone, so I use their app on my phone. I've never done it on an iPad before.

Dan Hayden:      Yeah. I can't get used to the phone app either, but either one, I'm more comfortable with the MacBook. I'm just going to bring up Broadcom to see where we are at right now. Right now it's right in the middle of these three, so I would stay away from a trade right now.

Allen Sama:        About how many trades do you put on at a time?

Dan Hayden:      It all depends. It all depends on what's telling me to trade. Right now I have, there's a put. The puts are on Altria and AT&T, two high dividend players. If I own them, I'm good. If just take the premium in, I'm good and then I'll do it again next month. But right now I have NVDIA, Intuitive Surgical, Campbell, Arcadia, Pacific and Broadcom.

 You can see here, profit and loss. These are things about setting up automatic sells when they hit a certain point.

Allen Sama:        Let's say you got about one, two, three, four, five, six, seven, eight, nine. Nine trades on.

Dan Hayden:      Yup. One, two, three, four, nine.

Allen Sama:        In addition to your covered calls.

Dan Hayden:      Covered calls, I've stopped doing those. I used to do the covered calls on these stocks right here, but I was ... The covered calls to me, I'll get into those later. With Alexion, I have 1,000 shares of that. That's the one I really wanted to stay focused in on. But I've put that on the side burner. I'm just doing the puts in the vertical spreads.

Allen Sama:        The thing is, with the different strategies, you can take and see what the market is giving you, and you can manipulate. If you're in a bull market, naked puts, they do awesome, put spreads do awesome. Covered calls, if you're not in the stock, if you don't own the stock and you just want to get out every time, then they work really well. In a sideways market, I love covered calls.

Dan Hayden:      Which right now, would you consider us being in a sideway market? We're up one day, down the next, up one day. I would think ...

Allen Sama:        We're still in a pretty good bull market in a sense where we're a 1% or 2% away from the all-time highs. I would say we're still bullish, especially if the fed does cut rates again. We have all this other news going on, all the noise that goes on in the market. But for the last, I don't know how many years, the bull market has been there because the fed had rates so low. I think that if they start cutting rates again, that's just going to signal to the market again that [inaudible 00:21:15] just take it up higher even more.

 In my opinion, yeah, it's a pretty good bull market. Yeah, you can still make money with non-directional trades, but overall I think we're ... I like this type of market where it's going higher, but it's doing it slowing. We're not like shooting, shooting up higher. Not too much volatility for our premium to be good. We can make our 10% on our spreads and not have to worry about too much movement.

Dan Hayden:      That might be help too, is to say, in a bull market, a slow rising bull market, it's best to trade the puts, covered calls. What would be the best vehicles in select markets, that might be helpful too. For me, whatever spits out as I scroll though, and I try to scroll through on Monday morning to determine what I'm purchasing for that next ... What don't we try 25 to 35 days as the best timeframe? Or a little bit longer.

For example, Allen, SPX right now, it's above the three moving averages. Technically this looks like it could be a trade. This is the vertical.

Allen Sama:        I've noticed that [inaudible 00:22:36] here, when you're looking for trades you're looking at the monthly ones. But on some of your trades that you already have on, you've done the weeklys.

Dan Hayden:      Yeah. I try to do it, I think you said the sweet spot is 30 to 40 days out, so I'll try to go 30 to 40 days out. I think those were set last week. That's typically why. Right here, I would look at this 35. If I'm wrong, you let me know. With SPX above the three moving averages, I look at the 35 and look over here on the puts. I would look at is the delta around ...

What do you like? You like deltas around 20?

Allen Sama:        It depends on how many days. I would like to get it as low as possible, but if I'm going in there about 30 days or less, then the delta increases probably about 20. If I'm at 35, I might try to get a 15. But really, we're trying to make 10%, so I'd like to get as far away from the money but still be able to have a potential 10%. The delta in that case, I use it more as a guideline, not as a hard and fast rule that this is the delta I'm going [inaudible 00:23:45].

Dan Hayden:      Just to give anybody ideas, I have it set up so you have the singles on one page, so I can automatically go to what I was looking at, which was the SPX. I'll go down and I'll look for between a 10 anda 20 delta that brings in good returns. I would go down here, let's say, to a 15 delta, 35 days out. It's somewhere around 27.20.

Then on this next page, I already have the verticals pulled up, so I can automatically look and say for the 15 deltas, 27.70, I can almost right away go to 27.20, so 27.20. I am doing 27.20, 27.25, which would be right here. I wish I could show you exactly what the bid-ask spread was, but it could be because of the bandwidth, but I'd be looking at this area. You've got plenty of open interest. It's the SPX, so you can expect that.

 I would be looking in this area between a 10 delta and a 15 delta. Then I'd automatically go over to my, this is up here, so I automatically go over to my scratch pad to make sure that whatever I am trading, I'm making 10% on that money.

Allen Sama:        That's why I think you need the computer instead of the iPad, because you have so many screens open.

Dan Hayden:      That's probably it. But as you get going, I'll minimize these screens for the verticals, and I'll minimize the screen for the singles so that I'm actually overlaying each one. Right away I can go from one to the other, to the other and say, "Yup, that's a trade." If not, then I go right back over here, click this and go to the next stock.

 If you have a big screen and you're at a desk, this is easy to do.

Allen Sama:        Yeah, [inaudible 00:25:47].

Dan Hayden:      But I'm lazy so I carry around a laptop and don't want to hook it into an office. I typically sit on my front porch, and make the trades and make my notes.

Allen Sama:        That sounds pretty sweet, man. Making money on the porch.

Dan Hayden:      I overlook one of the Finger Lakes, so you got to take advantage of that too.

Allen Sama:        Okay, so you told me that your goal was to make about a couple thousand dollars a month.

Dan Hayden:      Correct.

Allen Sama:        Do you think you've been doing this for what about six, five months now?

Dan Hayden:      Correct, yes.

Allen Sama:        Do you think you have the confidence to start going real money?

Dan Hayden:      I do. I do. I have confidence and I have confidence in the selection criteria. I asked you, I said, "This is way too simple. This doesn't make sense." You can get pushed up and above, but you use your rules to get in and get out. You can minimize the losses because in this crazy market, anything can happen. Macroeconomically anything can happen that can impact these markets quickly. We can get pulled around. I've seen in. Where I get in, it makes sense. [inaudible 00:27:04] trading below or above the three moving averages, and then all of a sudden the market goes crazy and does something opposite. I've seen it right at the beginning of this year.

That's the only thing that I have to build more confidence on, and I'm working with the Thinkorswim platform is that when I do make the trades, I am going to start setting stop orders so that if it hits a particular level of a loss, I'm out. If it hits a particular level of a gain, for example, at five cents, 10 cents, I'm just out. I move out, Thinkorswim has a pretty good commission rate so it's not costing me a lot to get out. At five cents I think it's free, and then I move on to the next trade.

 Yeah, the confidence is there. Do I get nervous that I don't want to lose money? Absolutely. But you got to expect that if you have good rules, any money that you do lose should and could be minimized. That's the one thing that I have to integrate into my trading because hey listen, I had the time to be at the computer every single day for an hour, and check on my trades. But as recently, I really haven't because I've been flying around and meeting up with these companies. That's why I want to get good with setting up automatic stops.

Allen Sama:        It's about an hour that you said, you spend about an hour looking at your trades when you can?

Dan Hayden:      Yeah. It doesn't have to be every day, but probably an hour throughout the week. Especially if there's some newsworthy events happening, you want to be on there definitely during that day. But it's probably an hour a couple of times a week. That's only, that's like managing seven trades or so, something like that. It's not a lot of trades, not a lot of time, but typical to when you pick up this laptop or computer, I get carried away and I start looking for some other good dividend playing stocks [inaudible 00:29:08], because I love the scans.

 Here's one that I did looking for dividends, high dividend plays and what I could maybe sell puts on. I'll do certain other things while I am looking at the trades that I have already open to try to create other opportunity.

Allen Sama:        [inaudible 00:29:30] you just love this stuff. You're just into it.

Dan Hayden:      I do. I do love it.

Allen Sama:        If you didn't get sidetracked, it would be so easy. Just log in, check it out and I'm out.

Dan Hayden:      Absolutely. People go on Facebook and all this stuff. It's great to keep up with that at stuff, but I enjoy looking at the stocks, the stock market and just trying to pull a little bit from the market into my accounts.

Allen Sama:        Yup, yup, yup. Okay, you've been ... All right, what else? I had a couple questions for you in my mind. They just slipped.

Dan Hayden:      See because you're probably looking at your screens right now.

Allen Sama:        No, I'm looking at yours. I'm at home. I didn't even make it to the office today, so I'm just looking at the laptop. All I see is your stuff.

  Wait it's funny though, you don't usually Analyze tab. I use that one almost exclusively.

Dan Hayden:      Yeah. Before I got with your service, I used to use it all the time because I used to do these butterflies, and things that I picked up from all of these services that were trying to get your money. So I did use this a lot to analyze broken wing butterflies, and we used to do iron condors with butterflies in the middle to bring the iron condor up higher.

I'm not the smartest guy at this, but I was learning more and more about this as I started to throw on another trade, either to save things or to increase my profit. Maybe it's something I should be using more. Do you use it just to see about your profitability, and when it does break even and start losing?

Allen Sama:        I like putting the lines on the chart, but you know how it says they are add simulated trades?

Dan Hayden:      Yup.

Allen Sama:        I'll just look at that one and that pops up the option chain as well. I'll go down to a specific delta. You know how you were looking at should I do this one, or should I do this spread, or should I do this spread?

Dan Hayden:      Yup.

Allen Sama:        Then I'll just pop it up, I'll just pick one, do it as a vertical and then it'll have the numbers down at the bottom. So it'll be like, "Okay, so the 100, 105, he's giving me 50 cents and then the 105, 110 is giving me 25 cents." I can have two or three perspective trades on the screen. Then I'll just leave it there.

Sometimes I'll do a trade and there is certain stocks, like I know IBM. It doesn't have a lot of premium, but it's a very slow moving stock. I like to trade it, but you have to get in really early. Sometimes you have to get in 40 days or 45 days to be able to get decent premium amount.

Dan Hayden:      [inaudible 00:32:04] decent premium?

Allen Sama:        Yeah, in order to get a decent return.

 I'll go and I'll check it, and sometimes I'll leave it there. Or some other stock that maybe on the chart looks really good, but it's gone up too much or gone down too much. Right now, I'll put in a trade. I'm like, "Oh man, I really want to do this trade but it's only giving me 9%. Oh, gee. Okay." I'll just leave it there in the analyze tab, and then maybe two or three days later or a week from now, I'll come back and I'll look at it again when I'm going through my list, and I'll be like, "Oh okay, this one now, it's giving me 10 and a half percent. Okay, I can do it," because it pulled back or it moved around a little bit.

It just stays there. Then if it doesn't work out, then you could just exit out and delete it, so it's not a big deal.

Dan Hayden:      Now is that in our trading videos? Do you have a session on that?

Allen Sama:        No, I don't think so. That's just something I picked up myself.

Dan Hayden:      Yeah, that'd be cool to go in your brain and see how you use that function with the add simulator trades, because when I went into analyze, I would always go to the risk profile. It's interesting how you use the add simulator trade.

Allen Sama:        I like the risk profile too, just to tell me what is exactly the probability and then I like to put it on the chart. I like to put my break-even line on the chart and just see it. I know your fooling yourself because you think, "Oh, that's so far away. That's never going to make it." You're fooling yourself, but I just like the way that looked.

Dan Hayden:      No, that would be cool for one of your programs just to say something that, "This is how I approach this in monitoring whether I should get into a trade or not get into a trade."

Allen Sama:        Yeah, so we can do that. We'll do that. Let's do that on the next coaching call. I'll go in ahead and go through the screen and we'll do several of those.

One thing I also wanted to mention, you got your scratch pad. That's really cool. But for me, to keep it simple, if I'm doing a five point spread, I'm looking for 50 cents. If I'm doing a two and a half point spread, I'm looking for 25 cents.

Dan Hayden:      Exactly. That's typicalLy how it [inaudible 00:34:14], $1 spread, you're looking at a buck.

Allen Sama:        That's a little bit more than 10%, it's like 11% if you get exactly that. You can say, "Okay, I can go down a penny or two. I'm okay with that."

Dan Hayden:      Yup. You got some flexibility. Yeah.

 You know what else I noticed too, Allen, is when I go to set up a trade and it's a good trade, but it just misses the mark for example if it's a dollar spread and it comes in at 0.08 cents, a lot of times I'll put in 0.09 and leave for the day, and it hits.

Throughout the day, something happens. Maybe the stock changes a little, the prices changes a little bit, but I'm like, "I'm close enough where I'm basically at 10%, but I'm going to set the 10% and walk away." I've had more and more stocks, it fills while you're never there with a good premium.

Allen Sama:        That's a good tip.

Dan Hayden:      Yeah, that's something else that I've done a couple of times.

 Hey, this is the time that you experiment a little bit. You don't want to nick your percentages, but you also don't want to miss out on a good trade because there's some weeks where it's tough to find a good trade. Even the consistent one's just not offering a premium for some reason.

Allen Sama:        Yeah. It goes through different ups and cycles. When you have earnings, it's harder to find a good trade. Sometimes you have to go to ETFs or something. But what you just mentioned, putting in a trade like, "I really love it and it's really close. Let me try it." It's not going to hurt you. You put that on and sometimes because of the way the option premiums are priced, maybe a large order comes in, or the stock moves and down a little bit, and the premium just move more than they should sometimes and you get filled on those.

Dan Hayden:      Yeah, that's been interesting.

You made it really practical, how to approach it. Also, I will say that there's one gentleman who put on the site Excel spreadsheets, which I downloaded and they're awesome. He has a really great profitability chart, so you can put the numbers in and it'll calculate it out automatically. I can't remember the name of the gentleman that did it, but really nice addition in your site.

Allen Sama:        If somebody was thinking about joining the course, the Passive Trading course, what would you say to them?

Dan Hayden:      I would say people can hear what they want to hear, but there's so much pollution out there from these other services. You teach a person to fish so he can feed for a lifetime, and that's what I wanted. I don't want somebody to basically take the steering wheel and drive the car. I want you to teach me how to drive the car so that I don't have to rely on other people.

I would absolutely recommend it. There's as much risk as you want in it, but you control your own destiny. That's the best place to be in because I don't want to send my $1,000 to this service and they're the ones picking out the trades, when in all reality you simplified it to such a fashion that you can join this service, but then you can learn it and move on if you want.

 Hopefully they stay with you and they believe in you because I believe in you right now. You've simplified something that quite honestly as you first join, can be way overwhelming. But you made it simple, you've allowed for three different ways to have extra streams of income, and you teach us to do it. That's the best thing that you can ask for. Yes, I would definitely recommend people to join.

Allen Sama:        That's funny too because you said you've studied iron condors, you've studied broken wing butterflies, which is a pretty advanced trade. But you're like, "I want to go back to this stuff that actually keeps working. I'm not going to go so advanced. I want to try to make it simple so that it doesn't take a lot of time, and you don't ave to monitor it so much and is just a lot less stressful," I think.

Dan Hayden:      It absolutely is because the more things you stop placing on, the more you do have to watch the monitor, and the more you have to react and do other things to fix that broken wing butterfly.

The only reason, Allen, I got into broken wing butterflies is because I paid a service to basically teach me how to do broken wing butterflies. It's probably a really good service, but quite frankly, it's way too complicated. It's not necessary. A vertical spread, if you get good at it, it can be boring, over and over, and over again. But if it's boring and your account is growing, that's a good thing.

Allen Sama:        Yeah. That's how we designed it. We want it to be boring, we want it to be passive so that we can actually go and ...

Dan Hayden:      Enjoy life.

Allen Sama:        ... spend time doing what we want to do. Yeah. There are people that want to be on the screen all day checking their stock, and checking their trades and what not. There's definitely a place for that.

 In the beginning, I tried it that way. To me, the more complicated it got, the more I realized that maybe I'm not the smartest guy in the room, but there is so many extra things that I can miss. I'm like, "I'm just a normal person. This is getting too complicated for me. Let's just tone it down. Let's take something that works, I know it works."

What I love with you is you've put in the time, you've put on the trades. How many trades have you put on since you started paper trading? Just ballpark. 100? 200? 500?

Dan Hayden:      No. It's not that many. It's probably a little over 100.

Allen Sama:        Okay, so 100 over five months. So 20 a month, that's decent. You were practicing, you're gaining confidence, you're learning how you like to set it up with the three screens, and how to monitor it, and set up your charts and all that stuff. That takes a little bit of time, but now I think that you're at the point where, "Hey, I turned 250 into 484."

Dan Hayden:      Right. Right

Allen Sama:        That's [inaudible 00:40:29] double. That's really good. In five months, holy cow.

Now it's time for you to now slowly, slowly transition, I think, into the real money. Maybe you pick one ... Or maybe you start with a small amount of your capital, whatever amount. You start with a little bit. Maybe let's do three spreads and two covered calls a month, or two puts and three spreads, or something like that.

Dan Hayden:      Exactly.

Allen Sama:        Let it out.

Dan Hayden:      With a lot less contracts.

Allen Sama:        Oh yeah. Yeah, of course. Yeah, [inaudible 00:41:04].

Dan Hayden:      Here I'll do 10 contracts every single time. There, real money, I'll probably do between one and five contracts.

Allen Sama:        Whatever the amount you have to work with, [inaudible 00:41:18]. If you have 10,000 to work with, okay, I'll do $1,000 in each one or something like that.

Dan Hayden:      Each one, exactly. Proper money management. Yeah, [inaudible 00:41:28].

Allen Sama:        The contracts doesn't really matter, but the fact that you've almost doubled it in five months means if you were working with a $10,000 account, you would have done the same trades. You would have been almost the same thing. The numbers, you just add zeros at the end for more money.

That's what I love too that you can start out small, do the same exact trade. You don't need $8,000 to do a trade. [inaudible 00:41:48] trade, just add zeros to it.

Dan Hayden:      Yup. I have a Roth account and I keep saying, "I want to grow that Roth account." I think what I've decided is that with the Roth account, I'm going to sell puts. Then if it's executed and I own those shares, I'll sell covered calls really close to the money. Basically just keep transferring the stock. Take big premium by selling very close to the money. If it hits, okay, I'm back into cash. Now I'll sell that put again really close to the money, take a good premium. If it hits, I own the stock and now I'll sell covered calls. I just want to grow that Roth IRA money so that there's a significant amount there that's all tax free.

 I've segmented it there, and then start with my cash account in selling verticals. Verticals is what ... That's the primary breadwinner I should say. Then I have an account that has a company with a significant amount of shares, and I'm just going to sell covered calls on that one. It's like three different accounts with three different principles.

Allen Sama:        The company that you just spoke about, I believe you told us what it was earlier. Why are you in that one? I'm just curious.

Dan Hayden:      I worked for them, so I accumulated shares over the years.

Allen Sama:        Okay, that makes sense. Are you allowed to sell those if you had to?

Dan Hayden:      Yeah, because I don't work for them any longer.

Allen Sama:        I see. Okay, cool.

Dan Hayden:      Part of me thinks about selling them, part to them thinks about just taking an income each months. It's a volatile stock, that's the problem. It can be tough trading, but if you take chunks and you sell covered calls at different levels, like one close to the money where I might lose this, but okay, so I just cashed in on 250 shares, I sell a little bit further out so that I still own those shares, and then 250 I sell a little higher. I don't bring as much premium in, but I know I'm keeping the shares.

Allen Sama:        That's the thing if you work for a company, you have a little bit of a inside track to see how the company is doing. Are they hiring more people? Are they letting people off? If they're letting a lot of people off, okay there's something going on. If they're hiring more people, if they're expanding, if they're spending more money on marketing. You hear all that news that as a trader ourselves, we might not be privy to all of that unless we really dig into the information.

Dan Hayden:      Correct.

Allen Sama:        To be able to trade a stock that you own because you work there, I think that's a big leg up.

Dan Hayden:      Yeah.

Allen Sama:        Even now I'm sure you still have friends and people that work there that you know. You can stay on top of that information.

Dan Hayden:      Yeah, in some instances. But then again, it goes to show that the market will do what the market wants to do because I've been around where we've had awesome quarters and we got hit by the market. We lose. Nothing's a sure thing. I remember those days where we'd have a blowout quarter and we were down 10 points. It made no sense at all. Yeah, it's good to be affiliated with it, but it's also they can throw you curve balls and make it very frustrating too.

[inaudible 00:45:17] go in thinking about vertical spreads straight up and then whatever else you start accumulating through your puts, sell covered calls on, have a method to start creating your stream of income in three different ways. The way you trained us, I think is a beautiful way to begin growing your stock accounts and making money passively.

Allen Sama:        Yeah, and thank you for saying that. One of my goals is the stocks that I buy, I want to get them for free. I want to get so much money back from them that I didn't pay for them. I got my money back. Then you're playing with the house money, and whatever happens happens. I'm okay because I got my money back.

Dan Hayden:      Yeah, that's exactly it. That's why I think young people should be doing this as quickly as possible because they have the ability to do that, and doing it over and over again, taking in the premium which reduces the cost of the stock. Then you're saying, "Hey, it doesn't really matter because I bought this at this, I've taken this much in, and basically I own the stock for free."

Allen Sama:        Then it doesn't matter if it goes down, it goes up. You're getting a dividend, you're like, "Okay, I'm happy."

Dan Hayden:      Exactly. Yeah. Yup, absolutely. You still have the shares, so do whatever you want with the shares.

Allen Sama:        What would you say is the biggest thing that led to your success?

Dan Hayden:      Well success is ...

Allen Sama:        Well I know you're being humble but seriously, but seriously, to double [inaudible 00:46:43], to double your money in five months, I've never done that. You're doing something different, you're doing something special. What do you think caused it?

Dan Hayden:      For me, it was just finding out ... I needed a method to ... I just wanted a recipe. Give me something that is easy, that I can select stocks that makes sense, and then doing it.

 It was basically providing the methodology, which I have because of these three simple moving averages, and then executing. That's it. It's not rocket science. This is paper traded, so you might get a little bit over ambitious with one trade over the other because it's not your money, but just to me, the most important thing was developing that method, having confidence in knowing if it's above or below that three moving averages, and the stock's trading up, and so is the marketplace trading up, it's a good sign that this is going to be a good stock to trade.

Now let's look at what the returns can be, let's look at the verticals, let's look at the individuals to find the right delta. Having that method to basically weed out what you should be trading.

Allen Sama:        Yeah, a lot of people, when they first hear about it they're like, "It can't be this easy." Then you said the same thing.

Dan Hayden:      I did. Yup, I wrote to you and I said, "There's got to be something else I have to throw in."

 You see my screen, this is from the old days where I'd be looking at volatility, standard deviations, [inaudible 00:48:19]. I tried to come up with the best technical analysis and seeing if the stock anticipated to go up, down, what. You don't need this. This was the olden days where I had all this stuff at the bottom and I've just never turned it off. You could take out all that noise, and basically just look at the charts and have confidence in what you do. You're going to have curveballs thrown at you every so often, but be ready for those curve balls, and get out with minimum losses and you'll come out way ahead.

Allen Sama:        I think that's where asset allocation comes into play, especially with the different strategies. If you're only doing spreads and you're only doing put spreads because the market's going up, but then it drops, you're behind an 8-ball, you're in trouble.

But if you're doing a little bit in the puts, a little bit in the calls, a little bit in the spreads, a little bit in something else, then you can weather the storm. It's not one trade will be doing good, the other trade will be not so good.

The way we talk about it is, every month has the potential possibility of being a very good month. If you have a good month, and a good month, and a good month, and a good month, but then you have a bad month, which is going to happen, if you do it right then the good months will overcome the bad months.

Dan Hayden:      Absolutely. Yup, yup.

Allen Sama:        In the long-run, if you look at it a year, two years, three years down the road, you'll be like, "Okay, I'm up a lot. This really [inaudible 00:49:50]."

Dan Hayden:      Exactly. [inaudible 00:49:51].

Allen Sama:        Some people look at it and say, "I tried it for a month and I lost money on two of my six trades, so this sucks." I was like, "Well, that's the way it works."

Dan Hayden:      Exactly. Even the professionals lose. You just have to know how to minimize those losses, and that's the biggest thing. That's something that I have to do. You can see some of these losses that I have to be more proactive in setting up my losses when I set up my trades. The minute that trade hits, I got to go in and say, "Okay, I got to get out when it's profit of this or a loss of that." That's all in your ... I don't have my notes with me, but it's all in your notes for these losses.

 I brought up this screen here that shows my puts. I have Altria, and I'm okay. I'm okay if own this. My fear when I put a put on, like you just talked about earlier, is suppose something happens macroeconomically between they decide not to lower rates, Iran does something, China does something and it drops heavy like Altria goes below that 47.50 put. Well now I just bought it at 47.50, but it's at 45. That's a hurt.

The only thing you can do to get away from that because you're fully exposed when you do this, is just to start selling calls close to the money to say, "I either get out of the Altria and take a minimal loss, or I'm good because I believe it's going to be coming back, and plus I'm making my dividends."

                                We talked about fear, how as a trader, you're fearful of losing money. Well I'm fearful of having to buy Altria if the market drops hard, or AT&T, the market drops hards, and I'm buying it higher than the market's actually at. That's a fear that I have. But if you stay on the sidelines, you don't do it, you don't get your dividends, you don't get the opportunity to buy these stocks at a discounted rate.

Allen Sama:        That's why we do the paper trading too, because actually do it for a few months and you'll get a better idea of how many times did I have to buy the stock? I did it five times, I never even came close. Maybe this fear is a little bit unwarranted. So maybe if I do it with real money, and I do it for a year, two years, three years, maybe I'll get the stock once or twice.

                                That's why with the paper trading, I'll advise everybody like, "Get in trouble. Put some trades on that you wouldn't to get in trouble with it, and so that you can see, how do I navigate my way out of trouble?"

Dan Hayden:      How does it respond, exactly. Yup, yup.

Allen Sama:        With Altria and AT&T, okay, maybe I'll sell at the money put.

Dan Hayden:      Yup, just to see what happens.

Allen Sama:        Just to see, okay, I have to buy the put at this price. What do I do now? Oh, I bought this stock. Okay, how do I get out of that?

Dan Hayden:      The worst time to trade is when you're in fear, you have something going against you and you're nervous. That's the worst time to place that reactive trade.

Allen Sama:        Exactly, exactly. A lot of this stuff is we're dealing with stocks as well, so if you own the stock, there's a great chance the thing will rally in the next 10 years. Anyway, if you're only trading options then you lose, and the month expires, then that's it. That loss is yours, you got to eat it. You got to make it up next month, the next month. But with the stock, you can always come back.

                                Is there anything else you want to share?

Dan Hayden:      No, I greatly appreciate what you're doing in helping others. I really have learned a lot from you. I do, I do I have the confidence again in getting into option trading and having a good plan for doing that option trading. So thank you.

Allen Sama:        Great, great. Yeah, I'm excited to see how you take it and how far you go from here because you got the foundations down, you got some basics, and now it's time to start doing it.

Dan Hayden:      Yeah, well it's funny too because now that I'm working with this company in doing consulting with them, I have income coming in so it's like, "Okay, well I don't have to bring in income with the option trading as much." That psyche comes into play where, "Okay, when I wasn't working I said Okay, I got to make sure that start bringing in X number of dollars a month." That's why I'm not, I shouldn't say as serious because I do look at the charts and all that stuff. I track it probably a couple times a week, but in January, February, March, when I wasn't working for any other company, I was looking at it, looking at opportunities every day, and I was very, very religious about it.

                                It is that psyche, but all I can recommend to everybody is even if you have a full-time job just flat out, 15 minutes, 20 minutes, an hour if you can just to monitor the trades that you have on, but also to look at new opportunities elsewhere. But get dedicated almost like I have a system now by scanning, by reviewing the chart, by reviewing the delta and by reviewing the return. I have a method, and that way have a method each night, each day to give yourself a couple of minutes to look at the trades and to scan so that it becomes second nature. That's the best thing to do.

Allen Sama:        Yeah, definitely. Like you said with the mindset, when you don't have any income coming in and you have to make your nut, maybe $5,000, $10,000 a month, that's when the stress really this you from the trading. It's like, "Oh my God, this trade has to work. It has to work." That's when you mess up.

                                When you have even a little bit of income coming in and you're not totally dependent on your trades, then it allows you to actually trade better.

Dan Hayden:      That's exactly right.

Allen Sama:        That's very helpful especially when people are getting started.

                                I've seen some people where they jump the gun too fast and they, "I want to be a full-time trader," and they jump to fast into it, and they're like, "I have to make money every month." We had one student who did that and the stress just got to him. He placed trades that he shouldn't have and then he lost. On a mental standpoint it just sends you for a tailspin.

Dan Hayden:      Did he need that money or was this supplementing his income?

Allen Sama:        No, he had quit his job to trade full-time. He over traded I believe, and then he lost some money. Now you have to cut back on your lifestyle when that happens. It's not something that ... He has the skills. He'll be back, I'm sure he'll be back. But it hurts in your mind. You feel really down about it.

                                That's why I love it that you're starting and you're saying, "Hey, my goal is to make $2,000 a month." Well okay, if I can make 3%, 5% a month doing something pretty safe, $2,000 a month, I don't need to have a big ton of money. I can put little bit of money, make my goal, and then once you get to that goal it's $2,000 and you say, "Okay, no my goal is 3,000. Now my goal is 4,000."

                                Then eventually you can actually go and say, "All right. I don't need the consulting anymore. I'll just do this." If you love it, you go do the consulting too. It's up to you, your choice.

Dan Hayden:      This isn't something where your going to make a ton of money tomorrow. It's not the day trading, it's not that heavy, it's not that risky type of a trade. This is something where you get good at it and you bringing in a little bit each month. Then like you just said, you bring a little bit each month, you get good at what you're doing, and then you get the confidence to say, "Okay, I'm going to now trade two contracts. I'm going to trade three contracts."

                                Because if you quit your job and you're getting stressed out because you're losing money, then you must be risking too much because you shouldn't be risking too much. You should have proper money management. This is my own opinion, but you shouldn't have that stress, just like you shouldn't be like, "Hey, I am so good at this because I've had all these ... "

                                I don't consider myself good, I consider myself that I've got a new training system so I consider myself a little bit more confident. But I'm not good in any means. But you shouldn't take chances. This isn't gambling. This is proper investing and trying to create a passive income. That's all it is, is a passive income.

Allen Sama:        As you venture more into the real money world, you know that I'm always here. You can email me, we could do the coaching calls, or the Facebook group, or the community, whatever. You know that there is some support there as well.

Dan Hayden:      Absolutely. Yeah, no. You've gotten back to me, you've slapped me on the hand a couple times. Even going onto your site, I wish there was a little bit more interaction between the members because that's where I learned and I picked up that Excel spreadsheet from your one member. I love reading it because it's like, "Okay, I want to learn more. I always want to keep learning."

                                But yeah, I felt, "Hey, I've got these trades. I've really done pretty well. Should I start doing cash trades now?" You said, "How long did it take you to learn your skill? Your lifelong skill?" We said, "30 years." You say, "Well, it's going to take you a little bit longer to get comfortable with it with the practice trading."

Allen Sama:        Yeah, [inaudible 00:59:35].

Dan Hayden:      Yeah, yeah. The support's there, and you do get right back to it relatively quickly. I think it's on our side now where we have to start interacting a little bit more, coming up with, "Hey, this was successful to me, this is what I was looking for, this is what I got, this didn't work out for me, what should I have done differently?" Things like that.

Allen Sama:        We're working on that. Right now, the course itself, we've only marketed it to our own list, so we haven't really gone to the public with it. We haven't let a lot of people in. We only open it up once a month for a few people, a handful of people, and then we shut it down again because I'm working with people, and we're working it out. But once we do expand it a little bit more, I'm working on a couple projects coming up that we'll definitely open up the course and we'll have a lot more people in. Once we do, then that interaction will grow.

                                Currently I'm working ... Right now my major project is I'm working on a book called Passive Trading. Once we get that book into people's hands, they'll see like, "Hey. Wow, this is awesome. I never knew I could do this." [inaudible 01:00:36] in there from students who are doing really, really well. I think that will help as well.

Dan Hayden:      That's awesome.

Allen Sama:        When we get more people in the group then yeah, it'll definitely pick up. But I appreciate you posting in there and doing stuff. Even on the call, I appreciate you coming on a call, and sharing all your knowledge and experience.

Dan Hayden:      Like I said, knowledge and success, it's ... These net liquidating trades, and overall profit or loss, I can't figure them all out because there's other trades that came into play with it as well. I'm probably 10 grand a month or something like that in the profit. That's pretty good since I started.

Allen Sama:        Yeah. You started five months ago, so yeah, that's pretty good.

Dan Hayden:      It's exceeded what my initial goals were. If I can now taper it down a little bit with my cash because I'm not going to be as aggressive and all that stuff, especially to start out with, but yeah, it's been a lot of fun to learn and that's the best thing about it is that I'm not having somebody else have to tell me what to do. I'm learning it and I'm appreciative of that. Thank you.

Allen Sama:        Yeah, man. You could do this for the rest of your life as long as we get older and we slow down a little bit, and our arms don't ... When your back hurts and this hurts, and that hurts, working a job or doing all that traveling might not be an option. But sitting on your porch, like you said, with your laptop, yeah, you'll be able to do that for a while.

Dan Hayden:      Absolutely. If I can get good at this and then teach my kids how to do it ...

Allen Sama:        Oh, game changer.

Dan Hayden:      A game changer is right.

Allen Sama:        That's one of the things I want to do as well.

Dan Hayden:      [inaudible 01:02:14] because you're taking something that's complicating, making it simple, and teaching others to do that. That's great. Good for you.

Allen Sama:        Because this stuff has been around for a long time. But with the advent of the internet, and the brokers, and now everything's at our fingers. Anybody can do this from anywhere around the world, so it's really opened it up for us as individual investors. I think for our kids, it's just going to get even better.

                                We're limited to a little bit of the U.S. stock system. I think when our kids are older or whatever, they'll be trading around the world, they'll be trading on the moon. It's going to be crazy.

Dan Hayden:      It's true. No, it's true. Anything's possible. It's amazing because if you're ... The times that I've gotten into trouble is the times that I haven't got out of trades because, "Oh, it's going to turn around. It certainly can't keep going." It's going down two or three days in a row. You think it's going to turn around, but if you play by the rules, you have your rules, that's where you don't get into trouble and you're out.

                                You said, "Hey, I'll take this little hit. I've made a little loss, but I'll make it back." Or, "I made it on the front side." Almost like your puts. You've owned these stocks and you've gotten so much premium that you own it for free. How much damage can be done?

                                There's no need to take risks, to take chances. If you follow the rules, when to get in, when to get out, it's all good. You're going to have minimal losses and maximum gains.

Allen Sama:        Mm-hmm (affirmative). Yup. You just play it month by month, year after year. The returns, they take care of themselves pretty much.

Dan Hayden:      Yup, and you get so bored that you just say, "Well, here's Monday again. I got to go make some money."

Allen Sama:        Well that's the biggest thing. That's one of the biggest risks is that you get bored and then you don't pay attention. I've noticed that when I first started out. I'll put on my trades and I'd be like, "Uh, nothing's happening. All right." Then, "Oh, nothing's happening." Then I'll just forget to check them, and then, "Oh, something did happen and I didn't ... Ah, don't worry about it. It'll be fine." That's when you get in trouble, when you get too bored.

Dan Hayden:      That's where I am right now because as I'm traveling with this other consulting, you're bored because, "Well, I've made this much money. If they go wrong, I'll just set up new trades because it's paper money." But I got to get more disciplined in my paper exiting so that ... To me, that's the last part of my training right now, is just setting up the trades as I enter the trades to get out.

Allen Sama:        Well you have Thinkorswim, so they have something called OCO orders.

Dan Hayden:      Correct, one cancels the other.

Allen Sama:        Yeah, most brokers have something like that. If you call them up and I'm sure they'll walk you through how to set it up or they might even have the videos on their website.

Dan Hayden:      They do have videos. Yeah, they do have videos.

Allen Sama:        They show you how to do that. If that's what you're looking for, there is a way to do it.

                                Or if you want, you can just have them alert you on your phone.

Dan Hayden:      Yes, you talked about that last week, which is awesome. You can have them text or ...

Allen Sama:        There's ways to run it if you want to find it that way. Then it's totally automatic. Put the trade on and then just put the orders in, "Okay, I'm done. I don't have to do anything at all."

Dan Hayden:      Yeah. Yeah. I lost, but I only lost a couple hundred dollars. Yeah I gained and I made $500, whatever it is. Yeah, that to me, that's relaxation because you don't have to, in that heat of the moment when, "Oh my gosh, it really turned against me. Now I'm down $300. What do I do?" That's the wrong time to be making a decision. Yeah, if the decisions can be already made for me, all the better.

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For more information on the program Dan is part of and how you can join go to PassiveTrading.com

And also visit us at OptionGenius.com

Jun 30 2019

1hr 6mins

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Getting Started As An Options Trader With Craig Davis - 48

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In this episode we talk with a newer options trader who wants to make trading options his full time gig. So let's dive into his questions:

For more information on the program discussed in this episode, The Iron Condor Mastery, Click HERE

Craig Davis: So in terms of becoming options trader, being a specialist, what's the top three, top five things I should be looking to do, be, read, think about, think about, and words I'm supposed to have, things like that?

Allen: Okay. The top five or three things that you need to know to be a full-time trader. Obviously, you need to learn. There are many different ways to learn, right? There are many different coaches out there, there are different books out there. You can go, I know in the US we have the public libraries, and you can get any introduction to trading book, and they'll have lots of different strategies in there, they'll teach you everything. But I think it comes down to, so let's say...

Okay, so if I was going to be a trader, so I'm starting over, I'm working my job, I think in the beginning I would try to be more realistic and say, you know, "I need to set my goal, whatever my goal is." I need to, whatever my monthly expenses are, it's 5000 pound a month, or 10,000, whatever your expenses are. So, that's the central goal. And then I think you have to get into the psychology aspect of it first.

Craig Davis: Yeah, okay.

Allen: Where you have to figure out, okay, why? Why is this so important to me? What's going to happen if I don't achieve this goal?

Craig Davis: Okay, yeah.

Allen: Because I think you really need to dig down and make a list of all the negative things, and all of the horrible things that will happen. You know, I'm going to be working until I'm 70 years old, my kids are not going to be able to go to the right college and university, and all these different things, to make it like a mandatory thing in your life, that you have to achieve this goal no matter what happens.

The reason I say that is because a lot of people, they have, "Yeah, yeah, I want to make more money, I want to make more money." But then, while they're on the road, the road has bumps. And so sometimes they go over a bump and say, "Oh, that was too bumpy. I'm going to get off of this road. I don't want to do this anymore." Or they pause, or they stop. They pull over to the side, and they say, "Oh, I'll get back to that after my kid graduates from school, or I'll get back to that after this happens. Let me do this project at work first." They lose track, and then they never come back.

Craig Davis: Okay, okay.

Allen: So, that's a big problem. So, the mental aspect is there. And then the second thing, I think once we have that, then really, you know, you need to look over your entire lifestyle and say, "Okay, I obviously... You need money to trade." There's no other ways about that. So, we need to have, and build up our account as much as possible, so that we have some money to trade.

Craig Davis: Yeah.

Allen: That way you're reducing your expenses as much as possible, paying down your debt, so you're not paying extra fees, and interest, and all that stuff. And then, putting that money away and saving it. Once you have that done, let's say you have the mental aspect done, you have some money to trade, then I think you do some research and you say, "Okay, there are all these different strategies, which one do I think gives me the best chance for success?" And for every single person, it's different. There are people who tell me that, "I think what you're doing, where you're selling options, that's way too boring for me. I want to be a day trader, and I want to get rich in three days." Then, you try that path, right?

Craig Davis: Okay.

Allen: There are people that are very aggressive, there are people that are very conservative, and they say, "Oh, I don't want to take very much risk." Well, okay, then put your money in the index fund, or put your money in a bond fund, and just buy bonds, and make, whatever, two, three percent the bond is paying you, and you live off of that. There are some people that, I know one guy in Canada, he has a company where he teaches people how to do dividend investing.

Craig Davis: Oh, okay.

Allen: By the right shares, and they'll give you four or five percent a year in dividends.

Craig Davis: Okay, fair enough.

Allen: So if that's your thing, that's your thing, that's all you do, and that's all you do. You don't need to worry about it. I found that, for me, I found something that I don't want to only make four or five percent. I want to make, per year, at least 20 percent. And then, I want to do it in a way that made sense to me. For me, I'm a bit of a lazy person, honestly. I don't want to put a lot of time [crosstalk 00:04:31]-

Craig Davis: I think you're being over modest.

Allen: No, really. If you talk to my wife, she would definitely agree with me.

Craig Davis: Well, so you do some work somewhere, so there's some work there somewhere.

Allen: We do a little bit of work here and there in the office. But in terms of the trading, it's not that much. In the beginning, I wanted to find out what I wanted to do, so I did a lot of trades in the beginning. I did a lot of what's called the virtual trading, where you get a free account, and you just do all the different strategies, all the different trades, see which one works for you. I did a lot of back testing.

Craig Davis: Yeah.

Allen: There's software out there that lets you basically go back in time, and you put on a strategy, and then you just go through day by day by day how the strategy worked. If you need to adjust the trade, you can, if you need to change your strategy, you can. So, that was very, very beneficial, because that took a lot of time... If you do virtual trading, like paper trading, or you use real money and you do...

Let's say I want to do a butterfly spread. You come up with your own criteria and you say, "I want to try this new strategy that I've created. I'm going to do this, and this, and this, and this." To actually do it in real time would take you 30, 35 days, and you only get to do one of them.

Craig Davis: Right.

Allen: If you do the back testing, you go back to, let's say, 2000, January 1st, 2000, and you put on your trade. Within like three hours, you can do 10 hours, or 10 years worth of trades.

Craig Davis: Right [crosstalk 00:06:07].

Allen: So it's a big, big chance where you don't spend that much time on it. And you get the learning much faster.

Craig Davis: Right, I see. Yeah. Okay, yeah.

Allen: In the beginning I would find, I would say, "Okay, I'm going to find..." I wanted to find one strategy. Just one trade I could just do it, I don't have to do anything else, I don't have to worry about anything else. This is the only thing I wanted. I just wanted to find one thing that would work. I tried different things. I tried butterflies on McDonald's, butterflies on Walmart, I tried iron condors on certain stocks, iron condors on indexes, credit spreads, double diagonals, cover calls. I tried several different strategies. They all have their benefits, and they all have their negatives.

Craig Davis: Okay, yeah.

Allen: I do think that you can take any one strategy and just work with it, and learn it, and do really, really well with it. So if you find one strategy speaks to you, then focus on that one. Do your virtual trading, and if you can afford a back testing software, get the software, and just within a weekend, you'll have done dozens of trades. You'll have a leg up on everybody else that's doing this. I think that's a secret that people don't really use as much.

Craig Davis: Have you got like two or three back testing softwares that are for doing research?

Allen: So, the one I use most is called Option Net Explorer.

Craig Davis: Okay, Option Net Explorer, yeah.

Allen: I think that one costs... I don't know how much it costs now. Let me see. They have a 30 day trial, so you can try it for 30 days. After that, I think it's... Actually, the 30 day trial is 10 pounds.

Craig Davis: Okay.

Allen: And then for a year, it's 500 pounds.

Craig Davis: Wow.

Allen: You're in the UK, right?

Craig Davis: Yeah.

Allen: So yeah, so it's 500 pounds. So it's a little pricey, you know, maybe you don't need it for a month, or you don't need it for the whole year, but [crosstalk 00:08:16]... Yeah, so it's 10 pounds for the month, so you try it out. And if you like and you want to keep doing it, you can do, they have a three month plan and then they have a 12 month plan.

Craig Davis: Yeah, I'll look at that three month. Okay, three-month and 12 months, okay.

Allen: I mean, you look at everything and you say, "Okay, these are the different things that I want to test. Before you open the account, or before you do the trial, come up with your rules. Like, "Okay, I'm going to do this strategy, and this is my rule, this is what I'm going to put the trade on, this is how I know I'm going to be in trouble." You know, so you have a basic whole trading plan. And then you go and you test that, and you try it. You say, "Okay, this didn't work. Okay, how can I fix it? What can I do differently?" Then you go back and you try it again, and try it again, and try it again until you come up with something that works for you. We have different trading plans that are [crosstalk 00:09:07].

Craig Davis: I'm looking to specialize in the Iron Condor one.

Allen: Okay.

Craig Davis: Because I've seen some things, and trades in the range, and all these adjustments and all that seems like it's a good plan. And then I seen on your program, you have the lazy day trading, or something like that. That incorporates some Iron Condor. So, maybe I am heading towards the iron Condor thing to focus on and try and specialize in.

Allen: Yeah. So we do, we have that course. It teaches everything of a tizzy about the Condor, how it works, how do you do it. It gives the different trading plans that you can use based on if you want to be aggressive or more conservative, whatnot. So, if that's something that you want to focus on, then just go 100 percent and do that, and see how it goes. Do the trial, and test all the different trading plans, see if you can find some other trading plans online.

Craig Davis: Okay.

Allen: I know the ones that we've put into the course, we've tested them, we've done them with real money, so we know that they work. So the question is really, "Okay, so here's the plan. Allen says it works. Now let me go back in time and let me try it, and let me see how I do."

Craig Davis: I like that bit, yeah.

Allen: And let's see. You know, let's see if Allen is full of it, or let's see if he's really telling the truth.

Craig Davis: Now, that's fair enough. I like it. Yeah.

Allen: Because it also, like I said, it's different for everybody. So, the trading plan, we've gotten testimonials from people and said, "Hey, I tried this and it worked great," and then we've had other people that said, "I tried it and it failed, and I didn't work." So, what's the difference? The plan is the same, the market is the same.

Craig Davis: People.

Allen: It's the people that are, they're doing something different or whatnot. We had one student, he was in one of our other courses. It was, you know, you put on the trade and you wait until the trade, if it goes against you, you have to let it go to a certain Delta.

Craig Davis: Yeah.

Allen: So we do that with condors as well. You put the trade on at a certain Delta, and when it gets to a certain Delta, that's when you know that, okay, it's time to change or adjust the trade.

Craig Davis: Yeah.

Allen: Well, this fellow didn't want to wait until that Delta. He was looking at the money and he said, "Oh, I was down 200 dollars, so I got out of the trade, and it didn't work."

Craig Davis: Yeah.

Allen: I said, "But, that's not how it works. That's not the plan."

Craig Davis: Yeah.

Allen: You can go down four 500 dollars, and then eventually it will come back up, and then you'll win. So, you have to be able to ride the waves. For him, that particular plan, or maybe trading in general was not, it didn't fit for him, because of his style. If you cannot see yourself and say, "Okay, I'm going to put the trade on..." When we're selling options, especially with iron condors too, in the beginning of the trade you might be down 100 dollars, 200 dollars or something, before it turns around and then it starts making money again.

Craig Davis: Yeah.

Allen: But if you don't have the patience, or you don't have the ability to just sit and wait, then this is not the trade for you.

Craig Davis: That's true, that's true. Yeah, from what I can see and from what you're saying, it seems like you have to have that confidence to stick to the plan, and just follow the rules according to the plan. So yeah, I think that's-

Allen: You have to have confidence in the plan. So, that's why you do the back testing. You just do it as many times as you can, you track all your results, and you look at it and you say, "Okay, you know what? Over the last 10 years I made money eight of the years or six of the years, I lost money for of the years. In my head, am I behind? Is that acceptable to me?

Craig Davis: Yeah, yeah.

Allen: You know? I had a friend of mine, he found this strategy for the iron Condor, somebody showed it to him, that says, "This is how you put the trade on, and then you never touch it."

Craig Davis: Oh, naughty. Yeah.

Allen: That's it, you don't do anything else. You put the trade on, and then you just let it do its thing, and the numbers should work out, and you should make money. So, it's either you're going to win on that trade, or you're going to lose the maximum.

Craig Davis: Yeah, that's not a good trade then. That's not a good plan.

Allen: Right. I mean, before we make a judgment, we have to test it. So my friend, he's very smart, so he said, "Okay," and he got it. He got the same software, this option software. Now this guy, he's wealthy, he's already wealthy. He went and he found somebody, and told them, "Hey, I need you to learn how to use this software, and I'm going to pay you to run this test."

Craig Davis: Nice one. A real life scientist, yeah.

Allen: Yeah. So, he hired this person, and the guy did all the testing for like the past 20 years or something. The results were that if you had traded this way every single year for 20 years, you would've just about broken even.

Craig Davis: Oh my gosh, that's not good.

Allen: Yeah. There were some years where it did very, very well, and then there were some years where he lost a bunch of money. But overall, over 20 years you would've broken even. So he's like, "Yeah, this doesn't work," and I'm like, "Well, I'm glad you know before you wasted the next 20 years to try to bring it out."

Craig Davis: [inaudible 00:14:35].

Allen: So for iron condors, I do believe you have to adjust it. That just gives you a better chance to win.

Craig Davis: Yeah.

Allen: But another thing you have to be aware of is, you don't always want to be in the market.

Craig Davis: Okay. That's an interesting concept. Because you're always like, when you see on some of the things where they say, "Oh, yeah, you've always got to be [inaudible 00:14:59]." So it's interesting when you say be in the market and out the market. What do you mean by that? That's a good mindset, I suppose for someone that starting out?

Allen: In the stocks, when you're investing in stocks, they have gone back in time and they've looked at this, and they've said that most of the games that are made in the stock market are made in a few days every year.

Craig Davis: No way.

Allen: Maybe like 20 days every year. That's when the majority of the gains happen.

Craig Davis: No way, so what's happening for the rest of the time?

Allen: 70 percent of the time, stocks go sideways.

Craig Davis: Sideways, okay.

Allen: Yeah, that's why iron condors work. They go up, and they go down, and they go up, and they go down. That's why they tell you that you always have to be in the market if you're a stockholder, because you don't know when those days are going to happen.

Craig Davis: Yes, yes.

Allen: It could be in the beginning of the year, it could be in the middle, could be the end. You might miss out on a rally... Like for example, this year, 2019, if you were in from January to now, you would be up whatever it is, 16, 18 percent.

Craig Davis: Yeah.

Allen: If you missed these first few months, and you get in right now, well it looks like the market's going down, so you might lose money the rest of the year.

Craig Davis: Yeah, yeah.

Allen: That's why if you're a stock trader, most of the time you have to have your money in the market, because you can't time it. You don't know when it's going to go up and when it's going to go down.

Craig Davis: No, no.

Allen: Most of us. Most of us cannot.

Craig Davis: Most of us, yes. And unless you've got that magic crystal ball where you can say, "Oh, yeah..."

Allen: Yeah. But when you trade the iron Condor, or other option strategies, you want to look at what's the VIX. The VIX is the volatility of the overall market.

Craig Davis: Yeah.

Allen: Now, the more volatile it is, the more volatility there is, the more the option prices are worth. You get more money when you sell them. But, that also means that the stocks are moving up and down much faster.

Craig Davis: Right, okay.

Allen: So you have to be on your toes. You have to be watching every day when it's very volatile, and you have to be ready to adjust, you have to be ready to play with it, and you have to be... To trade when it's very volatile, you have to be the best of the best.

Craig Davis: Right, okay.

Allen: When volatility is very low, the stocks aren't really doing anything, you can put on the trade and just wait, and then it expires, and you're done, right? Anybody can do that. And so in the beginning when you're starting out, I tell people like, "Hey, if it's too volatile for you, if you are getting nervous because there was a two percent move, or a three percent move in a day, then that's a signal that this is above your skill level, and you need to just get out."

Craig Davis: Okay, yeah.

Allen: Because if we are trading iron condors, we can make 10, 12, 15 percent per month.

Craig Davis: Yeah.

Allen: Do we need to do it every single month? No.

Craig Davis: No, okay. Right.

Allen: If you have two or three good months, and you're up, let's say... Let's say it's the end of March and you're up 30 percent for the year, that's a pretty good year. You could take the rest of the year off, and say, "Hey, I made 30 percent." Most people don't do that, because they're so greedy. They're like, "Yeah, I want to get more. Let's go for 70 percent. Let's go for 100 percent."

Craig Davis: Okay.

Allen: Eventually one of those months you're going to lose. And the thing is, you really cannot tell, in the beginning, you cannot tell which months are going to be simple and which months are going to be very volatile. But the thing is, when you're done with a trade, you can re-examine and say, "What's going on in the market right now? Do I want to get in right now, or do I want to wait? Is there some news event on the horizon, or something that would cause the market a lot of uncertainty and a lot of concern? Then I'll just wait until that thing is over with, and I'll see how the market is reacting to it, and then I'll put my trade up." So, that's what I mean by you don't have to be in it all the time.

Craig Davis: Right.

Allen: You can pick and choose. [crosstalk 00:19:05]... Sorry, go ahead.

Craig Davis: Is there a way in your training, or is there some way to be able to help you make that decision? Because I might see the... The VIX might be something given this is in the market, but [inaudible 00:19:22] say with confidence to say that, oh, the market's a bit volatile at the moment, I might stay out of it?

Allen: So, it takes a little bit of experience to be able to really pinpoint it. But I'll give you the short version.

Craig Davis: Okay.

Allen: What I do whenever I'm putting on a trade, especially my iron condors, and I do them every month on SPX, and I do them on Rut, those are the two big ones that I like... You can do them, if you have less money you can do them on SPY, and IWM, or any of these ETFs.

Craig Davis: Okay.

Allen: I like to do them on the big ones, because it takes less contracts, and it has different advantages. But, I look at, when I'm putting on the trade, I have an analysis sheet and I say, "Okay, what is the VIX trading at right now? Do I see any kind of support and resistance on the chart? How did I do last month, how did I do the month before?" And then I'll also look at the standard deviations. So, standard deviation is basically a percentage movement. It's a statistical number, statistics, so it will tell you that the SPX moved in a bigger amount than it normally does.

Craig Davis: Okay.

Allen: So even if the volatility is still the same, today they had a really big move for some reason. So normally, you know, 70, 80 percent of the time, the SPX will be within one standard deviation.

Craig Davis: Okay.

Allen: If it moves more than one standard deviation, then that's a cause of like, "Hmm, let me pay attention to this."

Craig Davis: Okay.

Allen: If it's moving more, if it's moving two standard deviations, then that's a flag. And say, "Okay, there are big moves happening here, I need to pay attention to this, or maybe I need to get out of the market, or maybe I need to stay out."

Craig Davis: Right, yeah.

Allen: If there is a day when there is more than a one standard deviation move, I don't get in, I don't put a trade on that day.

Craig Davis: Right, okay.

Allen: I want to get in when it's a calm day. So that is the shortcut there, that you need to monitor the standard deviations on a daily basis, and see how they are doing for whatever instrument you are trading. If it's not SPX, if it's a stock, [crosstalk 00:21:35] you can find the standard deviation for everything. Look at it and see, "Okay, I was trading it last month, and it wasn't really moving very much. But now, it's moving one standard deviation every day for the last three days. Okay, something is going on."

Craig Davis: Okay.

Allen: So that's like a flag, it's a bell. "Ding, ding, ding." [inaudible 00:21:58].

Craig Davis: Yes, okay.

Allen: You need to research this more and decide, "Hey, what is the cost, and do I want to get in or not?"

Craig Davis: Yeah.

Allen: There's different ways. Sometimes I look at it and I'll say... When I'm putting the trade on I look at it, "Okay, over the past two weeks, how many times has it moved more than one standard deviation?"

Craig Davis: Okay.

Allen: If you get two or three, that's normal. You have to understand what is normal for whatever instrument you're trading.

Craig Davis: Yeah.

Allen: But for SPX, two or three times is normal. If you get seven or eight, that's very high, because it's only for two weeks. Over the last 10 days, it moved a lot more than one standard deviation seven times, that's very high. So that means that, without even looking at the news, you know that there is something happening in the market.

Craig Davis: Right, okay. Yeah. No, I like the sound of that. That's a good... There's one thing to a trading plan, but this analysis sheets sounds like another good thing as well. And definitely looking at standard deviations, and the movements and the market's an instrument. That sounds like a good, what's it called, skill, or discipline to have. So thank you.

Allen: It's something that can help you, you know? Just keeping an eye on it. It's not a hard and fast rule that you don't do it, or you have to... I don't initiate a trade when there's more than one standard deviation. Do you have to do it that way? No, that's just my personal preference. But, this is something that you can, it's like another tool that you can use.

Craig Davis: Okay, yeah. Lots of tools in the toolbox sounds good to me, lots of skills, yeah. I like the sound of that. So that's something I need to have in my vocabulary more than the standard deviations, the percentage movements?

Allen: Well I mean, if you don't do the standard deviation, you can look at the percentage movements, but then you'll have to remember. It's harder to remember. If you... I don't know what broker you're using.

Craig Davis: I'll be using Interactive Brokers.

Allen: Okay. So, I'm not familiar with their set up, but if you call them, or you find online that there must be a way that you can actually, on your chart you can see the standard deviations.

Craig Davis: Yeah, let me write that down. [inaudible 00:24:26] brokers where on charts I find the standard deviation. Yeah, okay.

Allen: You might have to write it down, or they might have it visually on your screen, however. But whatever works for you, it's a good measure to keep track of.

Craig Davis: Yeah. Thank you. No, we'll do that. Standard deviations, [inaudible 00:24:55] analysis sheet. Is the first one on there now? [inaudible 00:25:02] I need to get a trading plan, makes me stick to the trading plan, my analysis sheet. So you've now got another sheet now that says analysis on it [inaudible 00:25:10], and check standard deviation.

Allen: You also want to make sure that you're not trading during earnings, if it's a [inaudible 00:25:20].

Craig Davis: Okay.

Allen: And, if you're doing iron condors, you want to know in advance, at least have an idea of what you are going to be doing as an adjustment if the trade goes against you.

Craig Davis: Okay. That sounds like an interesting technique. How would I... Because you've got a couple of programs, is that mindset and that skill set within there, like that adjustment thing that you were just saying, like is that [crosstalk 00:25:51]?

Allen: In the course, and the iron Condor course, that's covered in detail.

Craig Davis: Oh, okay. So then-

Allen: Yeah, so we actually have videos where I went through some, I think it was three really, really horrible iron condors, like the market just went crazy. I go through it on that software, that back testing software I told you about.

Craig Davis: Right, okay.

Allen: I go through it on there, and I go day by day and I'm saying, "Okay, market just dropped 50 points. Okay, this is what I'm thinking. Do I do this, or do I do this, or what happens if I do this? Okay, which one am I going to do? I'm going to do this, because of XYZ reason. Okay, now let's see if it worked. Let's go day number three, day number four, go forward, go forward." So basically I'm telling you what I'm thinking as I'm going through the trade.

Craig Davis: Okay. I like it. That's a good, that's the best way I think.

Allen: So now are you going to be, you're in the UK, are you going to be trading the US stuff, or English stuff?

Craig Davis: US. I'll be looking to do US, yeah.

Allen: Okay, so the market-

Craig Davis: But I think my main focus is going to be the US stuff I think. Like the SPX, like I just said, SPX, or SPY and all that. I want to try and do something may be on the SLV possibly, if I can do something.

Allen: Okay.

Craig Davis: As I say, I've I've got to look at your program, look at the resources that I've got, and then just [inaudible 00:27:16]. But yeah, the ETF SPY might be the one that I start with as well. But yeah, that's where I'll be starting, on the American stocks, and the American instruments.

Allen: Right now, gold is very steady, I think. I haven't checked it. I think it's been steady. I haven't checked SLV though. Let's see how that's doing. So yeah, these are ones that do not have earnings, so they are good to do that, they're good for iron condors.

Craig Davis: Okay. Sounds like a good one to do some back testing and research on that. Okay, yeah.

Allen: Definitely. Yes, definitely. Hold on a second. Hold on, I'm going to share my screen.

Craig Davis: Oh, okay. Do I have to press anything? Oh, no, it's fine.

Allen: I don't think so. You can see?

Craig Davis: Yeah, yeah, yeah, yeah, yeah.

Allen: All right, so here is SLV, and you know, it's pretty much up at 16, and died down at 13 something right now.

Craig Davis: Yeah.

Allen: So basically if we're doing an iron Condor... And you can use... In the course we normally go for about 45 days. But we can go 28 days. This one doesn't have a lot of volume, SLV though.

Craig Davis: Right.

Allen: So, might not be the best one.

Craig Davis: Okay.

Allen: Let's try it.

Craig Davis: Do you have a minimum volume in the instrument that you go for? What's your guide range?

Allen: I just want to see some action.

Craig Davis: Oh, okay.

Allen: If I'm doing five contracts, and like this one, this one has 200 contracts every day, 100 contracts. That's fine, because I'm a small part of that.

Craig Davis: Right, okay.

Allen: But the other one, SLV, this one was only showing, like right here, there's only 230. So, these are the only two options I have. So, I don't have a lot of choice in which to trade, so it was like, ", yeah, I don't want to do that one." You know, compared to SPY, you take a look at that one and you're going to say, "Oh, you have a lot of these to choose from."

Craig Davis: Yeah.

Allen: People are trading all of them. So, you have enough liquidity to get out if you need to as well.

Craig Davis: Yeah, yeah. Liquidity, that's definitely a good keyword.

Allen: So if you are doing this one today, depending on how much money you want to put into each trade, you can go to the 292 maybe. Let's say we do 200 each, so two points. This is what our trade would look like.

Craig Davis: Yeah.

Allen: This trade gives us a 66 percent probability of winning, it's right in here in the middle, and then I can put these on the chart. So basically, this redline and this redline are the top and the bottom of our trade.

Craig Davis: Yeah.

Allen: So it seems like it'll do all right.

Craig Davis: Yeah.

Allen: This is a yearly chart. In this trade, what can you make? You can make 55 cents, and it's 200, so let me see if I... You can make 100, you can lose 300. So you know, whatever that is. You have a 66 percent chance of doing that. So what is that, like 33 percent gain? One divided by three?

Craig Davis: Yeah.

Allen: You could make... I mean, so you can be more conservative than this if you wanted to.

Craig Davis: Yeah, okay.

Allen: You can bring these all the way out to here, and go maybe 75 or 80 percent probability. That way, your tent will be larger.

Craig Davis: Right, okay.

Allen: So, less of a percentage return, but more chance of being safe.

Craig Davis: Okay.

Allen: Now the thing is, like right now, I don't know if you've been following the news or not, but the US and China, they're having their little trade war.

Craig Davis: Trade wars, yeah.

Allen: So that has been sending the market up and down almost every day for the last week or so.

Craig Davis: Right, I see.

Allen: If there's a tweet from Trump, then it goes up, otherwise it goes down. So in this environment I would say, no "Well you know, VIX is up a little bit, let's look at standard deviation, and these are the standard deviations. So in the past two weeks, we have one, two, three, four, five, six, seven, eight, nine, 10, one, two, three, four days where it moved more than one standard deviation." So that's a little bit on the high side.

Craig Davis: High side, okay. Yeah.

Allen: I would love it if it's like this, where it's all just gray, and no, they may be have one, but that's about it.

Craig Davis: Yeah.

Allen: This is telling me things are getting heated up.

Craig Davis: Right, okay.

Allen: Just looking at it visually. You see this, you see a lot of gray, a couple bars, a couple bars, couple bars, then all of a sudden you start seeing more reds and yellow. Yellow for here is a danger, because it's more than two standard deviation.

Craig Davis: Right.

Allen: And then, you're see more color, it's getting a little heated, so you have to be careful. That's all that tells you.

Craig Davis: Yeah, that's cool. Okay. So you say something about news, what kind of news are you following, or if there is one I should start looking at, one or two?

Allen: I try not to.

Craig Davis: Oh, okay.

Allen: I try not to watch the news. [crosstalk 00:32:48].

Craig Davis: Okay, good.

Allen: Yeah. I've done... When I do my back testing, you don't hear any news. You're just looking at the chart, you're looking at the trade and you're going day by day. You don't know what's going on in the world.

Craig Davis: No.

Allen: You will do better in your back testing than in real life, for sure.

Craig Davis: Yeah, that's true.

Allen: Just because the news has an effect on us.

Craig Davis: Yeah, true.

Allen: When you're in the trade for 30 days sometimes you get scared, sometimes you hear something. So, if you're only watching the trade, you're not watching the news, you'll actually do better.

Craig Davis: Right, okay. No worries.

Allen: But sometimes there's stuff like this, when it starts dropping all of a sudden, then you have to pay attention. "What's going on? Why is it always that it's going steady for so long, and then all of a sudden it starts dropping?" And then you have all, look at this, you see this? Red, red, no red, red, red, red, red, yellow. This is like, "Hello, wake up, we have something going on here."

Craig Davis: Yeah.

Allen: So that's when you watch the news and you see what's going on.

Craig Davis: What's going on, right. When the red flags are there, then watch the news, okay.

Allen: Yeah. So I mean, I watch some shows that tell you like technical analysis, what other people are thinking. They'll say, "Oh, this is the line of resistance, and this is the support level, and this is this," okay, I'll take a look at that. But on a day to day basis, the nude is total baloney. They have no clue why the market is moving. Really, on a day to day basis, they don't have any clue. They have to make up something.

Craig Davis: Yeah. Yeah, just to keep the viewers happy, I suppose, yeah.

Allen: Yeah, I mean, they have to have airtime, right? They're on 24 hours a day, they have to talk about something.

Craig Davis: Okay. Yeah, yeah, no worries. No, that's really insightful there, thank you. Yeah, so red flags, warning, check the news, standard deviations. [inaudible 00:34:51] if it's yellow, yeah, stuff is happening.

Allen: I mean, Interactive Brokers might not show it like this.

Craig Davis: No, that's fine. If they've got it somewhere, I'll just have to just get my eyes used to the way that they present the data, but yeah, I'm happy to do that.

Allen: So essentially you have about 2000 to trade with, is that what you wrote?

Craig Davis: Yes.

Allen: Okay. And your expenses, your goal is about 3500 a month, and you want to get there in about three years.

Craig Davis: Yes. Or sooner, or sooner.

Allen: Or sooner.

Craig Davis: I put that down there because, like as I say, I just put the figures down there, in terms of like what's achievable and what's possible.

Allen: So let's say, here, let's do some quick math. So, 3500 times 12, 42,000 pounds a year, and you have 2000 to work with.

Craig Davis: Yeah.

Allen: That's 42,000 divided by, let's say, 25 percent a year. If you're making a 25 percent yearly return, you would need an account of 168,000.

Craig Davis: Nice one.

Allen: And you're at two.

Craig Davis: Yeah, so that's no chance. [crosstalk 00:36:04].

Allen: How long will it take you to go from 2 to 168? There's a small chance, but you'll have... I don't want you to take excess risk is what I'm saying.

Craig Davis: No, no, no, no, I'm in it for the long term. I'm going to start small, grow small, learn.

Allen: And right now you have two, but that's what we talked about earlier, you're saving whatever you can. [crosstalk 00:36:24]...

Craig Davis: Yeah, you'll add into it, yeah.

Allen: Yeah. One of the things I tell some people is that, when you're doing your back testing at your paper trading, even if you're not real money trading, keep a result of all the records.

Craig Davis: Yes.

Allen: Keep a track record of how you're doing. Because you never know when you're going to run into somebody who has money, or an uncle, or someone who's... Because you know, when you go to a party or you meet someone, you say, "Oh, hey, what are you doing now? What are you up to?" And you, "Oh, I'm trading options." "Oh really?" "Yes." "How are you doing?" "Oh, I'm doing fantastic." "Really? Oh, okay, I have some money that I need to invest. Can you do it for me?"

You will be surprised at how many people there are that have money, that they don't know what to do with. So these people, they might come and tell you, "Okay, I have 20,000 pounds, please do something." And you do it for them if you want to, and then you keep, "Okay, I'll take half the profit." "Okay."

Craig Davis: Yeah.

Allen: But keep in mind though that that also brings another level of stress.

Craig Davis: Yes. I could imagine, yeah.

Allen: Losing your money is one thing, losing somebody else's money is a whole different thing.

Craig Davis: That's true. Yeah, man, you have to be careful. Yeah, that's fine. Yeah, man. Just go and lose their money that easy. There's a UK term, they call it like a... I don't know how you'd say it in American slang, but in the UK it's like, "Don't pee it down the toilet," or something like that.

Allen: Yeah.

Craig Davis: Yeah, so I understand [inaudible 00:38:05].

Allen: Yeah, we call that, what do we say? We say we pissed it away.

Craig Davis: Yeah, that same thing, yeah. So yeah, we say the same thing.

Allen: Cool.

Craig Davis: So yeah, definitely. That sounds like a way forward. That's excellent.

Allen: So what else, what other questions?

Craig Davis: So, with respect to... I'm just trying to think, I think I've gone through the sort of, like you definitely have the mindset [inaudible 00:38:36]. With respect to adjusting, so you've calculated how much to put on a trade for an iron Condor. I'm just going by the term, like the rollover adjusting, is there a way to calculate, or you can't tell how far it could go against you, is there a way to make it like a rough ballpark figure on how much to put aside if you needed to do an adjustment? Or is that all on your course on how to make the decision should you adjust, or should you do this, or take money off the table?

Allen: In reality, you can adjust forever. You can adjust month after month. You can keep it rolling forward, "Okay, so I didn't do good this month, I'm just going to roll it into next month," and then roll it into next month, and you can just keep going. I don't think that's a good idea, because it never ends.

Craig Davis: Yeah.

Allen: If I lose money on a month, then I just want to end it, and then start over fresh.

Craig Davis: Yes.

Allen: I don't want that baggage of coming, "Okay, I'm down 300 dollars from last month, I got to make it up." No, I want to start fresh, and whatever I can make, and then get it back eventually. If I was to put... I usually keep about half of what I put in originally.

Craig Davis: Oh, okay.

Allen: So, if I put in 1000 on a trade, I might keep another 500 on the side.

Craig Davis: Okay.

Allen: Or maybe another thousand, and worst-case scenario, to adjust.

Craig Davis: Okay. Why not, why not? Okay, I like that. Yeah. I like that. It makes sense. So 100 to 50 percent, why not? Why not? I like that. I like that. So trade, and that's what you [inaudible 00:40:22]. Okay, why not? Yeah, I like the sound that that's okay. Let's see, what other questions could I ask you? I sure have put some on my email, but-

Allen: It says here that you took some courses already?

Craig Davis: Yeah, so I took some courses. I know this might seem like a strange one. There's a guy called Robert Kiasaki. I went to one of his training things and I thought, "Right, I'm going to fly in..." So pretty much, he's the one that put me on the path to try and look into do these things. I've been trying to do real estate things, and business things, and the stocks and shares thing. So I've done a couple of things, but that was just like the theory. I never got into a paper trading account.

So last year I went, because in my full-time job I work in healthcare, I work in a pharmacy. So I got this contract, I was at the hospital pharmacy, where you've got more some more and things. I worked with this guy, I worked with him before, and he says, "Oh, come and work with me on this iron, and it's paying me [inaudible 00:41:21] a bit more money." So I thought, "Oh, based on the hours that I've got, this is okay."

But what I didn't factor in, and maybe it's a life lesson, is like the downside. If you can imagine, I experienced the most downsides where, this is my assumption, I never asked, so I suppose I wasn't wrong. So for example, the person contracted [inaudible 00:41:46] for his business, he was saying, "There's too many staff, we're not going to employ staff." So I go, "What do you mean by that?" I had to find out the hard way that if all the jobs don't get done, I have to stay behind.

Allen: [crosstalk 00:41:57] Yeah.

Craig Davis: So before I was supposed to do 45 hours a week [inaudible 00:42:02], I think I must've pushed about 75, 80 hours a week. I was there late nights on weekends, I was there on my days off.

Allen: Right.

Craig Davis: I was there trying to... So, my plan was to go there, get my paper trading account up and running, start doing some stuff, so that's where I had the idea to get onto the [inaudible 00:42:22]. But then it stopped. So let's say, so April, May, say June 2018, I stopped doing stuff. So in the process now, I have to send an email back to Interactive Brokers, because my account cleared [inaudible 00:42:37] on SLV. I was selling some put options, because I thought, "Oh, I've learned about put options, let me sell some put options, and if it goes up, I keep the premium, if it's slow I keep the premium, if it goes down, then I don't get the stock anyway, but I got it for discount."

So I started doing all that and then, boom, the reality of that kicked in. Then, I says, "Oh, I need some annual leave." He goes, "Oh, I can't find cover for your annual leave." I go, "What are you talking about?" So before I just assumed, I never discussed it. Well, it's not that I didn't discuss it, but I thought like, well... So for now, I'm just working with teams now where if I can get an agreement where possible, I'll go for that. Because before, I just overlooked it.

Allen: Mm-hmm (affirmative).

Craig Davis: I overlooked, like with my other team, like they were saying, "Oh, you got to do this [inaudible 00:43:30]." "You guys are killjoys." He was telling me, "Sorry, we can't give you cover for your leave," so I says, "What are you talking about?" So, I didn't have the words and the vocabulary, because I never thought I'd have to present an argument to ask for... Or, [inaudible 00:43:47] present an argument to request for annual leave.

Allen: Yeah.

Craig Davis: Never. I thought, "Okay..." So with respect to the courses, I started off with Robert Kiasaki, did some real estate ones, and there's a guy called Andy [Tamura 00:44:04], he had some ones. Then recently, I went on to Udemy, and that's where my... Because on Andy Tamura, he did one of these things and then I stopped. [inaudible 00:44:16] the profile, and when I seen the profile, "Oh, someone on Udemy," and I seen this thing it says like, "How to make money on weekly options," and it was talking about iron condors.

Allen: Mm-hmm (affirmative).

Craig Davis: So I researched and said, "Oh my gosh, he was talking about that." And then they say, "Oh, you've got to get educated," so I went on some podcasts and then I came across yours. I was listening to the way that you were speaking for your people and I thought, "Yeah, yeah." Because they say sometimes if a person, you can listen to what they're saying, but you have to make the decision on what they're presenting and what they're saying.

Allen: Right.

Craig Davis: What gave me the confidence to say, "Oh, yeah, this guy seems okay..." Because when you where then talking to the student guy, you... Because there's some people, like I said, that can sugarcoat it. But you actually said to him, "No, you need to get someone that's going to make you accountable, like a trading partner, that's got a list of rules." [inaudible 00:45:09], "Okay, you didn't get the trade, what are you going to do about it?"

Allen: Right.

Craig Davis: And that kind of thing. I thought, "Yeah, I like that." Because that's what you need, is everyone, "Oh, yeah, it will be fine [crosstalk 00:45:19]." You want someone to know, really to... Yeah. So I thought, "Okay, yeah, you seem like a serious guy. You want people to benefit."

Allen: I learned from experience. That was my wife. That was my wife standing there telling me, "What are you going to do to fix this?"

Craig Davis: The best trading partner, yeah. Yeah, but that's a good incentive as well.

Allen: Yeah, every day she would come up the stairs when I was at home. Every day she would come up the stairs and stand there until I talked to her.

Craig Davis: Yeah, "What have you done? What are you doing?" So yeah, so there you go. Behind every strong man there's a strong woman, I could imagine.

Allen: Oh, yes.

Craig Davis: Like I said, so for me, that's what got me onto the parcels. And there's programs. I seen yours, I listened to that podcast, and I looked into some of your things and I thought, "Okay, I want to be an expert, so I'm going to have to put the money in. Because why not pay, say, 297 dollars if it's going to say..." I'm telling you before I was not an ambassador. I don't know why I wasn't listening before. It's like I just have the theoretical, I had to practically...

[inaudible 00:46:41] like the insurance, if it can save you money, I don't mind spending 297 dollars going in the forum, and it's going to save me 3000 dollars or something like that down the road. I haven't got a problem with that anymore. Before I might've been, "Oh, I'm going to risk it." No sense. Because it could be worse. Because as I said, there is no...

Allen: You mentioned a couple things. You said the weekly iron condors. I would not do that.

Craig Davis: Well, so don't do the weekly ones, [inaudible 00:47:18].

Allen: Those are for experts, and those are for people who like to gamble. If you don't have the money to risk, I would not do that at all. I would stay with the monthly.

Craig Davis: Yes.

Allen: The weeklys, you cannot adjust them. I'm sorry. I don't care what other people say. They just move so fast, that you cannot adjust.

Craig Davis: Right.

Allen: And the money that you make is so little, that you're only trying to make five, six percent. But that thing could, you know, you sell it for 20 cents today, tomorrow it could be a dollar, what now?

Craig Davis: Yeah.

Allen: You can't do anything. I learned the hard way that those are very dangerous, and they...

Craig Davis: Yeah.

Allen: And the [crosstalk 00:48:01] Kiasaki, he gets paid a lot of money from that Andy Tamura guy, to just be the head. You know?

Craig Davis: Yeah.

Allen: He will just use your name, and your picture, and your video, and... I mean, I love his books, I love his books, and they make a lot of sense, but yeah, so be careful of those. [crosstalk 00:48:30].

Craig Davis: He doesn't recommend the weekly options [crosstalk 00:48:34] for him. He didn't recommend that. I did see it on the Udemy, where it says, "How to make money selling options doing this weekly..."

Allen: Oh, I see, I see.

Craig Davis: So for me, I was looking at it as a learning exercise, where what is the difference between doing this weekly iron Condor to the monthly? Because they do say do it for 45 days, and do this.

Allen: Right.

Craig Davis: So, I was just looking into the process, but yours seems like you've got the accelerated version, where you've got the whole package there, you're going from start to finish, and this and that.

Allen: Yeah, I mean, and if you have any questions or anything, you just email me, I'll help you out.

Craig Davis: Yeah, definitely, definitely.

Allen: If you need anything, just let us know.

Craig Davis: Yes, yes.

Allen: But really, take the plan, do the back testing, if you can afford it.

Craig Davis: I will.

Allen: I haven't checked, there might be something out there that's cheaper.

Craig Davis: I can have a look. So if I literally Google, is it called like back testing software? Is it like that, or is it-

Allen: Yeah, so just option back testing software.

Craig Davis: Okay.

Allen: You might find something. I know this company that I use, on the screen, the Think or Swim, they have something for back testing.

Craig Davis: Okay.

Allen: It's included, it's free. It's not very good... I think it's right here, Think Back. So, it's not the best, but it's free.

Craig Davis: Okay.

Allen: You can go back in time, so let's say you want to go back a few years, go back to this day. So it'll tell you, "Okay, SPY on that day was 131." And I think this is a chart for it.

Craig Davis: Yeah.

Allen: It gives you all the prices. So, you can put on a trade and then just go through it and see. Just go day by day. Like, "Okay, this is the 7th, today's the 8th, today's the 9th, how's my trade doing?" It's not as good as the other one, but then again, it's free.

Craig Davis: Okay. I can have a look at it. I have seen the Think and Swim. I don't think they're taking account for the UK anymore.

Allen: Oh, I didn't know that.

Craig Davis: [crosstalk 00:50:42] Interactive Brokers.

Allen: I see, okay. That's horrible. Tasty Trade... Or, no, Tasty Works is another one.

Craig Davis: Okay, let me try that, Tasty Works, yeah.

Allen: They're a newer broker, and I know they opened for Australian accounts, so they might be probably open to you guys too.

Craig Davis: UK, okay.

Allen: And they are, you know, they focus on options.

Craig Davis: Oh, excellent.

Allen: They have a lot of educational stuff as well. Some of their stuff I agree with, some not.

Craig Davis: No worries.

Allen: Okay, so the guys who, they're the same guys who made Think or Swim.

Craig Davis: Oh, okay. Oh, that's good.

Allen: In the past, they were floor traders on the exchanges. Then they made Think or Swim, and you know, they started doing videos, and teaching people. They were the ones that told everybody to do the iron Condor without adjusting.

Craig Davis: Really?

Allen: That's how they got popular, yeah. And then they sold this company to Ameritrade for millions and millions of dollars.

Craig Davis: Okay.

Allen: And then after they have the buyout period, where they cannot do anything for a lockup, they cannot do anything for a certain amount of time. Then once that period expired, then they went and they opened another brokerage.

Craig Davis: Oh, okay.

Allen: They're still out there, making videos and whatnot. So, they have a lot of content that people like. But they might, let me see if they open accounts in the UK. I think they do.

Craig Davis: Okay, I'll have a look. But like as I say, with this Andy Tamura guy, you mention weekly, but he says safety, so that's where I got the safety element. But yeah, he definitely was saying, "Grow small, take your time. [inaudible 00:52:43] paper trades."

Allen: Right.

Craig Davis: But no, I don't think he wouldn't have said anything about [inaudible 00:52:49] saying about, "How do you have a losing strategy?" And rather than taking the maximum offer, he was the one that [inaudible 00:52:58]. So that gave me the idea. That's what I was leaning to. Because he said, "How do you turn a losing trade, so you don't get the max loss, and you're sort of not [inaudible 00:53:07] after having the max loss?"

Allen: Yeah, so that's basically talking about adjusting.

Craig Davis: Yeah, yeah. So yeah, man, Think or Swim [inaudible 00:53:25] said to do that, wow, they would've believed it.

Allen: Yeah.

Craig Davis: Well, like as I say, if it were, it depends on what context. Yeah, if they break even after 10 years and that.

Allen: I was shocked, I didn't know that. I hadn't done it, my friend did it, and I was like, "Wow, really?"

Craig Davis: Wow. If something sounds too good to be true, it most probably is or something, they might say. But no, I'll look for that. I'll look for the Tasty Works. If I can start an account, then I can look at that.

Allen: Yeah. The only reason I tell you that is because their software might be better than Interactive Brokers.

Craig Davis: Ah, okay.

Allen: It doesn't matter which one you use, but their software, because they are focusing on option traders, so their software might be better. And they're newer, so they'll respond to you. I know Interactive Brokers, they don't really respond very well. Their customer service is not the best.

Craig Davis: Right, that's all I need to know. You've got a problem, you can't get a hold of anybody.

Allen: Yeah, I opened an account with them, and I couldn't even figure out how to use it, seriously. And so I emailed them, and I didn't get any response. Then I canceled the account, and then they contacted me. They were like, "Why'd you cancel?" I was like, "Well now you contact me."

Craig Davis: No, that's not the best way.

Allen: I think they are the cheapest, but you know, you really have to know what you're doing.

Craig Davis: Yeah. [inaudible 00:55:08].

Allen: Yeah. So you have your game plan?

Craig Davis: Yes, I have definitely... Oh, man, Allen, you're a top man, you're a superstar. I've definitely got a game plan. You gave me so much food for thought, hints and tips. I've been writing down some things. I know you're said you're recording, but let me just write it down while the inspiration's there. Yeah, I'm definitely more [inaudible 00:55:30] focus on these and back testing of the plan, which I never thought about, which makes sense, just to get confidence. Not confidence, but at least I can, what's it called, develop the skill of putting on the trade, and making sure I'm doing it properly. So yeah, yeah, I like the sound of it.

And plus, yeah, I can view like how many trades over how many years in like a few minutes, so I like that. That's good. Then I could just say, I just have to get used to the [inaudible 00:56:00] where I'm coming forward, the volatility in that. So yeah, man, definitely got a game plan to go forward with. Looking forward to be working with you, and being part of this [inaudible 00:56:14] team. It's going to take me a few days until I digest everything, and get into it. But, I'll definitely be staying in contact, and if there's anything else that [crosstalk 00:56:27].

Allen: It's interesting, it's fun, but when you're doing it, it's very boring.

Craig Davis: I'm glad you're telling me that, that's okay. They say the good plans are the [inaudible 00:56:40] ones. So it sounds like I've got a bit of a...

Allen: Yeah. Like, yesterday the market was down, so it was exciting. It was like, "Oh my God, what do I do? I got to do this, I got to do this." Today, market is flat, and I've got nothing to do today. Most days you don't do anything. You just sit there and wait.

Craig Davis: Waiting for something.

Allen: Yeah.

Craig Davis: Man, I didn't do an adjustment or something, or I didn't do this, didn't do that.

Allen: Yeah.

Craig Davis: I like it, I like it. So, that's where the boring part comes.

Allen: Yeah. That is also something that you're going to have to learn with experience. You might adjust sometimes too soon, sometimes too late. It's a fine line. Like, we'll give you rules that say, "Okay, if this happens, you adjust."

Craig Davis: Yeah.

Allen: But there's always the thing that, you know, "Oh, if I didn't adjust, it would've worked out great. If I had waited another day or two, it would've worked out great." So, that always is there. When you have a firm set rule, it doesn't always work out in the best way. That rule will work most of the time, not every time. And so as you get experience, you'll realize that, "Okay, I know my rule says to adjust, but I am going to wait one more day, because I see something something on the chart, or I think this is going to happen," or something.

Craig Davis: Yeah.

Allen: That's why we don't give Vista computers. This is why we do it ourselves. Otherwise, we could just make a computer program, and let it run, and hopefully it works.

Craig Davis: Yeah. No, that's fine. No, I like it. Yeah, man. Allen, definitely [inaudible 00:58:28], it sounds like you've done a great journey. You're a great teacher, and you want to encourage people. I'm glad you've got your course, and the website, the podcasts. Yeah, man, I'm glad that you've even got this thing, where if you want to speak with you, to donate some money. So even that for me, that's a learning for me as well. But yeah, man, this is definitely much appreciated. Definitely. Plan everything for everything.

Allen: Great. I hope I was helpful, and like I said, going forward, you need anything, just email us. We're here.

Craig Davis: Yes, definitely, man. I'll email you guys. Yeah, man, definitely much appreciated for the help and support. Definitely much appreciated. Thank you.

Jun 11 2019

1hr 4mins

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Financially Independent Retire Early With Options (FIRE) - 47

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I was a weird kid growing up. I know that's a really hard, weird way to start this episode. But, yeah. I was a weird kid growing up. I was obsessed with money. It's weird. Sometimes it's the thing that we don't have that we strive for, strive for, strive for. I think that was part of it. I'm not going to go into my whole story of when I was little and that we didn't have any money or anything. But I think that was the major motivation for it. But when I was little and anybody asked me, "Hey, Allen. What do you want to be when you grow up?" The answer was, "I want to be a billionaire." That's actually what I told people. It wasn't a doctor, a lawyer, an engineer, an astronaut, any of that stuff. I wanted to be a billionaire for real, because I thought that if I had a lot of money, then I would have freedom.

But then, as I grew older, I got into my teens, I started reading books, like, "Okay. How do I get rich? How do I get rich? What do I got to do?" One of the earliest books I read was, "How I Made $2,000,000 in the Stock Market" by Nicholas Darvis, and that book really introduced me to the stock market. I'd never heard of it before, but I was like, "Wow. This guy, this was a long time ago, and he was traveling around the world, and he was making money from the stock market. Wow. I want to do that." So I read that book. I read "Think and Grow Rich". I read "Rich Dad, Poor Dad". I read "How to be Rich" by J. Paul Getty. I kept reading books and books and books. I realized that you don't have to be a billionaire. Being a billionaire is probably a lot of hard work.

I toned down my goal, and then my new goal is that I wanted to retire early. I didn't really care about the retirement part. But the idea was to have enough money coming in without me having to work for it in order to pay all my expense. I got that a lot. I think I got most of that idea from "Rich Dad, Poor Dad", where it was like, "Are you successful? How do you know that you're going to be successful? Or if you cannot work? Let's say you get hurt, and you cannot work for three months, six months. What's going to happen to you?" Because I think that definition of being rich really hit me, really stuck with me that, you cannot work, and you have enough money coming in that will pay all your bills, and you're going to be okay, and you can live the life that you're used to without having to work. That was like, "Oh, man. This is awesome. This is my goal." Since then, that has been the goal.

In fact, my wife and I were just talking about this the other night, that thanks to options, we both could stop working today, if we wanted to. She has her own business that she owns with a partner. She goes there a couple days a week. She could stop going. She don't have to go anymore. I could shut down or sell Option Nunez, and that would be it. Wouldn't have an office to go to anymore. Just stay home, handle the kids, drop them off, pick them up, do the normal momma, daddy day thing, and we wouldn't have to work. We do have other investments that are doing well. But the money that comes in from the trading covers our expenses. That goal of being able to retire early has been met. On a side note, that led to a little bit of a mid-life crisis for me where I was like, "What's up? What's next?" Kind of thing, but that's a different story.

We have other investments that are doing well, as well. Those are making money and coming in. We also have investments that are doing poorly. Just this year, I've lost already about $80000 in bad investments, $25000 each in two different cryptocurrency investments, and $30000 on a real estate deal that we just closed this week. I was lucky to get out of that, even with a loss of $30000. But because my monthly expense are covered, I'm not mad about the losses. I wasn't. Yeah, they suck. That's a lot of freaking money, right? But they didn't send me into a panic like, "Oh, my God. Oh, my God. How could I be so stupid?" I didn't get into that because I'm okay financially. I knew that I was rolling the dice, especially with the crypto ones. Those are like, "Okay. You put in $25000 in. If it does well, it's going to turn into $250000. If not, you're going to lose it all," and that's what happened, pretty much. There's still a chance we can get some money back, but most likely those are going to be gone. I knew the risk on the real estate one, as well. That one was unexpected. I didn't think I was going to lose money, but we did. That's okay. Maybe we'll make it up on the next one if we do another one.

I'm not saying all this to brag, but I want to prove to you that, if you work at it, if you learn, if you practice trading seriously, that you, too, can get there. You can start with nothing and get there. At my lowest point, I was down over $100000 in debt. Credit cards and loans and personal loans and student loans and all that stuff. I crawled out of it. You can get there. You can do it. You can do the same thing if you set your mind to it, especially if you don't have three kids like I do, three little kids all under the age of 10. Those little boogers are expensive. Geez. When you look at it, I'm not special. I'm not a genius. I don't have any gifts that you don't have. I dropped out of college, and it eventually took me about 10 years to finally get my Bachelor's Degree. It took a long, long time. If I can do this, seriously, I know you can.

The title of this episode is "FIRE", which is Financially Independent Retire Early. That is a new movement. It's not really new, but it's a movement that has become popular lately, and you can read articles about it, and people are writing books about it, and blogs and there are even podcasts about it and everything. It's basically retire early, become financially independent. They call it FIRE. Cool. Okay. This is especially big amongst millennials, because I guess they don't want to work for the man, and they don't want to work till they're 65 years old. But it's really cute, though, how millennials think that they create things that have been around for generations. It's like the desire to retire early. It's like, "Yeah, this FIRE thing. It's cute that you gave a name to it, but you guys didn't create this. People have been wanting to do this since the start of time, really."

Anyway, according to the tenants of FIRE, you have to do three things. You have to earn as much money as you can at work. You do have to work. You have to earn as much money as you can. And, you have to get a side hustle. A side hustle, just another name that they gave to a second job. Whether you're working online, for yourself, as a freelancer or you actually have a second job, or you do something else like trading options, you have to have a side hustle to make as much money as you can.

The second thing you have to do is you have to save as much money as you can. And they do this by basically living as paupers. That's what they tell you to do. Live like a poor person, like a homeless person. You don't need a car. You can ride the bus to work and take a bike, because that's healthy for you. Eat less food. Don't eat so much. Don't go out to the movies. Watch Netflix at home, all these kinds of things, where you're trying to save as much money as you can. And then, with that money that you save, you invest it in something like index funds. You put it away, let other people manage it, and that's the cycle. Earn as much as you can, save as much as you can, invest it.

Now, if you follow that formula, it works. There are people in their 30s that have enough money saved that they can live off the interest off of their investments. Their investments or whatever they invested in is making money, and they can live off of that interest, which is awesome. They don't have to work. Most of them don't have kids. Even if they did, they still have to live frugally, of course. Because even in your 30s, even if you're making $100000 a year as a job, you're still not going to be able to save that much that you're going to be earning a lot of income, or a lot of interest from your savings, from your investments, to live middle to upper class. These folks, they have retired. They're not working, but they are living low to middle class, somewhere around there. That's cool if you like that sort of thing. I don't. I think you can have your cake and eat it, too. I want you to retire early and still be rich. That is doable, if you take control of your money.

Now, I agree with the "make as much money as you can" part. I agree with that part. I agree with the "save as much as you can" part. Now, I don't think you should live like a pauper. I think you should enjoy your life, even now, while you're working, and you're saving. I love driving. I love my car. I'm never going to give that up to save a couple hundred bucks in gas and insurance a month. But if that's something that you want to do and that will get you to your goal faster, then do it.

But your side hustle should be to learn to grow the savings you have as much as possible, instead of losing control of your money inside of a mutual fund. Does that make sense? Your side hustle, you have to make as much money as you can. You go to your job, you get your income, you save your money. What do you do with that money? Well, you can give it to somebody, index fund, mutual fund, and let them do it for you, and hopefully the market goes up or maybe it will go down and then pay fees for all that information and whatever. Or, you spend your time, and you learn how to do it for yourself, because there are people out there that will charge you to manage your money that are not going to do anything that you cannot do for yourself. You can actually do it much, much better.

That's what we're all about. That's what we're trying to teach you. That's the point of this podcast, to help you to learn how to do that. Take advantage of your own future, instead of giving it to somebody else, and then you can fire yourself much faster, years and years sooner. I did some calculations to prove my point, here. Over time, the stock market has averaged about eight percent a year, eight percent yearly return. That's pretty good. But when you sell options like we do, we have the ability to make 10% a month. A month, not a year. Stock market, 8% a year, options 10% a month. Hmm. Which one is bigger? I don't know. You could sell options one month out of the year, make 10%, and then take the rest of the year off if you wanted to. But these trades and these option selling I'm talking about is very high probability trades that can make you at least 10% a month. Ten percent, that's my goal. That's what I try to make every month. But I know traders that do a lot better than that every month. It's definitely possible.

Now, look. I know right now that might seem like a bit of a stretch to you, maybe if you're not making 10%, or you don't understand the strategies. Ten percent is a lot. That's 120% a year. That is fabulous. If you asked me, "Oh, nobody every does that, Alan." Uh, yeah. I do. I've done it before. It's not impossible. But let's be a lot more conservative. Even though 10% is possible, let's just aim for 5% a month. That's 60% a year. Still, very, very impressive. There are guys on Wall Street that will chop off their right arm if they could make 60% in a year. That's really good. If you start with a $10000 account ... Let's say you start off with $10000 in your trading account and you're making 5% a month, in 5 years, you would have over $186000. Five years from now, $10000 to 186000. That's really, really good. What could that kind of money do for you? What would your life look like? Would you have a new car? Or maybe a new bike for you FIRE people? A new house? a new plane?

I know, okay, okay. Maybe 5% seems a little high right now for you, maybe because you're new to options and maybe you've tried to make it work before, and it didn't work for some reason. All right. Let's say you screw it up, and you don't make 5%. You only make 3% a month. Let's cut down our expectations. Do you think you could do that? If 5% is possible, and the odds are in your favor, do you think you could make 36% a year? That's in addition to whatever you're making on your stocks right now. You take that, and you add it to the 36%. That would be really good, right? Would you be happy with just 36% a year? That's really good. I'd be happy with that, because in 5 years, if you have a $10000 account, your account goes from $10000 to $59000 in 5 years. That's almost six times what you started with. We're still talking about life changing money. It would be awesome, right?

But I get it. Okay. Maybe 3% is a little high. How about if you totally, totally screw it up and you don't even get 3% a month. What if you only get 2% a month? That is 60% less than our goal amount. But that's still 24% a year. How would your account do, then? Making 2% a month? That would triple your account in five years. Your $10000 account in 5 years goes to $30000. And then, in another 5 years, from $30000, it goes to $98000, because it compounds. Every year, it's just going to compound and compound and compound. Remember, we're only starting with a $10000 account, here. $98000 in 10 years, that's fire your boss money, right there. That is actually 2% a month is more than what Warren Buffet has made. He's averaged 22% over his life. If you can do 24%, it's possible you can do better than Warren Buffet. Now, he started with millions of dollars that other people gave him. I'm not going to compare that and say you can be the second richest man in the world, or whatever. I'm not going to say that. But you can do better, have better returns, than he does.

These are all hypotheticals. Now, let's look at a real example. Let's figure this out. For most people, a really good average income would be about $100000 a year. Is that fair to say, you think? Would you be okay with that, if we used $100000 as an example? Let's say we want to make that. We want to make $100000 a year income. That is $8334 a month, $100000 divided by 12 months. I'm going to leave taxes out of this, otherwise it's just going to get too complicated. But first, what we need to do is we need to figure out how much money our account would have to be worth, because we're trying to make $8334 a month. How much money would we need if we were making 2% a month, to be able to make that? That number is $416700. If you have an account that size, $416700, and you make 2% a month, you would be making $8334 a month. You would be making $100000 a year. We need an account of that size, $416000. But we don't have that right now. Most of us don't. You don't have it. Okay. I get it. No problem.

Right now, let's say we only have $50000 in our account. I think that's more normal. I think most of us have at least that, or maybe more, maybe a little bit less. It's okay. But let's just say we have $50000, and you can make 2% a month. If you have $50000, and you make 2% a month, question. How long do you think it will take you to get your account to be able to give us an income of $100000 a year? You start with $50000, you make 2% a month. How long will it take to get to $416000? You think it will take 20 years? You think it will take 30 years, 40 years, maybe? Well, I did the math on investor.gov. It's a website. They got all these nice financial calculators that you can play with. It would take just nine years. Imagine that. If you're 50 years old right now, you could be making $100000 a year in income before you hit 60. When you actually do retire, you'll still be getting your Social Security, your pension and whatever else that you have in your investments. Sounds like a really sweet retirement to me. Am I right?

If you have $50000 right now, and you only make 2% a month without any stock appreciation, in 9 years you would have a 6 figure income from just the income from your option trades. Oh, and on top of that, you'd be working about a couple hours a week. I think that's the kicker. Oh, yeah. I forgot about that. We're going to be working hard? Uh, no. Now, for some of you, you might not have the $50000 right now, and that's okay. This is an example. You could start with a lot less. We have traders in our community that are starting with less than $5000. When you have a smaller account, it just takes longer, but you can still do it. Trades are the same, strategies are the same. Everything is the same. But the important thing is that you need to start now. Can you imagine it? No more credit card debt. No more worries about college costs. No more worries about not having enough money for emergencies. That's pretty cool, right? I think so. It is. It's an amazing way to live. You could lose $80000 a year and not even be mad about it.

My wife got mad, to be honest. She did. I told her it was going to be a slam dunk. I was like, "Yeah, yeah. It's going to work. It's going to work," and then we lost the money and she got mad. I didn't get mad, but she did. All right. But what if you are super, super new to investing, and you're just awful at trading. You're the worst. And you don't even get 2% a month. What if you only get 1% a month? That's 12% a year. How many of you guys would be happy with 12% a year. I would. I think so. That would mean that your $10000 account, in 5 years, increases to $18000, and that's without any stock appreciation. That's just the income from your option trades. Even if you're only making 12% a year, 1% a month, it's still significant money. It's still better than what you can do in the stock market, because you put your money in the stock market ... Stock market is getting 8% average, sometimes 7. Some people say seven, some people say eight. I just went eight. But if you calculate all the fees, all the commissions you pay, you're going to be looking somewhere around 4%, 4 and a half percent is what most people get out of the stock market.

If you can make 12% on your own, and you compound that money month, after month, after month, after month, because when you look at the stock market and when you put your money in an index fund or a mutual fund or whatever, that money doesn't compound every month. It compounds every year. When we're doing our option trades, these are monthly trades, sometimes less than a month. If you have $1000 in your account, or let's say $10000, to keep it simple. Let's say $10000, and you make 10% in a month, well now you have $11000. The next month, you're not playing with $10000 anymore. You're now playing with $11000. It compounds every single month, and that's why it can grow so fast, much faster than in the stock market if you put it in an index fund. Does that make sense? Good. Because that's what I want for you.

If you want to retire early, if you want to be financially independent, you don't want to live like a pauper, like a poor person, like a homeless person, then the best thing for you to do is follow the plan that I just laid out. Number one, try to make as much money from your job as you can. Number two, you've got to have options as your side hustle. You've got to be selling options. You've got to be trading options, selling them, not buying them. Number three, save as much money as you can. If you don't need to go to that five star restaurant, don't. If you don't need to go to the movies, get Netflix. It's fine. You'll watch the same movies later on. Once in a while, you want to splurge, do it. Enjoy your life. Don't live like a pauper, but don't live above your means, either. Save as much money as you can. Spend your time that you have, your free time, your side hustle time, learning how to trade, selling options, practicing, practicing, practicing, getting better, asking questions, getting education. Find other traders that you can talk to and ask questions from, learn from, model what works, because I've done it. Others have done it. We have hundreds of people in our community that have done it and are doing it right now. We've interviewed people on the podcast that are doing it right now.

It's not something that I'm making up. There are people who are doing it. There is a model. There is something that you could follow, a path that you could follow. Just follow it. Put your nose down, do it. The biggest problem I see, a lot of people when they start trading options, they're like, "Oh, man. I want to trade options. I want to make a lot of money. But I don't want to do it this way. I don't want to do it that way. I want to do it my own way. What about if I do this? What about if I do ..." And they don't follow the plan. They don't follow the path. They don't follow what's already been laid out. I said it a hundred times, keep it simple. Keep it simple. Just do what works. Follow the plan that's already been laid out that people have already been doing it. There's that poem, right? Follow the path that no one has gone on or ... Man, I don't know what it is. But in this situation, you don't want to go on the path that nobody's gone on. You don't want to make your own path. There is already a path on the road. You just want to follow the path, follow the road that's already been laid out for you.

And then, when you're rich, when you're monthly income, your passive income that you're not working for or you're just trading for, that income is greater than your expenses, yes. Then you can take risks. Then you can go and take a cryptocurrency flyer, or you can go invest in a real estate fixer flip like I did and lose your shirt. All right? And then you won't worry about it, because next month, the mortgage is still going to get paid. The light bill is still going to get paid. Your Tesla bill is still going to get paid, all right?

That's the way it works. Follow the path. And remember, trade with the odds in your favor.

May 28 2019

24mins

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The Path To Options Trading Success - 46

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What is the best way to learn how to trade?

Is there one best way to learn trading?

That is what I cover in this episode...

Hey, hey, hey, genius nation. How are my passive traders doing today? How are you feeling? What's going on? You know what I love? I love when you guys reach out to me and when we can communicate back and forth. So whenever one of you or if you have an issue or if you had something that you want to say to me, I would love it, and I do love it. It's one of the highlights of my day when I get a comment. If somebody, maybe they post something, they email us, or they post something on our blog as a comment or one of our Facebook groups, our free Facebook group, if they're a member in there. If you're a member, go ahead, let me know how you're doing today. Let me know what questions you have. Let me know how we can help you, myself, or my team or anything.

But I do understand that sometimes you might have a situation where you don't want to make it a little bit public. Blog post, comments, and Facebook groups, and when you write a review for the podcast, those are all pretty public, and people can see that. And I understand that if you have a longer issue or if you have a longer comment, then you can always email us. I love getting emails. We get several emails every day and the ones that my team can answer, if you're asking a question like, "Hey, what's the best broker to use," then my team will handle that. But if it's a more detailed question, if it's a personal issue or a trading issue, then I have those reserved for me, and I take some time every day to answer those.

And that's really part of how I feel that I am able to give back. So even if you're not a member of one of our services or one of our courses or whatnot, if you do have something, please reach out to us. We'll do our best to help you out as much as we can. That's getting us to our goal of helping 10,000 individual investors achieve financial freedom. So if we can do that without you giving us any money, then that's fine too. As long as it gets you to where you want to go and makes the world a better place, I guess.

And so today's podcast, I had a lesson that I wanted to impart upon you, and I'm going to cover that. But we got an email recently that was very lengthy, and it was confusing. It had me scratching my head for a little bit. It was a aggravating. It was really annoying in a way. I don't know. I mean, it gave me so many different emotions as I was reading his email that it totally confused the heck out of me. But when I went through it a couple of times, I read it two, three times, and I realized that the person that wrote this email really, really needs the lesson that I'm about to impart.

And so I thought that he would be really awesome if I could share with you just a few lines from this email. It was very lengthy. I'm not going to read the whole thing but just a few lines to get you into the framework to understand what that guy was thinking and what that guy was feeling when he wrote this. I did respond to him, and I gave him suggestions on what he can do because that's what he was looking for. But in this podcast, I want to go through that lesson to see how it applies to this.

Okay. So now I get this email. We get emails every day, but I got this one email, and it was very lengthy, and I was like, "Okay, this is going to be a good one," because he wrote, it was several paragraphs. And I'm going to read some of the things that he wrote. He started off by saying that, with pleasantries, "Hey, how are you doing? I've been following you," blah, blah blah. And then he goes on, and I'm going to read some of the lines. So he starts out by saying that, "I've heard options are manipulated. This is not an easy market, and hedging positions is important." Now this is one line of one paragraph. Okay, so I'm going to bounce around.

I'm not reading the whole thing. I'm just taking single, single points to get you to understand what I think is going through his mind. He wrote really long. So that was the first point that when I was reading through it, I was like, "Okay, I want you guys to hear this." And then then he says that, "I think most traders fail because they are the Jack of all trades, and they switch from stocks to futures to options to currencies without developing the skills in one." And at this point I'm like, "Okay, this guy, he's preaching to the choir." He knows what we're talking about because we're always talking about get that one strategy, and if you're going to be jumping around, you're not going to ever be good at anything. If they got, dive deep, gets good at something, be consistent, be profitable before you add something else. So I thought, this guy, he's been listening. He gets it. He understands it.

So let's keep going into the email. Then he says that, "I'm thinking about taking an options course." I said, "All right. That's cool." He goes, "I belong to an alert service now, and I'm happy with it." Okay, that's awesome. And then he says that, "I have a full-time job, 60 hours a week, and I cannot dedicate to trade full time right now. But that's my goal." I say, "All right, man. You are like so many of our clients, of our members, and our customers. That that is the goal, right? Maybe you can trade a little bit. Maybe you can trade during lunch. We can show you how to do that."

But that's what his goal is, and I commend him for it. So then he says, "I understand where you are coming from with money spent on education. As I have spent," this is him talking, "As I have spent $25,000 so far and not placed a single trade just yet. I am preparing to set up an LLC as I am at the point where I will start swing trading stocks soon." Now at this point, I was getting confused. I say, "Well, wait a minute. Well, hold on a second here. You work 60 hours a week. You don't have time to trade full-time or even really, 60 hours a week. You have a alert service that you're paying for every month, but you have not done a single trade ever. You've already spent $25,000 on education, but you have not done a single trade. You're paying for a service that gives you trades, and you're happy with it. How can you be happy with it if you're not making any money from it? I don't understand."

I'm confused at this point. I'm very confused. And then he goes further. He goes, "I am preparing to set up an LLC." You're preparing to spend money to set a corporation to trade in, but you have never traded a single share before. How do you even know it's going to work? Why are you going through all this extra hassle and wasting time? And then he says, "I'm at the point where I will start swing trading stock soon." Okay, you going to swing trade. All right, good. You made a decision. You're going to do something, awesome, great. I commend you for that, but then why are you telling me in the previous paragraph that you were thinking about taking an options course and that you belonged to an options trading service? This makes no sense to me. I don't understand. Help me. Please somebody explain what's going on here.

Then he continues. He's going on. He goes, "Two of my mentors day trade futures and swing trade stops." Okay. The next line, the very next sentence it says, "I would love to be coached and mentor to learn options." Again I'm like, "Wait a minute. Whoa. You have two mentors that do futures and swing trading stocks. They're two different things, right? Kind of similar but still two different things, and now you want a coach to trade options. You want to be mentored in trading options." Okay, I mean, coach, you want to get a coach. Coaching is not cheap, right? To have a tab, somebody actually work with you one on one as a coach, as a mentor, that's not cheap. But you want to spend the money do that even though you've never done a trade yet.

And then he continues. He goes, "I will be in webinars all day Thursday as I am attending the something something summit." Okay. It's just pitch, okay? It's people pitching product after product after product after product. So a guy comes on, tells you how good his trading is and that you should buy his product. Next comes on and talks about how good his trading is, and you should buy his course. Next guy comes in and says, "Oh, I'm making tons of money. You should buy my course." That's what a summit is. You get guru after guru after guru coming on, giving you really no information and then just pitching product after product after product.

So he's going to be spending all day, all day Thursday, listening to these gurus pitch their products while he works 60 hours a week, right? So he's working 60 hours a week. I guess he took the day off for this. I don't know. And then he says that, "I've attended the summit two years," so he's gone to this thing for the past two years. This will be year number three. Supposedly he's getting something out of it because he's spending all this time on it. But again, then he's never placed a single trade.

I have no clue what's going on. Then the next line, it goes, "I enjoyed your presentation last week. It will probably take me four months perfecting your strategy." He enjoyed the presentation that we did. We did a training, and he was on. That's why he was writing in because he wanted to talk to me. So then he goes on and says, "This is my phone number. Please call me. I'm available after dinner time. Please call me at night after dinner time." And it's, okay, well, first of all, dude, I don't know what to say to you, right?

There's so many different things in your email. You start off by saying, you think our options are manipulated, and it's not an easy market to trade. Okay. And then the bottom, you're telling me that you can probably, it's going to take you only four months to perfect the strategy that I was talking about. So the strategy that I showed on the training, which is already not perfected. Nothing is perfect, but I showed the way I trade, my particular strategy, and he wants to take four months to perfect it, meaning I guess improve it or make it better than what I'm doing. But then here's a guy who has never done a trade before in his life, and he thinks he can perfect something that I've been doing for the last several years.

So that's where I was. That ticked me off to be honest. But do you see? I mean, I don't know. Maybe you can see yourself in this, where this guy is completely, completely bonkers. He's confused, and I don't blame him. His heart is in the right place. His brain may be not be in the right place, but he has his goal set that he wants to retire, and he's working hard. I mean, I got to give him credit for that. It's not easy working 60 hours a week and trying to learn how to trade and make yourself better.

But what I do fault is, how do you spend money month after month on something? How do you spend $25,000 without even trying a trade? And okay, fine, maybe you got suckered into it. Maybe somebody did such a great sales pitch that you just got suckered into some product. Okay, I get that. It's happened to all of us. You go to a seminar or whatnot, and you think it's going to be great, free information, and at the end it's like, "Okay, here, sign up for $5,000 program." Okay, we do it because they make you such an awesome, amazing offer that you think you can't fail. But then we learn, oh, that it's not the truth, but okay, even, oh, that's fine too. You spend $25,000. Okay, fine.

But the fact that bothers me is that he's still spending time going to sales pitches. Why are you spending time going to sales pitches when you have all this training or whatever that you already have that you're not using. Number one, you're not using any of it. You haven't done a single trade. And then you're going to the next step of making a corporation to trade in. I mean that is, if you are already a professional trader, if you are already making a very, very good amount of money, then you should go and look at and say, "Yeah, what, I'm going to start open a company," and we've talked about that in a previous podcast.

So if that's something where you're at, then you can listen to that podcast. But if you have never done a trade before, you don't need to worry about anything about setting up a company to trade in. You need to worry about A, putting a trade on, and B, not screwing it up because you're going to screw it up, especially in the beginning and to tell me that it's going to take you four months to perfect something that I'm already doing every day, where are you coming from? You have all this confidence. You've never done a damn thing yet. Jeez.

So, I mean, hopefully you're not in this situation where if you are, then it's very simple how to get out of this situation. Number one, stop wasting your time going to pitches, okay? Stop reading emails where all they do is try to get you to buy something else. If you have to, unsubscribe from that list, okay? Because a lot of these companies, that teach you how to trade, right, that's all they do. They sell you a very cheap product. Maybe it's seven bucks or 20 bucks or 50 bucks or 100 bucks or whatever. And then every day you get bombarded with emails about how you should buy one of their other products, and they have 10,000 other products, and they're all great, and they're all making millions of dollars, and they're all, you could triple your money in two weeks in all of them. But it's all BS, right?

So get off of these email lists. Get off all of that. Pick one thing, right? Pick one thing that you can do, that you want to do it. This guy tells me he wants to do swing trading. Okay, fine. Go do swing trading. Get away from options. Get away from futures. Get away from currencies. If you want to swing trade stocks, go swing trade stocks, right? Why are you on a options trading training? Why are you going to this summit? All of them are not talking about swing trading. They're going to be talking about all kinds of stuff, and then you're going to get sidetracked again, right? When you are learning, when you are trying to do something new, when you are trying to improve your situation, the tendency that we all have is to learn everything we can about it. Okay.

And this is the lesson part. When we learn, and for some reason, we look at trading because we don't know any better when we're starting out. We look at trading as trading, one big umbrella. So stocks, buy and hold, is the same thing as swing trading is the same thing as futures as currencies as options, cryptocurrencies even. All these things get lumped in together in our brain as trading. Say if your goal is, "I want to become a trader," or "I want to make 5,000 bucks a month from trading," right? That's your goal. We think that if we read a book on stock options, we're getting to our goal. If we read a book on swing trading, we're getting to our goal. If we're taking a course on technical analysis, we're getting closer to our goal. If we're learning about buying a course on futures, we're getting to our goal. The truth is we're not because each of those is a separate path. Each of those is a separate road that is taking you further and further away from your goal. Basically, you're just going around in circles. Does that make sense?

I've said this before many, many times. We need to pick one strategy even when it comes to passive trading. There's dozens of strategies that you can use to sell options, but we don't focus on dozens of strategies. If you're starting out, you focus on one. You get good at that, and you study that, and you practice that, and then when you're consistent and profitable, then you add strategy number two if you need to. And then maybe you go to strategy number three. You really don't need more than three strategies to be honest. You can make a very, very, very nice living and trade really well and have a awesome, amazing return every year with just two strategies.

And then there are those people that I know that do amazingly well, trade for a living, with just one strategy, just one. That's all they do. They master it. They pick one. They go at it, and they master it. That's all they do. So if you want to succeed at this, that is the path. The path is not to open a company before you ever done a trade. The path is not to spend $25,000 and never do a trade. The path is not to have an advisory service give you trades, and you never do them. The path is not to say, "Oh, I have mentors and this and this, but now I'm going to go learn something totally different." No, those are not the path. Those are distractions. Those are side, whatever they're called. They are not taking you to your goal. You want to get to your goal? You need to simplify it. You need to make it cut down as much as possible. Get rid of all the noise, and then you focus on step by step.

Okay, this is very important. You pick a strategy. You learn about that strategy, and then you implement it. You go out. You get a paper trading account, and you go out and you get a backtesting software. You go out, and you just do the trade. You don't even have to know everything about the trade. You don't have to know everything about how it works. You don't have to know every single adjustment. You don't have to know anything really except how to put on the trade and a basic idea of how the trade works. Once you have that, you go, and you put on a trade. Make it a very small trade if you're losing real money, okay? If you're using paper money, go and do it. That's what you should be doing. But if you're using real money, you go out, and you put it in a very small trade, so that if it does lose money, it's not the end of the world, okay?

And then you see how the trade reacts. And then you get to another point in your progression, and then you'll get stuck. You'll say, "Oh, okay. I put the trade on. Now what do I do?" Okay, well then you learn, and you go investigate. And you say, "What do I do now? Oh, I just have to wait. Well, okay, all right. I'm going to wait. All right. Oh, hey, my trade's making money. What do I do now?" Okay, well now you can go, and you can learn the next step. You can learn the step of what do I do when my trade is making money, right? And then you have different options. "Do I let it expire? Do I get out at a certain percentage point, or do I have a stop loss? What do I do?" Right? And then, "Oh, what about if my trade is losing money? What do I do now? Oh, my God."

Okay, well at that point you learn what to do about that. You say, "Okay, I need to adjust my trade. All right. How do I do that?" Well, go find an adjustment and see how it works, and if that does not work, then you go, and you find a second adjustment. You don't need to learn 20 different adjustment strategies before you even put on a trade, okay? What I'm saying here is to take it step by step. One thing, learn about it, learn about that step, then go to the next step, and then learn about that step, and then go to the next step and learn about that step.

This will get you to your goals so much amazingly faster than all of the other people who just sit around and just get educated, get educated, get educated, get educated, and never take a single action, okay? If you want to get ahead, if you are an action taker, if you want to make this work, you have to put on the trade. That's the biggest hurdle. I don't know why people think that just, I'm just going to learn about it and learn about it and learn about it and learn about it and learn about it, and I'm actually doing something. You're not. You're wasting your time. If all you're doing is learning, you're wasting your time if you are not implementing what you're told to do.

So for example, this guy, if he wants to do swing trading, get out there and put on a freaking trade, okay? If the trade does well, then you figure out, what do I do now? If the trade does badly, it starts losing money, then you figure out, what do I do now? Okay? While you are learning, this is the fastest, fastest, fastest way to succeed in anything, right?

I mean, if you are trying to bake a cake, you don't need to know all the nutritional properties of every single ingredient. You don't. You need to know step by step what do I do. Okay, you take the onions. Oh no, not onions. You're trying to bake a cake. You take the flour. All right. What do I do with flour? Okay, go on Youtube. Find a video on how to, whatever they do. They knead flour I think, so here, knead the flour into dough. I guess, I don't know. I mean, I've never baked a cake before. I'm sorry. I don't know what the steps are, but you take something, and you do something with the flour, okay? Okay, now I'm done with the flour. Now what do I do? Okay, I think you got to bake the flour or something, so, okay, how do I do that?

Learn how to bake it, put it in the oven, put it on certain degree. Okay, fine. I'm done with that. Now what do I do? Okay, now I got to put the icing on it. How do I do that? Okay. Find out how you do the icing. Okay. You go, and you make the icing, or you go, and you buy the icing. Okay. Now I'm going to decorate the cake. Okay, cool, step by step by step. If you sit there and you go, and you read a book about how to bake a cake, right? You just spent, I don't know how many days in reading a book about how to make a cake, but you still don't have a cake. If you do it the way I just told you earlier, hey, you might have the worst cake ever, but guess what? You are now a baker. You baked a cake, okay?

So now you take and you say, "Hey, I baked a cake," and somebody's going to come and say, "Well, you baked a horrible cake." "Well, yeah, I know, but I baked a cake, right? So that's good. I have one cake under my belt." And then if that other person knows how to bake a cake, they'll help you. They'll point at, "Okay, you did this wrong. You did this wrong," and then you can go, and you can fix it. But you are not afraid anymore. You're not afraid of baking a cake. And when it comes to trading, you're not afraid of putting on a trade. I mean, maybe that submit button, you put in the order, but that submit button, maybe that's the scariest thing in the world right now because you're afraid of losing money. The only way to get over that fear is to hit the button, to actually do it.

And if that's the case, then find the trade that has the least risk, that has the least amount of money, that even if it goes horribly wrong, and you lose 100%, it's not going to kill you because that experience that you get from doing that is going to be immeasurable. That confidence that you get, that "Yes, I did it. I finally did it. I finally put on the trade," immeasurable. So depending wherever you are, whatever path on the option continuum you are, maybe if you're option level two, five, six, whatever, doesn't matter where you are on your phase of learning options, forget all the noise.

Do it step by step. Do take an action and then figure out, "Okay, now I'm at a roadblock. Now I need to know, what do I do at this point?" And then you figure that out and then you take the next step and then, "Okay, I'm at another roadblock." Then you take the next step. Then you take the next step. And not only that, but when you ask for help, it is so much easier for somebody like me to be able to help you out, right? Because you've already done something, and you have a specific question. "Okay, I wanted to do a credit spread. I put on the credit spread. Now this is my situation. What do I do?"

Okay, that is so much easier to answer than this fellow's email because he was all over the place. I don't even know what he's asking me. He's swing trading, but then he's starting his LLC, but then he can't work, or he works too much, and then he's going to all these different trainings. I mean, even if he takes my course, do you think he's actually going to listen to anything I ever tell him, or is he just going to go to the next course next week, buy something else, and learn about that, and then go learn something else? I can't help you if you don't implement. Nobody can.

And if you're so vague, and please don't tell me to call you after dinner time, right? I mean, I have a life. I have kids, have family. I'm not going to call you after dinner time. If you want to sign up for our coaching, then you can sign up for coaching or one on one coaching. That's fine, but it's going to be done at a time that I can do it, right? So, I mean, I really appreciate it, this guy reaching out, and I tried to help him as best as I could, but there's only so much you can do for people that are rudderless. You're in the ocean. You don't know what direction you're going in, and you don't know how to get there. But if you pick a direction, right, and then you want to learn something, the fastest way to do it is step by step.

Do not try to learn every single thing you can do without taking any action. Once you get a few trades under your belt, once you get a few successes under your belt and a few losses as well, then you will have a much better idea of, "Hey, what do I need to focus on? What do I need to learn? Where are my blocks?" And then you can go and totally jump in and master that one particular strategy. Don't try to master all, every... Even when it comes to options trading, there is nobody that is an options master, that knows everything about options, that knows about every single strategy and is consistently profitable with every single strategy because it's all very difficult, very complicated to learn everything.

That's why you need to niche down. You need to keep it as simple as possible. Learn step by step because you are not a guru. You are not a trainer or a trader or a mentor to a million other people, right? You are responsible for your own trading account, and in that sense, all you have to do is make more money, have more money at the end of this month than last month. As long as your account balance is growing, you're in a good spot. And that's the goal. More money at the end of every month, profitable trading, consistently, consistently profitable. That's all you have to worry about.

Some people telling me that, "Oh yeah, I want to learn the most complicated strategies." You don't need to. It's not about showing off, right? If you make money every month with the most basic strategy, the bank doesn't care, right? Nobody else cares. Your wife is not going to think any lower of you because you did it, you're making money with covered calls instead of ratio spreads or box spreads. Nobody knows. Nobody cares. As long as you have a profitable trading account, that's all that matters.

Your broker doesn't care even. Your broker knows what you're doing in your account, but they don't even care, right? As long as you are consistently profitable, you are a good account for them. You're doing more trades. You're making them more money. You're going to stick around. That's the kind of person that they want. They don't want somebody who's going to open account and trade and blow up and leave in a couple of months. They want the trader that's going to be there for a long, long time to give him commissions month after month after month. Those are the types of people that they like to have accounts, and those are the type of people I like to work with that can focus on one thing, learn, grow, grow, grow, and then add other things as well.

That's what makes it fun. When you're making money, it's fun. When you're just learning, you have that false sense of I'm actually doing something. I'm actually moving forward. I'm learning, so that when I do finally started to trade, all this knowledge is going to just rush out and make me profitable. Like he says at the bottom, it's going to take him four months to be profitable. No, I don't think so. Not with all the other stuff that he shared. I mean, I don't even know if he has a trading account set up yet.

So, take it small, step by step. That's the lesson for this podcast, okay? Step by step, take it small. Don't need to immerse yourself in all the noise. Don't need to learn everything. Implement, please put on a trade, and then see where it goes. And then when you get stuck then research what you need to do next and then implement more. And then you get stuck, and then you research more, and then you learn a little bit more, then you learn a little bit more, then you learn little bit more. The trade is over, and then you're either successful or not, but you've had done a trade. You're experienced, right?

And then we have to add more and more and more experience. Do more and more and more trades, so that you learn more and more, and you learn faster. The more trades you put on, the faster you're going to learn because the more things that could happen. And the more you'll have to figure out, "Okay, what do I do next?" So that is what I wanted to impart with you today. Take it to consideration, right? And put something on please. I know it feels good to learn stuff. I know it feels good to listen to even podcasts, right? I know you're listening to this, but this is all a waste of time if you cannot go and put on a trade. If you don't that, then there's no reason for this, okay?

So please pick a strategy that you like. Put on a trade. If it's on paper, fine, great, I don't care. That's even better because you're not losing anything. Just put the dang thing on. See how it does, and then see where the roadblocks are. Learn the next step and move forward and then move forward and continuously moving, moving, moving forward. Because then when you're actually doing stuff, and you listen to podcasts, or you get more education, or you read a book, or you take a course or whatever, then you will be able to take that and apply it to what you're already doing, and it'll ROI immediately. Does that make sense? I hope it does. Remember, trade with the odds in your favor.

www.optiongenius.com

May 09 2019

23mins

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He Quit In One Week - 45

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Hello my fellow option traders. Welcome to the 45th episode of The Option Genius Podcast. 45 episodes. Man. When I first started this thing I was thinking like how many episodes am I going to have, I mean how much can I talk. It seems I guess I can talk a lot.

Well in this episode we have a very very special lesson that I do want to impart and share with you. Understand this and you can save yourself a lot of money from losses in particular. And unfortunately most new traders learned this lesson the hard way. I mean they learn it after they lose a lot of money and some of them don't ever get it including the fellow that I'm going to talk to you about. Sometimes they just don't figure it out.

So what is the lesson? Well I'm not going to tell you. Well I will but not right now. See before I need to tell you the lesson I need to share with you a story. Because while the lesson is great you're not going to remember it. It's like when was the last time you read a fiction book, you probably remember the story, and if it has a lesson you remember the lesson. But if you go read a nonfiction book you might remember it, you might not. You might just gloss over so many things and so I think that in terms of entertainment wise and for helping you to remember this lesson I should tell it to you in a story. And in fact I do have a story and it's a true story. So that makes it even more fun. Hopefully that will help you remember it because it does for me. I mean I remember movies that I've watched years ago, I still remember the stories.

So here we go. You see my wife has a cousin that she loves a lot and he loves her too. He's a few years older than her and they do, him and his family they live nearby so we do see them from time to time. Now when I first got started in trading my wife helped me a lot and I would I would learn the stuff and then I would share with her what I was learning and then I would share with her the trades that I was doing. And actually now that I think about it she was helping me get better at my trading. In fact as a side note I might never have become a consistently profitable trader without her help. And that's seriously the truth. But that is another story that we'll get into later on. But for the sake of this story I just want to let that my wife knows the basic of options and how they work and she actually enjoys trying to predict where a stock will go. So she has a pretty good knack for chart reading, actually much better than I am. And so when we were getting started I would show her the trades that I was doing and then I would be back testing certain trades and the trades that she would put on for the back testing almost always did better than mine which was crazy.

But so my wife understands the basics of options and trading in general. That is why she got really excited when one day her cousin came up to her and told her that he had started trading in his spare time of course. Now curiously though he did not ask me for help or tell me about his trading. He didn't do it because at this time when he came forward and told her this I was actually doing very well trading and he knew that I teach others. He knows this. He knows about Option Genius and all that. But he only told her for whatever reason. I don't know. People have their issues. People have their reasons. I don't know. And I didn't really pry or ask them but they started chatting about how he determines what a stock is going to do. He started telling her what trades he was making. A couple of the trades that he has made and he was all excited about it. And basically what he was doing is called swing trading. So he wasn't using options. He was just buying the stocks outright but that means that he would buy and sell stocks based on the charts and what he thought they were going to do. And then he would hold them for a few days.

Now he explained to her that he liked to bet against the current move. So he's basically like a contrarian or if a stock is moving higher he would want to short the stock or if a stock was moving lower he would want to buy it thinking that the move had to end and the stock would go back in the opposite direction. Now that's also called mean reversion. So if something is going, a stock is moving in one direction eventually it's going to stop moving in that direction and turn around and go back down and stocks go up and down so mean reversion is real in the markets, it just depends on how much of it there is in the stocks that you're playing.

Now my wife also totally buys into this theory. Now me I am the opposite. I do believe mean reversion is there, it is there, of course that's how stocks work. That's why selling options worked so well. But I have more confidence in trends. So if I see a trend, if I see a stock is moving in one direction, either it's going up or going down or it's going sideways, I feel that the trend will continue. There's this notion of the path of least resistance. The trend will continue. I mean that's there's this this notion of the path of least resistance. Now I don't want to make this an episode about mean reversion versus trend following, we can do that later. But to me it's the sense where if a stock is moving in one direction there's a good chance it's just going to keep moving in that direction. So why would you fight that? Why would you go against that? It's kind of like a train. You don't get in front of a train. You let the train go by. Then you cross the street.

So my wife and I we've had this argument many many times especially when we were doing the testing together and the trading together we would always have this argument. "Hey, you need to sell on the other side." "No I want to sell this side." So we would have this argument. But now she had somebody who thought the same way as her. So that was something really exciting to her. And she was excited for him because he was excited about it and it gave him a spark. He would light up when he started talking about it. And after that first time that they talked they would call each other every week or every couple of weeks or so and he would call her to tell her about a great trade that he made. She would call him to get an update and encourage him. And this went on for a few months really.

And then one day she comes to me and she says, "I haven't heard from him in a while." And I was like, "Really? He hasn't called you. You haven't called him. How long has it been?" She's like, "Well it's probably been maybe a couple months." She got busy, my wife got busy with the kids and whatnot and she forgot to call him and he didn't call her and she just realized that he hadn't called.

Now to me that's like a warning flag, like beep beep beep beep, warning, warning, that something is going on, something bad is happening 'cause when somebody is crazy about something and they can't stop talking about it and then all of a sudden they stop. All of a sudden he's like radio silence. Especially when it's about trading or money to me that can only mean one of a couple of things.

So either the person got really busy in something else. Maybe the person got caught up at work or they had an issue or family problem, something happened that messed up their routine and so they got away from the trading or whatever it is. Which in most cases is not really likely because if you're so excited about it you're still going to find a way to do it.

But the other way, the other possibility is that the person actually did very poorly and they lost a boatload of money and is embarrassed about what happened and so they stopped talking about it. Now I know because that has happened to me and it has happened to people with the stock market throughout time. I still remember in the dot com bubble. I was younger then but I remember people in the community, people at work, people everywhere, they'd be talking, "Oh yeah I bought AOL and it went up" and, "Oh I bought this one and it went up." And the people that were very heavy into the stock market.

I remember there's one gentleman in particular. Every time he would see my dad he would start talking about the stock market and how much money he was making and he would encourage every single person that he talked to, "Hey you got to get into the stock market. You got to get in the stock market." We just had the same thing with Bitcoin if you remember. Every party you would go to, every single gathering there would be somebody talking about Bitcoin. Somebody talking, "Oh Bitcoin is great. I'm making so much money, I'm making so much money, I'm making so much money." Then all of a sudden it stops. And there's a big loss. And then you don't hear about that anymore. After the dot com bubble that gentleman never talked about the stock market again. He didn't really talk to anybody. After the Bitcoin crash that we had people stopped talking about Bitcoin. "Hey what happened to your Bitcoin?" "Oh yeah yeah, I sold it." "Oh yeah. It'll go back up again." That's the end of the conversation.

So that's basically what happens. It's really two things. You either get busy or you have a loss and you're too embarrassed to talk about it. Now I didn't know which one it was in this situation. And I explained this to my wife and she's like, "Hmm, I guess maybe I won't bring it up if that's the case." And I'm like, "Yeah that's probably the best thing." Because in this case he never really told us how much. We didn't really approach the subject but after a few get togethers it kind of started coming out that something happened. And in the beginning he denied it. He denied that there was anything wrong. But eventually we found out that it was a lot of money. I mean enough to cause him and the family a lot of stress, to cause marital tension and actually a change in their lifestyle. So I mean it was pretty dramatic, pretty bad.

So basically his wife put an end to his trading which is probably for the better. But,  there's a big but here. And if this ever happened to you, if you've ever been into trading and you've lost money you know that it's not as simple as, "OK I'll stop." This is trading. Once you get bitten by the bug man you cannot stop. Even if you lose a ton of money you've got to give it another go. It's addictive. You've got to give it another. You can't just take that from market and just take that loss and be done with it. No you've got to get that back. I don't know, maybe it's testosterone. I don't know what it is. It's your machismo, whatever the problem is. But we as traders we got to go get that money back.

So recently they came over for another get together and I just needed to go to the store to pick up something, we didn't have it at the house. So I went to the store, picked up something and his son came with me to give me company. So that was cool. And as we're talking he mentions that his dad has just quit his job. Now this conversation is probably two or three years after the whole trading debacle. So he tells me that his dad just quit his job and I'm like, "What?". I was shocked. Like what is going on. "What do you mean he quit his job? Why did he quit his job? Did he get another job?" "No he didn't get another job. He actually wants to trade full time." And I was like, "Oh so he goes from working full time to quitting to trading full time. So was he trading part time before this?" He goes, "Oh no he wasn't trading part time but he just felt he had to do it."

It's like uh oh. You can see where this is going. So I'm like, "OK that's cool. I hope he does well. If he needs anything, you can tell him . Are you helping him?" Because his son had learned a little bit about trading. I'm like, "You helping him? You doing it with him? If he needs anything, let me know." He goes, "Oh well yeah. No he already quit." I'm like, "What do you mean he quit? He quit the job?" "No no no. He quit trading." I'm like, "Wait, you just told me he quit his job." "Yeah. He quit his job last week and then he traded for a week and now he's looking for another job because he quit trading." I was like what, this makes no sense at all. What is going on in his brain? I mean what did he do? He lost so much money in a week. What was his plan? Just what the heck.

And that's the problem. He didn't have a plan. He just decided one day to quit his job and started trading again. Whatever he felt like. No plan, no system, nothing. And the kid tells me that now he's really beating himself up and mom is really pissed at him. Of course she's pissed at him. She told him to stop the trading. Somehow, I mean he must have told her that he's quitting his job or maybe he didn't. I don't know what's going on in their household. But you have a guy who lost a lot of money. His wife told him no more trading. All of a sudden he quits his job. And they needed both incomes. So he quits his job, goes full time trading, loses I don't know how much money, if he lost. I don't know what he did or maybe he realized he couldn't do it, don't know what he's doing. And now he's looking for another job again. But I was like, "Man he had such an awesome job, he's not going to be able to find such a good job again." Like, "Yeah but he was getting tired of it and he wanted to try something new." Okay. That's fine.

Unfortunately I've heard this story many many times. Traders being full of confidence, heading into the markets with very limited trading knowledge. Thinking that all they have to do is click a few buttons and then they're going to make millions. Until they get hit in the face with reality. Because if you don't have a plan, you will not succeed. If you do not have rules, you will not succeed. You cannot simply watch a YouTube video or like a one hour webinar and think you know enough to be consistently profitable. It just doesn't work that way. You need a real trading plan that is tested in real market conditions with real money. You need a real strategy that works and not only works for just a couple people but has worked for a lot of people, has a track record. And you need proper money management to limit your losses and to provide you with stability.

So let me ... please don't go all gung ho, guns blazing, end up with a slap in the face, cause this ain't no video game where you could just hit the reset button and start over. Once the money is gone, bye bye, it's gone, it ain't coming back. That's why experience is crucial and if you do not have experience in trading you either need to get it through actual trading or paper trading or back testing or you need to pay somebody with experience to teach you the proper way to do it. Now trading education can be cheap or it can be expensive depending on how you look at it. The price is the price. How you look at it, how you think about it is what determines if it's cheap or expensive. I mean in dollar terms it might sound expensive but over the years how much can it make you and how much money can it save you in losses. That's what you need to really look at.

I mean if you buy a course and you learn one thing that makes you better that's worth it. If it causes you to make one less mistake it's worth it because every time you make that mistake in the future you would probably lose money. And so if this stops you from making that one mistake over and over and over again it's definitely worth it over the long run. Because when it comes to trading learning on your own is probably the most expensive way to go about it because not only will you lose money you will not make as much as you could. And those missed gains, the money that you miss out on will not get compounded. We won't have that money to make it grow and grow and grow. And so taking a class that costs you  1000 bucks can stop you from making a mistake that costs you hundreds of thousands of dollars over your lifetime. And I've seen this happen over and over and over again.

I mean that's it. There you go. That is the lesson. Do not trade without a plan. Know what you're going to trade, how you're going to trade, what you will do when things go right and when they go wrong and how you will protect yourself from losses. I'm just gonna repeat that. Know what you're going to trade, how you're going to trade it, what you do when things go right, what are you going to do when things go wrong and how will you protect yourself from losses. You figure that stuff out, boom, consistently profitable.

And one more thing. Come on guys. Don't quit in a week. What the heck is that? How do you go from, "I'm going to quit my job and be a full time trader" to, "Okay I give up in a week." Jeez. It's a good thing he doesn't listen to this podcast. He would be really pissed if he heard me talking about it but he doesn't listen to it so it's okay. I mean your dreams are worth the effort and time it takes to do this properly. Please don't wuss out in a week. Huh? I mean it can take whatever long it time it takes but everything you learn will make you better. Every minute that you spend to learn, every podcast episode of mine that you listen to, every course that you take, every email that you read, well not the stupid markety ones but the ones that actually have content, they will make you a better trader. The more time you spend on your trades trading, the better you'll be. But it's not going to happen in a week. It's not going to happen overnight. It might take a year, two years, three years and we have other episodes where I go over how long it should take you. So if you want to know what is a good timeframe then check out our other episodes. But seriously your dreams are so so important that you just can't give up on them.

Because what is the alternative? You're going to live in a humdrum boring insignificant life? I don't want that for you. Not when there's so much out there that you could be doing, you could be enjoying your life, you could be doing whatever you want to do. You are on the right path and I'm super super excited for you, that you are on the right path. If you are listening to this you have the access to the knowledge, to the ability, to actually make all your dreams come true. To have this stuff work for you. Because it's not that complicated. It's just about doing the work. It's about having the plan, going through the procedures, going through the motions, doing it over and over again, fine tuning it so that you do not make the mistakes. But if you go all gung ho and just trade whatever you can and not have a proper planning plan, not have a proper strategy. If you do it that way, the way this fellow did it, you're going to end up in the same boat. Time's gonna go by, your money's gonna go away. Your wife's gonna be pissed at you. Your kid's are gonna be mad at you. And you're not going to have anything to show for it.

I don't want that for you. I want you to have everything you deserve, everything you want. And when you're selling options and you're trading passively you can have that. Because if you don't have any other examples and just look at me, I am the example. I have been able to do it and I'm not some Harvard graduate Wall Street person. I learned the hard way and it took me years and years and years. It doesn't have to take you that long because I've given you all the stuff, I'm giving you all the knowledge. I'm like, "Here. I do this. Do this, copy this." And just do it. But you got to have the plan. You got to have the formula. You got to have the methodology. And then you have to have the practice and the patience to do it over and over and over again to nail it. And then once you do man, the sky is the limit. There is nothing holding you back.

All right folks. So take from this what you will. I hope the story helps. Please don't quit in a week. Please don't quit. Don't quit on yourself. You have everything you need. Your dreams are worth the effort and the time it takes to do this properly. So that's it for this episode. Don't forget, always trade with the odds in your favor.   

Apr 09 2019

23mins

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Fun With Discipline - 44

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Hey, hey, hey, Genius Nation. How's it going today? Coming to you today from the home office. Didn't feel like going to work today and felt like relaxing. Trades are doing well, everything's going well. And so, I'm here just relaxing today, but I did have this really, really exciting thought. So, I thought that, you know what, I need to record this. I need to get this down before I forget. And so, here I am. And, what happened was really that the last couple of coaching calls that I've had with clients, both of the fellows said something very similar and they both had a similar issue, which was that they are having a hard time adjusting. It's not that they don't know what adjustments to make, or they don't have a trading plan that we gave them, but they are not sticking to the rules.

And so, they are not doing it properly and they're not treating properly. And so, they're having losses that they really shouldn't have, and they know that, and they know it's their fault. But, for some reason, whatever, they had their own little reasons. Oh, I lost track, or I didn't have my records, or whatever not. They felt that their issue was that they could not stick to their adjustments. And, really it boils down to discipline. So, if you don't have the discipline, you won't stick to the rules, right? You'll just try to do it fly by the seat of the pants. It might work, it might not work. But, that's not the way that you want to be doing it. Now, discipline is like a muscle. It's like a habit. I mean, the more you do it, the stronger it gets, the more ingrained it becomes in you, and the better off you are r