Archive for January, 2009
A couple of months back I made the decision to move slightly outside of my comfort zone, fulfilling a long held desire to know how to trade options. I guess the catalyst for this quantum leap was the massive economic downturn affecting all world economies. I finally resolved that I did not want to be caught up as a helpless victim in a world where essentially all control had been wrested from me. And .. so I asked myself, “What if I could find just the right business venture that will offer me reasonable certainty of great profits, irrespective of what is going on in the world economy?”
Around twelve months earlier I had started to take a look at one of the options trading programs being touted, but for an ‘every day’ guy like me it was one thing being able to meet the high cost of buying into this program, only then to find myself undercapitalised for trading purposes. As much as I wanted to learn how to trade options, I could see no immediate prospect of me doing that. And so .. it went no further.
Two of my online marketing colleagues then drew my attention to an options course with a difference being promoted by internet marketing guru, David Vallieres. David has been trading for some 20 years but it was not until about 2-3 years back that he finally stumbled on a marketing method totally unlike anything available elsewhere.
I am being taught trading as a business, rather than place ‘one off’ speculative bids which amount to little more than gambling. And .. the beauty of this is that I can profit from my business irrespective of whether the markets are moving up, down or sideways. And although the markets may change over time, the underlying principles of this method of marketing never will. They are something which I can hand down to my children and grandchildren.
The purpose of this blog is three-fold. First, to let you share the experience of trading options with an outright newbie trader, so that you can gain an insight into the basics of trading, (you will see what I’m achieving on the paper trading platform first); second .. to offer you a business that does not depend on marketing and third .. to use the blog as a focus point to channel the outcomes of my daily trading activity and reflect on what I have learned. In that way I can chart my daily progress as I master all of the fundamentals before taking a look at some of the advanced techniques shared in this exceptional video based course.
Once mastered, trading as a business need take up no more than 15 minutes of your time each day .. placing positions and making adjustments as necessary. Learning how to trade options has to be the ultimate business model. Starting with my next post you will soon see why.
Today, I just wanted to give you a quick insight into the OptionsSphere course and what it reveals when it comes to how to trade options and make consistent profits and long term gains.
Its a great wrap up I think, before I start getting down on the blog some of my personal thoughts on working my way through the program.
In all the course consists of some 37 videos, spread through 11 modules. Here Dave provides you with a comprehensive yet easy to follow and (for me) totally absorbing account of the secret trading methods used by just a few professionals and hedge fund managers. As he sets up positions on the Think or Swim platform he invites you to observe him as he places his spreads, returns to make adjustments (if necessary) and then wraps it all up with some advanced techniques and never before shared, explosive wealth building strategies.
No stone is left unturned. After being introduced to trading as a business and trading with confidence, we then get to see why trading by the numbers is so important in the way they impact on our trading business, (enter The Greeks!); before moving on to the strategies used in selecting our trades, including an introduction to charts. Unfortunately many traders put on individual positions not realizing how this affects their overall portfolio. We are shown how to build a portfolio by putting on positions that work together, and are provided with an excellent overview of the Think or Swim platform. I might add .. TOS has an amazing array of training material available on working the TOS platform .. and best of all its totally free.
Having learned how to build our portfolio we are shown how to manage it by the numbers and are then shown what to do when the numbers don’t look so good (hint: think adjustments). Did you know that by making one small change in your position you can increase the odds of you making a profit by 80%? This is the one missing link in trading options and stocks that almost no-body ever teaches.
Next, we explore the risks of holding positions right through to expiry date and are taught how and when to close positions for maximum profits. Although we do not delve into technical analysis in great detail, there are specific analysis tools which give us an insight into the direction that the market may be moving. One such Dave reveals to us is an indicator that predicts short-term and opening market direction with an amazing degree of accuracy, close to 95% of the time. And that’s just for starters!
So far I have deliberately refrained from mentioning the price that this course is selling for, rather preferring you go check this out for yourself. But, let me say this .. I have been invited to join weekend courses costing ten times what you will pay for this course .. and seen some of the material left with participants .. and these do not hold a candle to what is on offer here. OptionSphere represents tremendous value for money .. and Dave over delivers on this big-time .. all the way through.
Having received the training package you are also invited to grab hold of Dave’s exclusive Daily Market Review and Commentary, a free trial offer for 30 days. After that time, a monthly subscription is charged. But .. speaking for myself .. and because I a newbie trader, I am just sticking with the OptionSphere program for the moment. And I will have unrestricted access to that material for ever. That is going to keep me busy for quite some time to come. Then, when I have learned how to trade options profitably, I may well return to subscribe to the Daily Market Review and Commentary. Some of you more experienced traders, may see the merit in subscribing to the Review and Commentary, straight away.
In knowing how to trade options and profit, it is not enough to place a spread, walk away and then rely on hope that you have done the right thing. Maintaining consistent profits is all about the art of adjustments and appropriate timing of these adjustments. If you see yourself getting slightly off track, rather than settling for a small profit, or worse, incurring a loss, you can go back on in and place a spread position to correct the situation. I found myself doing that this morning when IBM shares moved sharply upwards and I started moving a little too close to comfort to my break even points. I’ve now taken corrective measures. Fortunately, no adjustments were needed to my other three positions.
If we remain determined to trade as a business then we need to manage our business on a rock solid footing. That means thoroughly familiarizing ourselves with the dynamics of the market place, knowing in advance where we are going to be, before placing a trade, (in other words having a plan in place) knowing how to manage risk (remember this method does not require that we speculate or try and predict the market, which is how most traders operate), having an eye for opportunities so that we can act on them swiftly and maintaining a mindset that enables us to trade with complete confidence.
This business has all the hall marks of any other. My stock in trade is shares and options and I sell these to make a profit. As with any other business I will be managing my business by the numbers, seeking to create opportunities that will provide the largest possible return on margin (you will see me speak of something called the Greeks a little later on, in this regard).
Let me emphasize again .. we do NOT try and predict the market. We only manage risk!
There are only two essential truths of the marketplace when it comes to options .. options fluctuate in price .. and .. options expire. Understand these basic tenets and the future bodes well for you in the world of option trading.
Even at this very early stage I am starting to see that I need not be fearful . I am starting off just so very gently, following the path used by the professional hedge fund managers and professional investors, knowing that as with any business there is risk, but that with proper management of that risk, returns of 5% (most conservative) on up to 62.5% on margin a month are very possible. And what I find so lovely about this is that you can be collecting your profit just 30 or 40 days out from when you first put on your position.
Knowing how to trade options is as much about maximizing profits as it is about minimizing costs and the very first cost you will face will be that of gaining your option trading education. Tomorrow I want to talk a little more about that.
Now, let me say from the outset that I am just starting out on this wonderful journey to learn how to trade options. At this point in time my knowledge is scant. I just wanted you to know that if you are seeking “guru” advice then I am not qualified to provide it. However, you would do well to take note of my recommendation to check this course out if you are seriously keen to know how to trade options and profit.
Already my journey is uncovering things which I believe over time will prove to be of inestimable value to you. It is one thing to learn what the master is teaching, yet quite another to gain prior insight into the doubts and questions in the minds of those who have gone on before you; and to share in the delights of their minor triumphs when they see the fruits of their studies pay off. Having now reviewed all of the material in the OptionSphere course, played around a bit putting on ‘paper’ positions on the trading platform (the Think Or Swim platform is the platform of choice), I have told family and friends that the only way I could possibly fail to grasp the concepts taught is if, (a) I’m downright lazy, (b) I suffer some sort of brain injury or impairment or (c) I fail to reserve extra capital to make adjustments as needed. I will speak further about adjustments in due course and why they are EVERYTHING when it comes to ensuring you are in profit on a consistent basis.
Do you need to have any knowledge of options before you commence this course? Absolutely not .. I didn’t! However, if you don’t then it is recommended that you go get a good book from your local library, so that you have a basic idea of options; what they are, how they are traded etc.
Those of you who have already traded but on a “hit and miss” basis and who’ve become disillusioned with your results or who have found technical analysis too challenging will find this course to be a refreshing new approach to options trading.
Tomorrow I will discuss in a little more detail the nature of the trading method in the OptionSphere course .. so stay tuned!
Just as an aside .. and remember we are talking “paper trading” only at this stage! I have four positions on for February options .. just tiny amounts, placed on yesterday. Despite the markets opening well down this morning, I have 3 of the positions showing a small profit and one a small loss, at market close. If all of these indices stay around their current levels through to expiry .. then I will be seeing some good profits arising just prior to expiry date .. if they start to move significantly then I will be making corrective adjustments to get them back on track. Certainly, there is no cause for concern just yet! Last month I put on a small spread (IBM) and on a margin of $500 landed a $125 profit in two weeks. That’s a pretty healthy return I am sure you will agree and being my first spread I could not have been more delighted. It would have been even higher if I had placed the spread on a bit earlier.
As I said .. anyone can learn how to trade options and make consistent profits .. but as with anything else .. you need to put the study in at the front end.