Podcast – Episode 010 – How to Know if You Will Succeed as a Trader
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 an 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, and they’re amazed at all the benefits. They’re amazed at how simple it is to get started and all that, but then there are those that have been guilted. Those, they have a sourness to them. They’ve been ripped off or they’ve been lied to or they’ve been cheated or something like that, either by a mentor that they were trying to listen to and it turned out that that guy was a fraud or a phony. Maybe they bought a course and the course didn’t work out exactly, they were promised the moon and then they didn’t get the moon or they just had some other kind of experience where they lost money.
There was a guy whose book that I read, and this guy has … he’s written a lot. They’re kind of like the same book, but they made a lot of money back in the day, in the ’80s, by the name of Wade Cook. And this guy wrote up a lot of books, he was doing a lot of seminars, they had their own money management firm, they were doing really, really well, and then the sad part is that they embellished. I guess you could say lied, but there was one book in particular where the guy’s talking about covered calls, and he was trying to explain the whole how do you do a covered call, and in his book he gives you, or he says that with a covered call you can make 20, 30 percent return on your money, and that’s not exactly true.
I mean, when I first heard about it, I didn’t know anything about covered calls when I first read the book and I was young, I was like, “Oh my god, that’s so amazing. That’s so cool, it’s so easy, oh my god this is great.” But then when I looked into it I was like, “Wait a minute. There’s something not right here.” And eventually Mr. Cook did end up going to jail, I don’t know if he’s still in jail or not, but he was barred from the financial industry. People had followed him and there are many, many like him, there’s all these fake gurus out there. Most of them are marketers that have never done any kind of trading or if they had done any trading, they weren’t really good at it, and others are just phonies and frauds and fakes.
So, it’s extremely likely that you’ve been lied to or duped by someone in the financial industry, so I don’t want to take that against all these people that have this sour attitude and I think it brings out a bit of skepticism, which is good. So you should be a skeptic, you should be skeptical about this. But when it comes to success, if you see somebody following a path and you see them having success with it, then you know that the path is correct. So you do your research and you find a path and find someone on the path that’s willing to show you the path, then at that point I think you need to put your skepticism aside and then you need to go to work.
Because if you’ve done your research, if you’ve done everything and you’ve seen that, okay, this has worked for people, this has worked not just for one person, or two people, or ten people, but has worked for a whole bunch of people and it’s continuing to work and it’s working right now and somebody’s saying, “Hey, you know what, here, I’m gonna show you how to do it,” then maybe you put your skepticism aside and then you follow that path to the best of your ability. Because I do know that there are hundreds of ways to make money in the stock market and all of them work, you know? It’s just a matter of making them work and knowing how they work and being good at it, and that takes time, it takes experience.
But when it comes to success, I know that I can tell with amazing accuracy which investors will succeed and which will not. So, you put 20 people in a room and after a while you’ve talked to all of them and you see what their reactions are, you see what their comments are, you can tell, okay, these two or these three or these four are going to succeed, everybody else, maybe not. Probably not. And there is one simple way to tell. And I’ve seen this over and over again and it works with me too, I mean, I am also a victim of this. When I have this particular trait, I do great. Amazing even. I’ve made huge strides with my trading, with my life and everything when I have this one trait, and when I don’t have that trait, well, I coast. I backpedal, and things become stagnant and boring.
So what is this particular trait that I’m talking about? Well, to know if you are going to succeed in trading or not you need to know your reason. You need to know your “why.” Because if your why is for more money, then you will not succeed. And so when I’m talking to people, whether you’re seeing their posts on social media or when you’re seeing them talk about how well they’re doing, or about trading, or investing or whatever, if they’re only talking about dollars and cents, if they’re only talking about how much they want to make, if they’re only talking about what kind of returns they want to make, those are the types of people that do not stick around.
They burn out, they blow up, and they go away. They don’t have the type of success that you would want when it comes to trading, and by success I mean you’re doing this for the long term, you’re doing well, financially your accounts are growing, things are getting better in your life, you have more time off, there’s less stress because you know what you’re doing, you’re getting better at it, you’re improving as a trader, as an investor and then you’re helping other people as well. So that’s what I mean by success.
Now, if it’s about the money, if it’s all about the money, then you will never achieve that level of success. You might do good in the meantime, in the short period of time, but then something’s gonna happen and you’re going to sour on it, it’s gonna blow you up, you’re not gonna be focused on the right things and it’s just gonna go away. So, if it’s just about the money, you will not succeed. You won’t. That’s just the way it is. If all you want is more money you will not do what it takes to truly master trading. I mean, sure, you could make some good trades and win, but you won hit your goals. Why? Well, because trading is hard. It takes time to learn, it takes experience.
And I know we all want to make more money, duh, everybody wants to make money, that’s their first goal, like, “Hey, what do you want, why are you trading?” “Well, I want to make more money, duh.” But the money should not be the reason. The money is just points, it’s a way to keep score, the dollars and cents and the numbers in your trading account that go up and down, that’s not important. And I hate to be cliche about it, but the money doesn’t bring happiness. The things that money provides can bring you happiness, but having a bank account with a one and a bunch of zeros behind it leads to a very sucky existence.
Now in the beginning when you’re just starting out, the money can be intoxicating. But it’s not the money itself, it’s because of the potential, what you can do with the money and then also the newness of the fact and the ability that you can make money just by using your brain. Because most of us have been taught, you know, you go to school, you go to college, you work hard, you save up, you have to have skills, maybe it’s in manual labor, you actually have to do stuff, you have to put time in, and then here we are with trading where you press a couple buttons and money comes. And you don’t really have to do anything. And that’s freaking amazing.
And when I started out, for me, the money was the reason. Because I had just been laid off, and for me, I needed the money, and I wanted the money and I wanted to be rich, I wanted to be a millionaire, I wanted to be a billionaire for god’s sakes. And I was like, “Man, I’m gonna do it, I’m gonna make money,” and to me it was all about money, it was all about greed, it was all about I want more, more, more. I had just been laid off, it was tough, super tough, I mean my wife was working two jobs and it got to the point where it was basically ultimatum time, either I learn how to trade quickly or I go get myself a job.
But if you think about it, was it really about the money? Was it really about how much I wanted to have in my bank account? I mean, I did, I wanted to have a million dollar net worth, and I wanted to have two houses, and I needed the money in order to pay for those houses and all that stuff, you know, all the financial success trappings, but it wasn’t really about the money. The main thing was, I had my back to the wall, I had to do something. I had to get things done, I had to succeed and it was about not going back to work. It was about providing for my family and making things easier for my wife, you know?
And there have been other times in my life where everything was smooth sailing, things were great. And to motivate myself, I set myself a financial goal, or like a goal that only had to do with money. Some of the ones I had were like I want to retire by age blank, with an income of this. I wanted to have X dollars in the bank. I wanted to have a net worth of five million, ten million, whatever it was. I never hit those goals. Because they didn’t mean anything to me, they were just numbers. And I don’t know if you’re like this, but me, if my back is to the wall, I’m gonna do whatever it’ll take to scratch and succeed to get out of that.
But then when my back is not to the wall, when things are smooth, it doesn’t matter how big a goal I have, it doesn’t matter how much money I wrote down that I want in my bank account, I don’t really care. As long as my needs are being met, things are good, life is comfortable, I don’t really worry about it. And so that’s why option selling is perfect for me, because I’m not gonna be all gung ho motivated and go all crazy. For short periods of time, I am. I can be motivated for short periods of time, and I think this works for just about everybody, that’s what all the new age success and researchers are telling us about willpower and motivation where you can do it for short periods of time, but you can’t do it for long, long periods of time.
And so, when I have my back to the wall, I can work really, really hard. I can put in the hours, I can bust my butt and I can get out of that situation. But then, when things are smooth and fine again, I go back to status quo. I sleep in, I don’t work as hard, and that’s just the way it is. So, I’ve seen this same thing happen over and over again in other people as well. So when people tell me their why, you know, I ask people, “Hey, what got you into trading, why are you doing this? What’s the end goal, what’s the results you’re looking for?” The ones with the most burning desire are the ones that succeed the fastest and the longest. Really. Because only a burning desire will propel you forward, will make you work harder, will make you think more creatively.
If you hit a road block, if you have that burning desire, then you’re gonna find a way around the road block. If it’s just about numbers, you’re just gonna be like, “Oh man, this didn’t work. Okay, yeah, let me go try something else. Let me go look at that, oh hey, what’s that over there? There’s another strategy that this guy’s telling me about, let me try that. Oh hey, what’s that new product that just came out, that new course that this guru came out with, let me try that.” Only the burning desire is gonna keep you on track.
So when I first started Option Genius, I just wanted to share what I’ve learned, this amazing thing called option selling with people, and just a few people, just handful of people, I didn’t want thousands and thousands of members, because that would just take too much time. Answering emails and talking and all that stuff, I didn’t want to do all that. I just wanted to do something that would take a few hours a day, just enough to keep my occupied. And for years, it was fine. Everything was awesome, I was helping people, and the extra money was nice too. The subscription fees and all that, I didn’t get rich off of it, but it was good, bit of pocket change and all that.
But then I went through kind of what I think was a mid-life crisis. I mean, I didn’t go to a psychologist and have it officially diagnosed, but I think I went through a bit of a midlife crisis and I might even gone through it a year earlier too. You know, normally when you hit about 40, that’s when you go through it, or I think 50 is the age most people go through it. That’s what I’ve heard, anyway. But in 2016 I hit 40, and I had been feeling uneasiness for a while. I’d feel boredom. I was feeling like there was more to life, I needed to be doing something else. I had considered even quitting Option Genius and selling it, or moving on, or hiring a partner to take over the day to day stuff and handling it or make it grow, or do whatever, just because it wasn’t fun anymore. It wasn’t exciting, I didn’t want to get up in the morning and do that stuff anymore.
And I just happened to stumble across this website called the Death Clock. I think its Deathclock.com, where it asks you your date of birth and you answer a couple questions, they ask you do you smoke or not, what’s your height, your body weight, etc, and they tell you when you’re going to die. So basically they tell you how much longer you have to live, and at that time I was 40 and this thing told me I was going to go at age 73. And I was like, “What? Age 73? Are you kidding me? No man, 80, everybody’s going to 80. Oh my god, I thought I would make to at least 80. You know I’m still pretty young, I still feel good.”
But then 73 was the number. And I was like, “Wow, dude, I just lost seven years of life.” Without doing anything, I’m just gonna go seven years earlier than I thought I would. And so that’s when I started thinking about my legacy, what was I going to leave behind? And that’s when I decided, hey, it’s time to do something good, and do something big, and to put the pedal to the metal and get the word out about options. Especially in selling options, people need to know about this stuff because there are too many people out there suffering in retirement, suffering trying to make ends meet, suffering trying to go and make their 401k last all through their retirement years.
And it lit a fire under me and it lit a fire under my chair, let’s just leave it at that. And so my advice to you is this, if you have been having trouble in trading, if you have been having trouble staying motivated, if you’ve bought a course in the past, or more than one course and you’ve done nothing with it, find your reason. Find out why you’re doing it, and it’s not about the money. It’s way, way more important than that. Maybe it’s about your family, maybe it’s about your kids, maybe it’s about charity, something you’re passionate about. It’s not about the second house, it’s not about the sports car, it’s not about upgrading to a bigger house or just having that money in the bank or buying something. It’s not about buying things, it’s not about material stuff.
If you want to truly succeed, you need to have a much deeper meaning that actually resonates with you inside, because only then will you do the extra effort. Only then will you take the time and focus, and learn and work and not give up. Because I’ve seen that over and over again, the people who just want some extra money every month, you know, “I want an extra five thousand dollars a month, or two thousand dollars a month.” Well, that’s great, but if you’re already making enough to survive and be comfortable, two thousand dollars a month is not going to move the needle for you, it’s not going to make you want to do what you have to do.
And so it becomes kind of a wishy-washy scenario, like, “Yeah, it would be great if I could have another two grand a month.” So what are you willing to do for that two grand a month? Are you willing to put in the time and the effort? “Well, you know, I’m kind of busy, I’ve got the kids and my wife and I want to have a balanced life, you know, I got my job.” And that’s wonderful. You have to decide what you want. If the two thousand dollars extra is really worth it, and you really want it, then you’re going to find a way to do it. That might mean that you spend a couple hours a night after you come home from work, after the kids go to sleep, after your wife goes to sleep, practicing trading and learning and backtesting and stuff like that.
Or, it might mean you cut out something. If you don’t have the money for trading, well, maybe you downsize your car. Maybe you’re paying five hundred dollars or six hundred dollars a month on a car note and you have no money for trading, but you really, really want something, whatever it is. Maybe you want to quit your job, and you want to quit your job by learning how to trade and replacing your income because you really hate your job, you hate the people you work for, you hate your boss. It’s not fulfilling to you and you want to go do something else with your life, but you need the income. Well, if you have a five hundred dollar or a six hundred dollar car payment, maybe you could sell that car and buy a cheaper car. Maybe a two, three thousand dollar car that you pay off right away and then you take that five hundred dollars a month and you put it into your trading, you put it into your future.
If the will is there, you’ll find a way. Where there’s a will there’s a way, that’s basically what I’m saying here. And the people who succeed, they have the strongest reason, they have the strongest why, they have the will, and that’s what propels them further when there’s a back sting, like when you lose money. And obviously everyone loses money, at one time or another, you’re going to lose money. And it might be a big hit, and it might be devastating, it might be a really big hit, like, “Oh my god, I spent all this time and effort learning and trading and spending all this time backtesting and finally I put my money to work and I lost. What the heck is going on?”
That happens a lot. That happens to almost everybody, but I’m telling you right now it’s gonna happen, so be prepared for it. And if your why is strong enough, if your will is strong enough, you’ll get through it. You just keep going. You take what happened, you find out why it happened, you learned the lesson from it and you built it into your system, you built it into your trading plan so that doesn’t happen again. Or you get help from somebody else that actually knows, at a higher level than you are, you have them look at it and say, “Hey, what could I have done differently?” And then you learn and you apply and you keep moving forward and the ball keeps rolling.
And that’s how it works. That’s how you get successful. I don’t know anybody, I haven’t met anybody, and I haven’t heard of anybody’s story that has not lost a lot of money when they were learning how to trade. That’s just part of the deal here, because like I said, it does take experience and it does take a burning desire, something that’s more about the money. So if all else fails, go out when you’re gonna go out and figure what you want to do with the time you have left. Go out and find out what you’re going to do. Figure out what you want to do, how much time you have left, go to that website Deathclock.com and figure it out, how many years you have left. I mean, if you want to, you don’t have to, it’s fine. It did light a fire under me, but I was already going through that midlife crisis anyway, but it kinda helped me come to a realization.
Basically, it forced me to an inflection point. And I’m reading this book about inflection points in your life and basically it’s a point, an inflection point in your life is when something’s happening that is changing, and basically it’s external or internal. Maybe you’re losing your job or your company is restructuring and you don’t know what’s going to happen, that would be an external inflection point. For me, turning a certain age was an internal inflection point. And so you can either go along with the flow and not do anything about it, or you can take that energy, harness it and move it to your advantage.
And I think that’s what I have done, or at least I’m trying to do. I’m not perfect. I’m using that time, or that lack of time to actually go out and try and make a difference. To try and help people. And so I think that most people out there want to do the same thing and so if you’re having trouble finding a way, then maybe your why is to help other people. Because they say that with people who are depressed, the fastest way to get out of depression is to go help other people. I’m not talking like clinical depression, where you have to be medicated and you’re suicidal and all that, I’m talking about regular, I don’t want to make light of the situation, but if it’s not chemically imbalanced, if it’s because of something that’s happened in your life, you could sit there and dwell on it and feel bad, and sit in your black hole, or a way that could help you is to go out and help other people.
Maybe it’s the same thing here, if you don’t have a why, if you don’t know why you’re trading, if everything in your life is great and you don’t have any other way to come up with a burning desire, then maybe you find somebody that needs help. Or an organization that you really, really feel for, deep down burning inside, and you help, your trade will get better and then you help that organization with that. So find out what you want to do, figure out how you’re going to do it, and then just go do it, okay? And while you’re doing it, remember to always trade with the odds in your favor. Peace out.
Once again an awesome presentation. I would say that this guy is genuinely honest, and everything he said came out from his heart; NOT SCRIPTED. Thanks Allen for your honesty and motivation.