Podcast – Episode 139 – What to Do When You Have Tried Everything and You Are Still Not Profitable Trading
Mark: Well, look, it’s really it’s a, it’s a long journey. I’ve read your book, I’ve read many books, I’ve been in this game for a long time. It’s very difficult to sum it up in literally minutes, I suppose. But after reading a book just recently, and listening to all your podcasts a lot lately, I’ve delved into a lot of it and taken many, many things out of each person’s story, which I can resonate wholeheartedly with. But I probably got into Options back in 2006. And I’ve probably come and gone with it a lot. I’ve started and stopped, due to various reasons, obviously, life, I’ve got kids and family and work commitments and stuff like that. But it’s always been, I suppose, a hobby. But trying to make that jump or trying to get into it. Full time is obviously difficult for lack of funds or lack of time and effort. I don’t know, there’s always seems to be something that comes up that stops me from progressing. Having said that, I’m a pretty committed person. I’m pretty disciplined. I’ve been doing it now for a long time. But like, if you look through him on the table here, I’ve got trading stuff sitting everywhere, notes.
Mark: I’ve crunched the wheel so many times I’ve done the shiny diamond thing. I’ve gone from one program to another. I’ve spent numerous amounts of funds on various programs and different services such as yourself. I don’t know this Option Genius has been around in my life, I suppose, on and off. So I don’t know like I’ve all I’m a big advocate for what you say and what you do. I’ve wholeheartedly believe that I’ve been selling options for a long time I’ve done credit spreads, I’ve done strangles I’ve done butterflies, I’ve done covered calls, I’ve done a lot of those strategies, or centered around selling options. And I’ve been doing it for a long time. But for some reason, I just can’t seem to break through the ceiling, I just cannot seem to be there to go from this hobby, like training interest that I seem to be involved with, to getting to that next level. I suppose I when I found out that we’re going to do this call. Set last night I sat down I tried to write out things that would be good to discuss or to ask you. And I’ve got like all this paper sitting you have all these notes that I’ve made, as you would have seen in my email, it was quite lengthy. I think one of the assistants said all that email is probably the longest one I’ve ever received, that I really okay then.
Allen: Like, you know, because we get, we get lots of emails every day and some people, right? Some people write two paragraphs, but when somebody goes in deep, and they really share their, you know, their soul pretty much. It’s like, Hey, I’ve been doing this and this and this, and this, and I don’t know what’s going on, then, like we you can feel it when somebody is really, really wanting to make it work. And so those most of those get passed on to me. And when I read it, I was like, alright, you know, we need to we need to talk about this. Because if you’ve been doing this for years, then like, I have not doing my job. I’ve let you down in some way that because you know, you shouldn’t still be feeling that way. I know. But it’s not uncommon. You know, we come across many, many people that come to us and say, hey, you know, I’ve been doing this for a long time. But you know, it never clicked for me. But you will..
Mark: Yeah, I can see that. So many people that you talk to, you know, have the same they’re trying and trying to trying to find the right system, the right setup the right, whatever it is just can’t seem like I feel to break through that ceiling. Like you’re stuck underneath the water. You’re swimming hard. You’re learning this, you’re watching that you’re reading this you’re researching. You’re looking at the charts to pair with analysis, paralysis, all that stuff. And I’ve made lots of trades. I’ve done lots of trading. I’ve been I’ve been I won’t say successful because clearly we wouldn’t be on this call otherwise, but I’ve made money, but I’ve also lost money. I’ve got scars, I’ve got all that stuff I’ve had I’ve had losses, but still here I am battling looking at all that stuff that you talked about in the book in that book really resonated with me there’s a lot of stuff in there that I thought I can do this. I know I can do it. Why am I doing it? Why it’s just what why does it elude me so much? Is it just a pipe dream and more and more just a duck on the water swimming and just never gonna get there? I don’t know.
Allen: So you know, when we when we got the email, when they forwarded to me, they asked me like, hey, what do you think the problem is here? Does he not know enough? And my answer to them was No, I think he knows too much. He knows too much. That’s part of the problem. I’m just guessing here and I wanted to try to get to the root of it. But you know a lot of the times when so there’s there’s different things that you need. Everybody needs different things to in order to succeed in anything. Obviously, you know, you need to know what to do you need to how to do it. You know, you have to practice you have to put in the time. You need somebody Do that can actually has doing it like coach that’s teaching you, you need a team or a teammate or somebody to do it with. These are all different things that that can help. But a lot of times we come across people that have been, you know, bouncing around from program to program, like you said, they know all the different strategies, they know everything, they know how it works. Some people come and they know it better than I do. You know, so they’re, they’re telling me that, oh, the Vega this is this and the Gamma and the theta and the row and all this other, you know, they’re touching on the Greeks, and they’re managing by the Greeks, and they’re doing all these complicated stuff. But they’re like, it’s still not working, why is it not working? So I think, if it can work for somebody else, it can work for you. And I firmly believe that in just about anything, except maybe sports, you know, should somebody else could dunk the ball, maybe I can’t dunk the ball. But in trading, a lot of it is I think, 80 to 90% of it is menta.
Mark: I’ve totally, totally, totally.
Allen: So there might be something that is holding you back, or, you know, maybe like I don’t know, so let’s get into it. So now you’ve mentioned a couple of times that you haven’t gotten to the next level. So tell me what is the next level? What is the goal that you’re trying to get to?
Mark: Well, I think the goal is the same for everybody’s, you know, everyone’s trying to make income, like, right, I have a I mean, I’m in I’m a cop. So I work in a profession that I see myself coming to a fork in the road. I’ve been doing this job now for over 14 years, for 10 years. And before that I was in a private industry, we had a family business. So I understand all the dynamics of running a business, how it operates. We had a family business for over 30 years. And long story short, we got out of that for various reasons. And then I got into the government sector, which is a totally different psyche altogether, which took me some time to try and come to terms with. Having said that, I’ve forever in my wife, and I’ve come from a family that has been heavily invested in property, shares, businesses, and stuff like that. So I’ve always had this belief that I can do something with my life that will be able to produce constant income money have investments, like I’ve had investment properties, and I’ve done the share thing now on the option things for a long time. And I’m not destitute, I’m not desperate, I have a house, I have three beautiful children and family sort of stuff. But I want to go to the next level I want to be able to provide, I want to be able to teach my kids trading, I want to be able to show them how to invest all the money stuff, like all that sort of thing. I feel as if I’m promoting this stuff, yet, I haven’t really truly succeeded myself. I haven’t got to the level where they can say okay, Mark, look at you’ve got all this great stuff, and that show me how to do it. And when they do ask me, I’m sort of thinking so I will not really, I can talk about it. I’ve read about it, and I’m doing it, but I really haven’t got what you think I have. Having said that. Getting back to the trading side of it. I think I want to have this as a business, I can see the potential in it as you can do from home. It’s all in front of you in the net. I don’t have to go out I don’t have to be injured tree. I understand that. I do know a lot about it. I understand all those things you just mentioned with the Greeks and what not right? And I probably do, I probably do know too much. And I do want to keep it simple. I do say to myself, when I’m doing it, just keep it simple. Why do you need to have this indicator? Why do we need to be having that? I totally agree with what you’ve promoted and talked about for so long. And I think I was probably watching on Option Genius probably before you even started doing podcasts. But over the years, I’ve come and gone. I’ve been involved with and I’ve been with other things. And I’ve on and off as we mentioned before, right? All right. Does that help answer the question?
Allen: No. So what what what do you mean by the next level? Is it an income? Is it is it a certain amount of money in the account is a certain amount of money every month? Where it is it that you say okay, now I’ve arrived now I have achieved my goal? What what is that number so that you would be able to be like, Yes, I feel happy though.
Mark: Okay, so I’ve sort of thought about that. And I’ve put a number down to 10k. Now that’s a pie in the sky dream. That’s a pie in the sky dream. I know. And that’s a long way off being achieved. I would just like to be able to see some consistency, all that stuff that you promote consistent, being profitable, and I can do that. But then as you know, you get one or two trades that wipe you out, wipe it back to zero and then it got to start again. Right? So just not we’re just not getting that constant. Right? What do they call it..
Allen: Okay, so 10k is the goal. Now, it’s not a it’s not a it’s not a pipe dream. It’s so 10k is the goal. If you got 10k every month, you’d be happy. You’d be like okay, I’ve made it you know I’m accomplishing And that this stuff is actually working. Finally, this stuff is actually working if you were making 10k a month. So tell me, what is it that you think is keeping you from doing that?
Mark: Well, clearly a lack of funds at this stage. But I have had numerous accounts where they’ve had a substantial amount of money in there, but I’ve just brought it right back down to just doing one lots, until I can see the consistency and seeing that, the, that my trading works, it’s consistent, well, then we can scale up. So I’d rather than that, so I’m happy to do just one month a month, which means I’m not gonna make 10 grand in the near future, right, those types of trades, but we can scale that up at a later date.
Allen: But what do you so if you were to say, hey, Alan, give me this one thing, and I know I can make tons of money. What is that one thing?
Mark: Well, I suppose it’s like a business plan, isn’t it, like a franchise to follow a step by step thing, do this, do this, do this, do that put it on, obviously, there’s a little bit of, there’s gonna have to be a little bit of a thought process and feel for the market. But I suppose I need a plan. Like I know how to put the trade on, I know how to do a credit spin on it, for example, but I suppose I need a set of rules or business plan or like something to follow. So that way, I can just follow the recipe for a particular day, not particular strategy, but it’s very hard to identify it or pinpoint it down to one thing. Like I’ve written all these notes in the book and pages and pages of all these things that you’re discussing the iPad and whatnot, and try to answer those questions myself. Like, what am I looking for? What’s stopping me I’ve written here a recipe, a plan, a template to follow rules to follow or to abide by tools, treat it like a franchise, for instance. So that way, I’m not deviating to another thing. So I have it on my wall and write down Am I following those particular plans? Does that is that sort of answer the question?
Allen: So do you not have any trading plans right now? I mean, you said you were in different programs and everything so did you do you have any that you’ve been using as a guideline as a framework?
Mark: The cover I’ve written things down in the past but I suppose sticking to it, or having it visible is difficult. I suppose someone to write one with me or for me to say right this is a trading plan. This is what you need to have in it to follow I suppose I haven’t really been given a choice like if it says write a trading plan, write down this stuff, write it down, but I suppose I just want to try it like this is what’s going on my head just put the trades on just put the trades on work with the probabilities. Yeah, it should work out.
Allen: Okay, and are you conservative or aggressive?
Mark: I believe I’m conservative in the sense where at the moment like with the one loss, so like, if I was aggressive, I’d be going right I’m pretty positive this trades gonna work of two or five, or 10 lot but at the moment, it’s like let’s just hold back and do one more being conservative. I think I can be aggressive if I need to be but on how
Allen: And how much percentage return are you looking to make?
Mark: I knew you’re gonna ask me that question. And I don’t actually have a percentage. I’ve just I suppose a bad way of saying it but I just keep putting the trades on and hope that the probabilities work out so I don’t have a particular percentage amount that I’ve got Okay. When you ask that question
Allen: obviously so obviously you know, just putting the trades on hoping they work out that’s not working. So we’re gonna have we’re have to refine this What strategy do you think most appeals to you?
Mark: Well, obviously I’ve been working on the credit spread that’s probably the one thing that I’ve done the most of the credit spreads like I’ve done in many others, but that’s the one that I’ve probably done the most so in the last few years.
Allen: Okay, and are you keeping track record of all the trades that you’ve been doing?
Mark: No, I don’t. I have written them down in the past. I do try to follow that put it in a journal, but over time, it just becomes cumbersome I suppose like it’s writing it all down. I don’t I don’t stick to it. It’s probably the kind of problem there.
Allen: So what you said is you want to franchise, and in the franchise are going to tell you the first thing is to document everything you’re doing. Because we cannot tell what’s going wrong if we don’t know what you already did. So having a firm plan that says okay, I’m gonna put this trade on and writing down why, why am I putting this trade on? Because it’s moving higher because it’s got news coming out because it’s high. It’s, you know, very volatile right now or the IV is off or whatever their reasoning is, you put the rig, you put it there, you write the trade, you record what happened, why or why did not work out. And then after you do a whole bunch of these, you can go back and look at it and say, okay, every time I do a trade that’s at, you know, 35 Delta, it works wonderfully. But every time I do any other Delta, it doesn’t work. So I’m just going to do that 35 delta. So if you want to find your own trading plan, then this is how you do it. Now, this is a long way to do it, it’s going to take a long time, because you’re going to have to test different things and try different things and see what’s working, what’s not working. But it would be one way for you to create your own plan based on what you find you’re more comfortable in, because some people they come in and they tell me, hey, you know what I want to do Credit spreads, and I want to do 2025 Delta spreads, some people don’t want to do five Delta spreads, you know, so everybody’s comfortable with different things. And then based on the amount of credit they get, then we can figure out okay, how do we how do we manage the trade, some people should be not managing the trade at all, they should just be getting in and getting out at a certain amount. Some people, they can go ahead and say, hey, my trade is going bad, I’m going to, you know, adjust it or do something else with it. So depending on what we’re thinking, when we get in will dictate what we do when we’re in the trade.
Mark: So now that I know what I do for trades, there are particular entry signals that I looked for, like I don’t just go and find a stock and then look up a chain and then play delta and put it on. I do have, like, for example, I think there’s market volume, I use volume. So obviously, when volume is increasing, I’ll have them put on a put trade, obviously, when the stocks turning or progressing. And obviously over the three averages, like you say, things like that. So there are particular indicators, and not too many I do try and keep it fairly simple, I believe, before I put anything on, so I do try and put the weight in my favor. And the advocate of that, of course, by using those some small indicators to try and get it on sideways or progressing in the in the direction that we think it’s going. So I do look at that I’m not a big person, I’m gonna use a 35, Delta, or 45, or whatever. Right? Okay, I understand the Delta side of things. But it’s more about volume, I suppose at this stage and what.
Allen: Okay, so that that’s good to know. Right? So I mean, what I would do is, I probably have a sheet, kind of like a checklist, you know, so get it out of your head, and onto an actual piece of paper, where every single trade you have to mark it off, you know, the volume is high, yes, you know, movement is this way or whatever, whatever your your things are, you check it off. One, two, three..
Mark: I actually have done that I can attest that I have done that I’ve written down, like when the bar gets lower than the level of bar, it’s time to get in or when a turn when it points up. It’s getting. So I have written most things down in the past. Yes.
Allen: So that’ll be your trade law right there. That’s if you do if you have the discipline to do that, before you put in the trade, you’ll you’ll know at the end, okay. You know, just go back to that journal and be like, Okay, what worked and what didn’t work? What are the patterns. And that’s kind of the stuff that I was doing originally, when I was first starting to figure this stuff out, is look at every single one. And now I have my my checklist, where if there are two or three things that I cannot mark off, I don’t put the trade on, because I know that hey, there’s not enough, you know, these things are really important. I want them, I don’t want to put a trade on without everything checked off.
Allen: Now, that doesn’t mean that I’m not going to lose, like you still lose on the trade with everything checked off. But like you said, you know, we’re putting the odds in our favor. As many times if you have a checklist, like you said you did. That’s your journal right there. And so before you put on the trade, you just mark it off, you know, check, check, check, check, oh, I can’t check this one. Then later on, after the trades are done, you do 2030 trades, at least, then you can go back and look at and say okay, I lost on these three trades. What is the pattern I lost on these five trades? What is the pattern? And you might find a pattern, you don’t have to but you might find something that say okay, these indicators, you know, they’re not working or they are working. The other thing is, I mean, it’s, it’s really simple, right? You find the strategy that you want. And you said, Hey, I found the strategy. Second step is to find the trading plan, that you think you think will work and then is just test it and trade it and do it over and over over again. But the important part is that you have to stick to the plan. Do you think you stick to the plan, or is it? Is it a discipline?
Mark: Tell me, tell me, what got you out? I’ve read your book or listen to your story. What part got you through that ceiling? Obviously, we’re doing the same thing as we all do for such a long period of time. But there must have been something that clicked or something that you did or something did you get into? Was it a program for you? Was it someone that you got? Hold on What, what got you to that next level that we all tried to get to?
Allen: It took time, it took discipline, there were a few things that really helped me. One was really sticking to the rules that I had set up. And really, it’s about, you know, when it comes down to it, it’s about putting the trades on with the odds in your favor as many ways as you can. And I learned about that later on, you know, having different different levels. But what I started to do, and the ones that I really started doing well on, and in the beginning, were iron condors. For some reason, that strategy really, really clicked with me. And I was like, Oh, my God, I gotta work. No, no, it doesn’t work right now. But he’s like, you know, that strategy really worked. And it was like, Oh, I can adjust it. So I might never lose money in the trades. It’s just really awesome. But I still was having trouble following the rules. Because, you know, you have to work that. So there were there were a few ways. Number one is my wife got involved.
Allen: So every day, she would, like I would have a list of all of my trades, and I would have all the rules, like when I needed to do what, so every day at a certain time, she would come upstairs because I was working from home and she wasn’t she wasn’t working. So she would come upstairs. And she would ask me, Okay, let’s go through every single trade one by one by one. And so she’d be she’d have her notes. And she’s, okay, this trade on Russell. Where is it now? And they go, Okay, this, it’s up this much money, or it’s down this much money? Okay. When are you going to adjust? Well, when this happens? And they said, where is it now? Say, Oh, it’s right here. So do you have to adjust it? No, not yet. Okay, cool. Next one. All right. I did this. Okay. Why did you do this trade? And when are you going to adjust it? Should you have adjusted it? Yeah, I should have adjusted already. Why didn’t you adjust it? Ah, I don’t know. She’s like, Oh, what the hell are you doing?
Mark: All that is basically you got your wife involved?
Allen: I mean, not just involved, but she was holding me accountable. So I had to answer because she doesn’t need to know anything about trading. But she just needs to look at my rules and ask me the questions like, hey, what’s the trade doing? Is it up or down? Why have you not? What are you going to do about it? And if there is something to do about it, what are you going to do? So it’s just asking yourself those questions every single day. And it helped. I used to do that on my own. But I would always ignore the answers. Because I didn’t have anybody to answer to. It’s like, oh, I’m a trader, I’m the boss, I make my I’ll make the decisions. But when she came in, I knew I had to answer to her. And if I don’t have a good reason, then I’m putting her money on the line as well. Right? I’m putting her future on the line as well. So we would have a discussion about that. So I knew in advance, I knew, Okay, she’s coming at one o’clock, I need to make sure I got everything right. I’m doing everything right. Otherwise, we’re gonna have an argument. And so I needed her. Like, in the beginning, I wasn’t, I was I lost a lot of money. And so the only reason that I didn’t have to go out and get a job was because she was patient with me. But it was part of it was like, she’s going to be the boss, right? Until I turn it around. And until I break the ceiling, she’s the boss. She’s going to tell me what I can do what I cannot do based on how I’m doing. And so I call that my one o’clock, you know, fire drill. It’s like every day at one o’clock, I still do it. I go through every single trade and I look at it and say okay, is this trade up or down? It’s up. Okay, good.
Allen: What happens if it goes down a little bit? Am I still going to be okay? Yes. Okay, move on to the next one. And so I don’t have time to do that on 100 trades. So that’s why I limit the number of trades I have. But every day I go in and I look at it and I monitor it I know where each trade stands. So that before it starts to get into trouble, I know and I can look at it and be like okay, this one I need to monitor this one I need to adjust early or this one I need to maybe just exit it because it’s not acting right. It’s not acting properly. So It kind of gives me you know, so having that while you go in every day and look at each trade, and everybody does that. But in order to you ask yourself the right questions, and then you have to do what you need to do. So just monitoring the trades, and just checking on them is not enough. You have to know, okay, this is my plan, and I have to do this, then you have to stick to it. And then if you have an accountability partner, or if you have a wife or a child, or whatever, if somebody comes in and asks you, hey, you were supposed to do this, well, why didn’t you do it? And then you have to answer to them. So when you have somebody else there, that automatically, I mean, that instantly made me better, like instantly, the first day, second day she came in, you know, I just I just started following the rules, because I knew I had to, I had to give her an answer. So that was one of the things that did it.
Allen: The other thing was that I realized that this is a long term game. And so you’ve read the passive Trading Book. So I wrote that book, because I saw that if you’re only selling options, eventually, you don’t like the options can go against you. So what I mean by that is, in the financial crisis, when we had the financial crisis in 2008, there was everything was just going up and down. And so if I had options on if I trades on those trades lost, and then I could never get that money back. That’s when I realized that, okay, you know, if I want to play the long game, if I want to be in this forever, I cannot let something else knock me out. I cannot let a COVID 19 pandemic knock me out, I can’t let the financial crisis I can’t let you know, the President making some decision and sending the stocks down, knocked me out. And so I started building up the foundation of stocks, and using those to generate capital on those. And the idea is, hey, I want to own the stocks as my foundation. But I want to use options as basically like a rocket ship, you know, so I wanted to boost the returns. So I’m gonna have conservative stuff in the in the main portfolio, you know, where I have the stocks, and I’m making money.
Mark: I totally agree with all right. Yeah.
Allen: So, you know, that was now
Mark: I totally agree with all that, definitely.
Allen: So you can’t start off that way. Because it takes a lot of money to own that stocks. So in the beginning, you do have to get good at picking one strategy, getting good at it, just following it and being disciplined, and saying, Hey, I’m going to do this, and I’m going to follow it along. Now, again, long term, picture wise, every month, you’re not going to make money, every trade is not going to make money. So you have to have that in your in your mindset that, hey, sometimes it’s gonna work, and sometimes it’s not. So there’s lots of lots of little little things that you can improve on it. But the biggest thing that I’m seeing is that you have to follow the plan.
Mark: So Allen, do you think that I would benefit? Like I know you’re selling plenty of courses, promote what you promote in the book. And I totally agree with all that, I get it on one side. But if I was to do another course, such as yours, I my fear is, and we’re just going down that same rabbit holes, as I’ve done before, hence why I’m confused as to why I can’t seem to break that ceiling. If I was to go into a course such as yours, this one that you’re the passive trading and whatnot, I worry that I really fear that a year I am going into it again, I’m doing another course. But I understand the strategy. I think now I need more of a coach, maybe I need maybe that one on one, maybe maybe that’s what I need. Or maybe there are things that I’m not happy to admit to that I do that I need to be changed. I need to be molded stead of going down this direction on to be heading over in this little bit direction over here with my trading. I understand the why thing. That’s a great thing in my voice. She’s a great supporter of me. I am trying to I’m trying to get out of work. She works. I’m trying to get her out, keep trying and trying and time is your course gonna sit me on that path to freedom.
Allen: So it’s like, you know, I mean, I’ll give you an example. Like when people go to college, right? They everybody’s told go to college, go to college, some people they go to college, and they just they just party the whole time and they don’t get anything out of it. Some people go and they study, study, study, study, study, and they get a good job. Some people go and they make lots of contacts, you know, they they meet, they make lots of friends. They meet lots of teachers so that when they get out, they know a lot of people and they have a good network and then that helps them so it’s really up to each person individually. Now I would love to say that yes, every single person that takes my course makes them million dollars. But that’s not the reality. You know, people come in, life happens, they take it seriously, they don’t take it seriously. And, you know, that’s, that’s one part I cannot control. So I cannot tell you that, yeah, you know what, it’s going to work for you just because it’s, I’m amazing. And I’m a wonderful person, and it’s just gonna work. 90% of it is on you, I can give you everything I know, I can do it with you. But again, the markets have to cooperate. Number one, and then number two, it has to click for you, you have to do it, and you have to practice it. And you have to stick to the plan. A lot of times when people come into my programs, and they tell me Oh, hey, you know, I’m doing XYZ, I’m like, but that’s not what I have in the plan.
Allen: That’s not what I have in the program. They’re like, yeah, no, but I’m changing. I’m like, okay, but have you done it my way? No, not yet. But then why did you join my program, you could do your own way. Without my program, you don’t need to pay for my program, right? If you’re going to pay for something. And if you believe that, hey, yeah, this guy knows what he’s talking about this thing works, I think it works. If you’re going to pay for it, then just follow that step by step by step and don’t change it. Unless it works.
Allen: When it starts working, then only then would you say, Okay, now I’m going to, you know, change it up, because I think I can, I can be a little bit more aggressive, or, hey, I want to be a little bit more conservative, or I want to change it up a little bit. But you don’t do that until it’s always working. So the problem is that people that have been doing this for a long time, they know all the strategies, they’ve listened to many other coaches, you know, they come in, and they’re like, Well, you know, I don’t like that one thing, I’m going to change, I don’t like that thing, I’m going to change. And so they start doing it their own way and they don’t listen. And so you can’t take stuff from this course and this course and this course and mash it into a Frankenstein, and then tell me “Oh, it didn’t work?” Well, because I don’t know why that guy told you to do that. And I don’t know why that other guy told you to do that. Or the only thing I know is if you do it this way, you’ll get the similar results that what I’m doing. Now, if you add and change it, then I can’t help. So, you know, like you’re saying that we have, I think there’s like four pillars that I tell people that people need. So if you want to learn how to do something, you need these four pillars. Number one is you need the right strategy, which you’ve already said is, hey, that’s the credit spread, right? Number two, you need the trading plan that works. So number three, is you need other people to do it with because you’re doing it all alone, like you said, you know, you might need a wife, if you don’t have a wife or partner like that, then you can have a community or other students that are doing it the same way.
Allen: And then number four, you need a coach that can actually show you what he’s doing, because he’s still doing it. And he’s actually doing it right now, instead of somebody that said, oh, yeah, I was a market maker 30 years ago, and I don’t trade anymore. So I think those are the four things and depends on which everybody needs. So the coaching part is the one that takes the most time. And that’s why those coaching programs are the most expensive.
Allen: In my passive trading course. You know, we give you the trading plan. It’s like okay, here, this is the plan, these are the rules, you follow it and, you know, good luck. But there’s no one on one coaching. There’s no group, you know, where we are, where we’re doing and looking at the trades. And so when we have that passive trading course, it’s a cheaper course. And so people would join it, and they would go through the modules. And some people would have a lot of success, some people wouldn’t. So I said, What, what’s the problem? Why are they not? Why is it not working? And I realized that it would help if they could just spend a lot more time with me. And so we created that credit spread mastery course, where every week, we get on the call, and we’re just looking for trades, we’re managing trades, we’re adjusting trades, doing it together. So the point of that is, here’s the rules. Here’s the trading plan. Now let’s do it together, over and over and over and over and over and over. And so once you have that habit of doing it the same way over and over and over the other, the other ideas, the other habits kind of die off. So I’ve seen that that program does deliver results. So we back it up and we say hey, look, if you’re in our program, and the program doesn’t work, like you don’t if you’re not profitable in our program, then we keep you in the program. We keep working with you. We keep you in the class until you become profitable. And so even if the markets not cooperating That’s fine, we’ll learn how to manage it together. And then we’ll stay longer in the program, if you’d have to be..
Mark: So with your target trading alum, obviously, it does take a type of market. And obviously, that’s why through the last six months with Covid whatnot, it would be easy Earth to do that type of training, because obviously, it just went straight up didn’t keep they’re still on put, credit spreads the load of was money for Jim, in a market such as what we’re in now, which is up and down, up and down. It’s far more difficult, isn’t it?
Allen: Currently it is more difficult, doesn’t mean it’s impossible. So we do have to dial back our, we have to dial back our expectations. So last year, the year before, you know, making 10% a month, 7-8% a month, not a big deal, it was pretty simple. You know, put the trades on most of them work out in anybody, and everybody was making money. Like any you know, you could buy anything, and it was going up any everyone is making money. This is a market where you have to be really good at selection, trade selection, and management. So you have to know when things are turning around, and when to get out before they get really bad.
Allen: So the trade management, sticking to your stop loss is very important right now. And those are things that most people get afraid of, you know, so it’s like, okay, I put the trade on, it should work. And then oh, no, the stocks turning around, what do I do what I do, and they don’t do anything. So if your thing is part of, if you’re doing as part of a group or in a program, then be like, hey, we need to get out, we need to get out, get out, get out. Some people let people know,
Mark: There’s that mental component, that’s the biggest part. And as I’ve gone along this journey, if all these years, I’ve realized more so in the latest year, it’s not about the strategy. It’s not about all that stuff. That mental side of it, it’s 80-20, Mark Douglas, the book, the trading zone, I listened to that over and over and over again, and various other podcasts and whatever other things, but trying to pull the trigger when you’re in a loss is it wasn’t so hard, we put this trade on, it was gonna work a met the probabilities, it was all looking good, it was under the over the top of the averages. I had volume, blah, blah. But all of a sudden, now I’m underwater again. And here we go again, and then I’ve got to pull a trigger to get out to take that loss.
Mark: And I have taken some big losses in the past, I’ve had to pull the trigger, just recently with the weekly trading system. And when that I mean, there’s Solomon says, I’ve been there for a couple of weeks, again, I’ve been on and off over the over many years. And all of a sudden, now I’m having to pull the trigger again to get out because we lose money. Like it’s hard. It’s another scar, isn’t it another scar, not a scar, it’s another get back down there. You know, I don’t want to see you do any good. It’s difficult, you know, and that’s that mental side of it is arguments or trading?
Allen: Yep. The emotions, you know, the emotions have to be kept in check. So there’s different ways that you could do that, you know, one, one of the ways is people say that you divorce or divorce yourself from the outcome. So whether you win or lose, doesn’t matter make a
Mark: ..difference? Exactly what I totally agree with that. And that skill is very difficult.
Allen: Yeah, your job is to just follow the plan and stick to the plan. And if you can do that, eventually, over the long run, it’ll work out, you know, maybe you have losing trades, that’s fine. But over the long run, it should work out. So too much of it, like you said, you know, like, oh my god, I’m, I’m going to be negative again, oh, my God, I’m gonna have to pull the trigger. And oh, my God, you know, when you have that kind of reaction, that compounds and it just makes it all, it makes it much harder to get out of the trade when there is a loss. The other there’s one lady, she told me something that really worked for her. She goes, You know what, this is not my money. This is God’s money. And what what are you talking about as God’s money? She goes, Well, I use this money. And I use the gains from the money to do good. Because they use it for charity work. So she’s like, I don’t need the money to live. Because I have enough income I have enough. You know, I have I have money coming in that I live off of. But this is my trading money. And so I take the money that I make, and I give it away to charity, and I do good things with it. So it’s really God’s money, and I cannot lose God’s money. There’s no way I can lose money. And so if I’m if I’m going negative, that the trade is losing, I get out right away because I don’t want God mad at me because it’s not my money. So that’s another way you could look at it. That you know, again, it’s it’s taking yourself out of the outcome, you know, and it’s not like okay, it’s not under my control. So you’ve got the wife coming in and asking you what you’re doing and why it’s working or why it’s not working and being accountable. You have you know, not looking at the outcome just getting better as a trader, just hey, I need to do my skills, whether it wins or not, that’s not up to me. That’s up to the market, I can’t control that. But I can follow my plan. That’s up to me. The other thing is, you know, not looking at it in emotional point of view, like, Hey, this is not my, maybe this is my kid’s mind. Maybe this is, you know, God’s money, however you want to look at it, but it’s not yours. So if you lose it, it’s bad. Like, that’s the worst thing to happen. You know. So there’s, there’s three different ways that you can mentally overcome the different obstacles. But again, I think one thing that we haven’t talked about yet is to simplify, right? So you’ve done all the different strategies, and I’m sure, you know, some of it is creeping in. And, you know, it’s like, oh, you know, I got to do this, or I’m going to, I’m going to wait for this indicator, or I’m going to wait for these Bollinger Bands, or the Fibonacci, or the technicals, or any of that stuff, the more you simplify it, the easier it becomes to actually follow through with it. And so I think, you know, just one strategy, not chasing after the shiny object, you know, it’s like, Hey, make a decision. If it’s spread, spreads, and that’s the only thing you focus on, and you get rid of everything else, you stopped listening to everything else, you unsubscribe from all the emails, you know, whatever, whatever service that you choose, like, Hey, I’m going to, I’m going to follow this plan, I’m going to, you know, if you’ve taken a course, maybe you’ve already taken a course, you have a course that you’ve tak`en and be like, Okay, I like this course, I’m going to follow this course, we’ll get rid of everything else. Just go through it. Master that and don’t do anything else until you know what that is, until you get the results that you’re supposed to get it. In the beginning, when I started screwing up, like I would learn something, and then I would do good for a little bit and then I would mess up. And then I would do good, then I would mess up. So I was like, What the hell do I do? Well, I would always go back to the basics. I would imagine that I don’t know anything. And I would go back to step one. Okay. What is a call? What is the put? What am I doing here? What is the strategy? How am I supposed to put it on? What are the rules and I gotta follow them step by step by step, not like, oh, you know, I’m gonna, I think this stock is gonna go down or or, you know, there’s a Fibonacci retracement level, and there’s some support here. So I don’t have to adjust. No, forget all that stuff. I don’t know any of that stuff. All I know, is the strategy and my trading plan. And that’s it. And so that was, you know, you go back to the basics. And that will change your mentality of it, like, Okay, how do I manage the trade? How do I deal with this?
Allen: Again, if there’s other things involved, like stress, you know, if you’re under a lot of stress, you’re going to make the wrong decisions. If it has to work. If I have to make money this month, from my trades, you’re going to make the wrong decisions. It’s not going to work out in the long term. So there was a there was something another trick that one of our one of our students taught me. And now everybody can’t do this. Most people can’t do this. But what he does, is that he takes whatever money he makes trading this year. He will live off that next year. So when he’s trading next year, he doesn’t have to live off that money. Because he already has the money set aside from the last year. If that makes sense.
Mark: You need a big bankroll sounds like a real estate agent.
Allen: Yeah, you need Yeah, he was. Yeah, he was. He was a politician. But, um, he has obviously, other people’s money then. So I mean, he did have, you know, he had, he had a large account to do that. But eventually, that would be the best thing to do. You know, you have you already know your expenses are covered. Right? Now, you’re only focusing on the plan and focusing on on just winning and just trading properly. It’s not it takes the emotion out of so whatever you can do, whatever trick you can use to get that emotion out of it, that will make you a better trader. One, one more thing that that that that I’ve seen is happening to me is, the more you do it, the more of a habit it becomes. So if you do, you know, 50 trades, that’s a lot better than five trades, but 500 trades is a lot better than 50 trips, if you do them properly with the right practice. So eventually, you get to the point where Oh, it’s just another trade. It’s not a big deal. It’s just another trade. There’s another one coming. So if I get if I hit my stop loss, yeah, it hurts. I hate it. But it’s Just another trait, you know, I’m going to move on, move on to the next one, move on to the next one, because every month is a different ballgame. So you start over, you get to start over again and again and again. And so that is another trick that you would help in the long run. But again, you know, you have to, in before all of that happens, you have to have the confidence that this actually works.
Mark: So what do I truly do believe in?
Allen: Yes, you say that you say that. But then you also say that, you know, I can’t do it. It’s not working. It’s not working. But you, you you’ve heard it that it works, you want to believe that it works. But I don’t think you have that conviction yet that it works. And so the only way to get that conviction is to get it done for yourself. Right? And so it might be that you take a maybe you take a step back, and you go even simpler. And you say you don’t want not the credit spreads, how about I do something like maybe a naked put, right, in a naked put, I’m going to make money if the stock doesn’t go down. And it’ll expire. And then I’ll sell another one. And I’ll sell another one. And I’m going to sell it far out of the money. So that I just when I just make that 20 bucks, or that $30 or whatever it is that small amount I’m just going to make month after month after month trade after trade I’m going to make and if the stock drops, okay, no fine, I can buy the stock, no big deal, I’ll buy the stock. And then I’ll sell covered calls on that stock. And so the covered call will expire, and I’ll make something the covered call was expired, the next month will expire, and I’ll make something so you build up that confidence that you know what, there is a way to do this. That’s another option, you know, if you want to go that route, so you really got to figure out like, okay, you know, it’s a, it’s a personal thing, I wish I could just tell you that, hey, this is the one thing you need to do. But for everybody, it’s different. And unless I spent a lot more time with you, unless I see all of your trades, unless I see you know, your emotion, how you handle the emotions, I won’t be able to tell you. So that’s kind of like in our in our program, what we do is we tell we give everybody a spreadsheet, and we say, hey, look, you have to fill out the spreadsheet, you have to put every single trade on the spreadsheet. And then they shared with me so that I can go in and I can look at them. You know, I could look at the tray. And I’ll go in I’ll see like, why did he do this trade? This doesn’t make any sense to me. And I’m calling this Hey, John, why did you do this tray?
Allen: And he goes, well, no, that’s not gonna work. And he goes, okay, okay, fine, I’ll do it. All right, done. You know, and if they’re doing all the trades, right, then it’s probably working. And most of the time, it’s not working, like if they’re not making money, then we can identify, Okay, what are what is not going right? You know, there was one of our current students, he was doing several trades, and he was still negative. So I looked at his spreadsheet, and I’m like, Okay, what’s going on? What do I see, and his trade entries were great. You know, he was picking the right stocks, he was doing it properly. But whenever he lost, he would lose a lot more than he should have. He just wasn’t getting out early on time. And so that was the biggest thing is like, you’re not getting out. This is it, you know, your losses are too big. Doesn’t matter how many trades, you win, your losses are still too big, you’re still going to be negative. And so we worked on that. And then over time, he got better at getting out earlier and earlier and earlier. But he had, you know, he had somebody to look at that and to point it out, and to hold him to it. So that eventually he did it over and over and over again. And then by the end of the class, he was positive. He was like, Yeah, I fixed it. Again, that’s all you need to do. That was he needed that one thing, everything else is simple. The training plan I could give you, you know, you could go do it on your own. But the discipline part of it, that’s sometimes where we need help from somebody else. And so whether you know, it might be a wife might be somebody else, it might be a trading partner, somebody you work with, it might be a coach. So I think that might be one thing that you could implement.
Mark: So just quickly, what what’s the key points in a trading plan make like entry criteria, stop losses or that sort of stuff. Is there anything else that I can many points or rules should be in a trading plan? Like what I try and put a trading plan together, that is doable and simple to follow. To look at rather a complicated bloody list of all this crap, what would be a good trading plan?
Allen: So, you want it to be simple and easy to implement. But you don’t want it to be too simple, where it’s just broad, like anything can happen. So, you know, I’ve seen people that have a trading plan that says, I’m going to do an iron condor on this stock 45 days to expiration, I’m going to sell a 10 Delta calls and sending out the puts. And that’s it. That’s my whole plan, and I’m just gonna sit and let it expire. That’s a trading plan. It’s very simple, right? You know, what you’re going to do you know, what you’re going to how you’re going to do it, you know, what you’re going to trade it on. And you know, when. And so now that pretty good plan doesn’t work. So whoever’s listening don’t don’t do that one. We’ve back tested that, and it didn’t work. But there are, there are times there are several months where it does work, just because it has, you know, 80% probability, but over time, it doesn’t. So that’s the basics, you got to know what you want to trade, you need to know the strategy, you got to know what you want to trade. And then you have to know what constitutes a good setup. So when it comes to credit spreads, you mentioned credit spreads. So I like to do that, depending on the size of the of the trade, if it’s a you know, maybe a $5000 $10,000 trade, then I’ll go into I can go into a stock, or I’ll go into an index ETFs are good, too. But they’re their strikes are a little bit smaller. So you got to do a lot more contracts. But if I can go into a stock that has, you know, five point spreads, and I do 10 of them. That’s a $5,000 trade. That’ll work.
Allen: So you can, what do you want to trade? And then what’s the proper setup? So for me, again, I like to keep it simple. So if I see a stock that’s trending, as moving up, or moving down, then I’m happy to trade it. Because I’m, I’m more of a trend follower, you know, so there’s people that think, okay, if the stock is gonna go up, it’s going up, it’s going to keep going up until something big changes, there are other people that think the opposite. They’re like, Oh, if it’s going up, they just kind of come back down, because it’s gonna do reversion to the mean. And sometimes that works. And sometimes it doesn’t. So I don’t really buy that I just like, hey, if it’s going up, then it’s telling me that it wants to go higher. So that’s basically what I’m looking for. In a setup, I’m looking for the stock to tell me what it wants to do. So if I see a stock that’s jumping up and down, no, I don’t know what it’s doing. I don’t know what it’s telling me, I can’t understand the language, I’m not going to trade it. If it’s going up, then I’m going to play it bullish. If it’s going down, I’m going to play bearish. And sometimes, you know, it turns around and you get banked, but most of the time it’s going to work out. So that’s the kind of setup I’m looking for. And then over the years, you know, we’ve added other things to look at, you know, how do you make sure that all of your trades are not in the same sector? Right now, you know, right now, oil has been doing well. So all of the oil companies were doing great. But then they all turned around and went down all together. So if you have 10 trades on in different oil companies, that’s not that’s not diversification. That’s the same trade. And so if they turn around, I’m going to turn on together. So that would be one way of putting the odds in your favor by having you know, only a small portion of your account in one sector. So you have to separate that. How do you diversify by time? You know, so not putting all your trades on on the same day. That’s another way to do it. So you diversify by time. So there’s so many different ways that you can do it, some of them might make sense to you some might not. And then, you know, we have other students that come in and say, Well, I do it, you know, I look for this also in my trade, like, Okay, if that’s what you want to add to it, then add it. Don’t subtract things that I’ve given you. But if you want to add to it, one student said that he likes to look at the weekly chart, I usually look at the daily chart, see how the stock is doing. He likes to look at the weekly chart as well.
Allen: So I’m like, Okay, fine, you can add to it, you know, if it doesn’t hit your criteria on the weekly chart, then just means you’ll have less trades that qualify, but it’s not gonna it’s not going to put you into a trade that’s going to hurt. So when you’re basically you just have to figure out what you think is going to work. And then you have to test it. So back testing, and paper trading are really really, really helpful. Especially back tests,
Mark: I find paper trading useless. To be honest. You lose interest very quickly. It’s very easy to lose in that type of trading. Yeah, go ahead. I’ve done a little bit of paper trading and I’ve just found that I find okay, it’s gone the wrong way. But I got it wrong. You just let it go. Because it doesn’t mean anything. It has no significance, does it? Start with money trading? Yeah. You’ve got a connection heavenly with the with the live trading, because actually, it’s not your money tied to it.
Allen: It’s not your money. It doesn’t matter what the style of the trade does, you’re only focusing on becoming a better trader, the goal is not to make more money, the goal is to become a better trader. Right? It’s kind of like playing poker. It’s like when you when people go to play poker, right? They’ll professionals, they’ll tell you that if they play their hand perfectly, and they lose, they’re okay with it. Right? If they play, if they mess up, and they still win, they’re still mad at themselves. Because I didn’t play it right. I didn’t play my cards, right? Even though I won, I don’t care, because long run, it’s going to hurt them. If they keep playing incorrectly in the long term, it’s going to hurt them. So that’s the goal to become the better trader. And the end results, the profits will take care of themselves. So paper trading is practice. That’s all it is. Right? If you didn’t need to take that on board. It’s slow practice. Back testing, I prefer back testing way better than paper trading. Because you can go really quick. You know, if you if you come up with a plan, like okay, these are my criteria, I got these seven criteria on my trading plan. I’m going to enter when I see this, this and this. I’m going to exit when this happens. I’m going to adjust it this way If this happens, okay, I got that right and down, and that you can even just come up with your you can just guess No, I think this one’s good. This one’s good. That’s my plan. Okay. You pick. You pick a stock, spy. Great, perfect. You go back to yours in time. January 1, put the trade on. How does it do? Oh, it made money. Awesome. Cool. February, how do you do made money? Great. March. Oh, we lost a lot of money. Doing it, huh? Okay. APR, how do you do? And then just do it month by month, I want back testing one month or one trade, you know, might take you five or 10 minutes. And so you can get years worth of practice in just a few days by back testing. And you’ll find that
Mark: It’s something that I’ve never done is back testing. Is there a particular software that’s adequate for that sort of stuff? I’ve never really looked down that line. I’ve heard about it. I’ve listened to it, but I’ve never actually really done it myself. Is there anyone ticular that would be worthy.
Allen: The one that I use, the one that I use is called the option net explore. option that explore? Yeah, and I think I think they’re based out of Great Britain. And so basically, it’s, it’s an options selling platform, you know, so it looks like your broker’s platform, you put the trade on, and you go through it day by day by day. And it doesn’t do it all for you, you actually have to look at it every single day. And if you want to make changes, you can make changes to it. That’s what I like about it. There are other software’s that you just put in the strategy, you press a button and it’ll tell you “Oh, you made money or you lost money”. That’s not the point. We want to get better as a trader. Right. And so this one is like, Okay, I put the trade on, click a button. Oh, stock is down today. Do I need to do anything? No. Okay, next stage. Oh, stock is back up again. I don’t have to do anything. Next stage. Oh, stock is down again. Oh, no, I’m at an adjustment point. Okay, what adjustment am I going to make? I’m going to do this adjust. Okay, cool. Let’s see, did it work out? Go there forward today forward a day forward a day. Oh, expiration day stop. It worked. So it’s, it’s just, you know, there’s no money, right? It’s just about becoming a better trader. It’s just about getting the practice doing it over and over and over again. So that I think would definitely help you as well.
Mark: Okay, so one of the things obviously, we talked about discipline and the mental game, what’s probably the best thing to follow, or to train your mental strength, like, as you said, like a paper trade or a live trade, you should be able to make that same decision, then in there without any emotional war. What’s the best way to get to that level of trading where you whether you win or lose, it’s just business as usual?
Allen: Yeah, I’ve done to you have to divorce yourself from the outcome, whatever, whatever that takes for you. For me, in the beginning, it was getting my wife because I knew how I would have to answer to her.
Mark: And scary
Allen: I didn’t have it. Exactly. It has to be scary. Because if you do it properly, she cannot get managed. Right? It’s like, Hey, I followed the rules, babe. I did everything I was supposed to do. It still didn’t work out and she’ll be like, Okay, fine. That’s no problem. But if you do not follow the rules, that’s when she gets manage. And that’s when it gets scary. So yes, you have to make it scary for you not to follow your rules, because a lot of us a lot of US traders, like, if we lose money, yeah, we don’t we get mad about it, we’re like, oh, man, I lost money, we feel bad about ourselves. But it doesn’t hurt enough. You know, it’s kind of like these people that say, Hey, I want to lose some weight. You know, so they make a goal, I’m gonna lose some weight, I’m gonna lose some weight, they tell everybody, and they do it for a few days, and then they give up. But then there’s this website, that what, what this website, basically what it does is, you have to pick a, maybe a political party, or a person or some organization that you hate, you actually hate them. And you have to put up a lot of money and say, Okay, if I don’t stick to my goal, this organization is going to get $5,000 or $10,000. So that makes you because it’s now becomes a different level. It’s not about just the money, or about doing the thing. It’s like, okay, you know, let’s say, for example, I don’t want to give my money to anybody like the Save the whale Foundation, right? I don’t want to, I don’t want to give my money to the whales, I hate whales, I want them all to die. I don’t want anybody to save the whales. So if I don’t lose 10 pounds, they’re gonna charge my credit card $5,000 and give it to the whales, and I hate whales. So I want to do whatever I have to do to lose that money to lose that weight. You know, because I don’t want that well to be saved. You have to want something more than what you have. So there’s, that’s another psychological trick. No, in trading? We sometimes we get used to it, you know, it’s like, oh, last? Oh, well, you know, we get used to it. And it just, we gotta it’s just the mental part of it.
Mark: Definitely, definitely, it’s a huge part of it. Something I didn’t I didn’t realize, until much later down the track of trading, how big a part of mental side of it really is.
Allen: I mean, if you find trying to avoid is difficult. Yeah. So if you find yourself having a problem with discipline, make it simpler, cut it down, make it as simple as possible. Find the trade that you know will like you know, the naked call or the naked put the covered call, these are very simple trades, they’re really hard to mess it up. Right? On the naked put, if you get assigned the stock, hey, that’s great. I just bought the stock much cheaper than it was before. And I’m going to own it. So you want to you want to do it on companies that you’re going to own you want to own for a long period of time. That’s the only way it really works. You can’t you can’t be selling naked puts on stocks that are just, you know, going crazy. That’s the wrong way to do it. So you know, if you can simplify it, if you can find some way to have somebody else monitor you, and hold you to your fire, you know, hold your feet to the fire like, hey, you need to follow this, why aren’t you doing this? Or, hey, it’s not my money. Right? I’m doing it for somebody else. This is my kids inheritance, right? I cannot mess it up. So I have to follow the rules. One guy, when I was in, just after high school, I became an agent, a real estate agent. And as an agent, as a brand new agent, they tell you that you have to do a lot of things that you don’t want to do. You have to talk to hundreds of people all the time, you have to cold call, people say Oh, Hi, are you doing? Do you want to sell your house? Oh, hi, do you wanna say, Well, you know, they have to keep doing things that you don’t want to do. So it was like, okay, in the guy, the guy is like, hey, most of you guys are not going to do it. But if you want to be really, really, really motivated, what you need to do is go out and buy a fancy sports car. Sounds like what you’re talking about, what do you do a fancy sports car? Because yeah, you need to go out and buy an expensive sports car so that you have that payment that you have to make at the end of the month. And so that is going to make you work your butt off because you have to make the payment. And as I go I mean, I understand what he was saying. I was like, No, I’m not doing that. But then eventually I didn’t make it as a realtor. Maybe if I did do that, maybe I just didn’t do the work that he told you to do. I just didn’t do it. It wasn’t the reward wasn’t worth it for me.
Mark: It was up to risk, I suppose. Yeah,
Allen: I mean, you know, so with your training, you got to figure it out. Is it really worth it? Is the goal that hey, I want to quit my job. Is it I want my wife to quit her job. I want the kids to have this vacation or whatever it is. You have to burning. Yes, just eat you up every single day. You have to really really, really want it
Mark: Explain to me how and it’s burning me.
Allen: Then the discipline has to stick. Because if you want it, but you’re not disciplined, and your losses are too big, then it’s it’s not there yet. So I think, you know, if you don’t have a trading plan, I’ll just give you the training. You know, I mean, it’s not that hard. It’s not it’s, it’s the training plan helps. But it’s up here. And it’s the practice just doing it over and over and over again and having confidence in the plan. Because then if you have confidence, you’ll stick to it. If you don’t have confidence, you’re going to change it, you’re going to you’re going to add things to it, you’re not going to follow it, you’re going to forget about it. Like with the paper trading, that’s exactly what that is, you know, so it’s not real. So, oh, well, I’m gonna ignore it. I’m gonna forget about I’m gonna do that.
Allen: That really resonated with me Allen’s that that point, like, go back to the paper trading, treat it like it’s somebody else’s money, and then make it work. Don’t look at it as just as being as a fake account, that doesn’t matter.
Allen: I mean, I wouldn’t Yeah, I would prefer you do back testing, it’ll be much faster.
Mark: To look at that I’ll get, I’ll get onto that particular site that you’ve made. Yeah,
Allen: That’ll give you years of experience in just a few days. And so, to me, that’s like the best way you can do it. But if you know, if somebody is listening to this, and they can’t afford that software, paper trading is free. And you can do it. Just Just treat it seriously. Treat it like real, and just follow the plan. And you’ll see, because if other people can do it, you can do it. I’m talking to you. You’re a very smart man. You know, if you understand what a strangle is, and and all the other things you taught me, you know that you told me, Oh, you’re doing this. And we’re doing that. And if you understand that part, you can get this. It’s nice. Not that much.
Mark: I know I can do it. I know I can I honestly believe in my heart, that of all the work and the discipline. Part, probably not so much the discipline, I suppose. But the tenacity that I have. I know I can get there. My wife, she just can’t understand why I’m not there yet. She says you’ve worked so hard at this for so long, why aren’t we living a better life than what we are now? Not that we’re destitute and desperate, we’re not we’re doing we’re doing fine. We both work with secure all that stuff. But I want to take it to here. I don’t want to be just going through life normal and just crunching the wheel everyday living in a rat race. I’ve done that I want to I can succeed. I know I can do it. I’ve just got to find a way through. It’s why we’re here, I suppose.
Allen: Yeah, I hear you. I feel it. You know, I was I was in your shoes for a long, long time. But, you know, part of it is sometimes, and I don’t like talking about this too much. But the whole nature of options trading it, there’s a lot of money to be made by teaching people how to trade options. There’s a lot of people out there that don’t trade options that teach people how to trade options. And they have no clue what they’re doing. They’re putting out information. You know, we’ve had people that joined our program, and then took our stuff and start selling it. And they don’t know they never used it. You know, they’re just oh, I learned this. And I learned this and I’m going to start become a coach. But you don’t do it yourself. Right. But somebody else listening to that guy doesn’t know that he doesn’t know how to do. And so it calls into question like, okay, all the stuff that you have been learning. I hope that it’s been correct. But we don’t know. So that’s another thing. Like, if you feeling overwhelmed, if you are feeling like Man, I’ve learned so much. And I’m studying this guy, and I’m studying this podcast, and I’m listening to this, I’m listening to that. Sometimes what you need is just a vacation from all of it.
Mark: I have done that over time. Now I had stopped that period of time where I felt like it’s too much or I’ve had a few losses. And in some of this during that time it says walk away for a while, take a break. And and at periods I’ve gone No, no, I’ve got to keep that I’ve got to keep at it. I’ve got to keep moving forward. But then I’ve probably learned as time has progressed, that it maybe just walk away for a few weeks, even maybe a couple of months. Just go and do something else for a while. But I always gravitate back to it. I always keep coming back.
Allen: You can come back, you can come back. But what I’m saying is that don’t make it too complicated. If you’re listening to too many people, if you’re listening to too many voices, then it just becomes too overwhelming. And even listening to so many like success stories, you know, everybody has success stories. If you just listen to that and say oh my god, this guy’s making this much money. This guy’s making this much money. He’s good. Why can’t I do it? What the hell is wrong with me? Why am I you know, am I stupid? Or am I First or what? It’s, you know, everybody has a different path. And so, you know, sometimes you just gotta stop listening. You know, no more marketing gimmicks, no more marketing emails, no more webinars, no more, none of that. Focus on that one thing that you decided to do, you know, pick that one strategy, it’s like, I’m going to focus on this strategy, this the only thing I’m going to learn about this, the only thing I want to listen to, and you go back to the basics, you start from scratch, you keep a record of all of your trades, you figure out the pattern, what’s going on, you learn it, and then you just go from there and build on that. And I think..
Mark: So what did that, that comes back to that trading plan doesn’t have a number of headings in there? Why did you went up? What day did you enter? Where was your stop loss? Why did you not take it out? I suppose there is a number of things that can be headlined in your journal, then you would have to account for as the trade progresses through to the end.
Allen: Yeah, I mean, we have a we have a presentation, a video that we show people. And basically, what I did was I took nine years of credit spread trades. And I put them, you know, like, these are all my real money trades, if I started with $100,000, and I put 20% into each one. So you know, 20,000 20,000 to five trades, right? Of all the trades that I did, I looked at I went back nine years, I looked at all the spreads that I did, if I had done that and put 20% into each trade. Now, every month, I didn’t have five trades. So I didn’t have all the money invested. If I started with 100,000, at the end of nine years, I had 1.1 million. So that tells me that, okay, you know what my trading plan kind of worked. Right? The trading plan worked, the strategy works, you gotta give it long enough. Some years were really good. Some years, we lost money. But over the long term, with real trades, I was able to make the work. And so you know, in terms, a lot of people say, oh, I need to learn adjustments. Okay, that’s one way you can increase your odds. If you learn adjustments –true. But if you want to just go back to simplicity, just make it as simple as possible. Put the trade on, if you make 10%, you get out, you lose 25%, you get out. Now, you know, I mean, I could teach you a hundred other things to add on to that. But if you want the simple, the simplest way to do it, find a credit spread that works that looks good to you. Try to make 10% temporary, you make 10%, you get out, you don’t get greedy and try for 15 or 20, or whatever, you make the 10 you get out you make 25 or you lose the 25% you get out you don’t you never lose more than two and a half times what you could make. And that was that’s your plan right there. That would work. That’s what I was doing before. So you know, I got a history Hey, yo, a real money. This is not back testing. Just this is real trades. It works. So, you know, the problem is, we don’t always stop when it’s down 25% We don’t always stop when it’s up 10%. You know, there’s been many times when I started when I was when I was getting started. I was up 10% on a trade. And I’d be like, you know what, no, I’m going to make 14%.
Allen: If I go to 40, if I let it go to expiration, I’m going to make 14%, I want the 14% I don’t want to. I don’t want to get out of the trade now. It’s only got a week left. You know what’s going to happen in a week, a lot could happen in a week. And then that thing would turn around, it would take back all the money that I made, and it would give me a big loss. And those are like oh my god, my stomach. Somebody just punched me in the stomach. Oh my god, I’ve got to die. Because not only did you give back all that money, but now you have this huge loss you’re sitting on and you feel like you’re the stupid schmuck in the world. So, you know, just stick to the rules. You’ll feel better about yourself.
Mark: Yeah, definitely. Definitely. Definitely. That’s what I made on a set of rules. Just follow.
Allen: Had this helped?
Mark: Yeah, I think so. Yeah, it’s been good is there’s been a few aha moments. And yeah, I just got to stick at it and take into paper trading thing. I think I’d definitely take that on. Have another look at that and try and treat it differently as opposed to just artists fake money. So to practice again, doesn’t matter. The wife thing I might have to get her involved and as much as she doesn’t really want to be involved in training. She’s not interested in one or the other. But I’ll have to probably get her into look over my shoulder and as you say, Make me accountable, more accountable. I suppose. I’ve got no trouble Follow the strategy. I’ve got no trouble following above averages and looking at the deltas and stuff like that. I think it’s more the discipline thing is probably.. probably the key thing and taking that 25% loss rather than thinking like that, we’ll come back, we’ll come back, like now at the moment, look at the market, we’re in the moment. It’s not easy, peasy, no, it’s gonna bounce, we’re gonna bounce, we’re going to bounce, but it’s just keeps going down doesn’t, we’re in a bear market.
Allen: You have to trade the market that you have, not the one that you want. So that’s where that’s where your your setup will keep you out of trouble. You know, so you want to like I said, you want to have the odds in your favor, as many as possible. So if you have all the indicators, or whatever your whatever your checklist is, you know, you got to make sure that they you check them all off. Otherwise don’t do the trade.
Mark: Yes, just want to get back to the COVID times when the market is frustrated off again.
Allen: I don’t think those days are coming back for a long time. This is the new normal, you know, where the Fed is the most important part, the Fed is..
Mark: I know inflation over there is raising interest rates is obviously a big thing in the States at the moment. But over here, we’re having similar things happen as well. inflation’s like interest rates, rock bottom for a long time. But now we’re starting to move back up again. And it’s really shaking things up. And people, I think, probably a lot of overextended over a period of time, because everything was so cheap. And now everything’s starting to go back up again. everyone’s freaking out. And it’s obviously shaking the markets up this bear market downturn?
Allen: Yep. Yep. I mean, it was, you know, we could see it coming. You know, we could, you could predict it be like, hey, when they start raising rates, stocks are gonna stop going up. They have to go down. So like, I’ve been predicting it, like, Yeah, we’re gonna have a bear market, when they announced, hey, we’re thinking of raising rates in the US, you know, when the US Fed announces that, we’re thinking of raising rates, that’s going to be the top, that day is going to be the top and then it’s just gonna go down. And that’s exactly what we’ve seen. So, you know, there are still there are some things that we’re looking at, like, Okay, if we see this, and if we see this, we might be putting in a bottom, but I don’t think we’re there yet. And this volatility is something that we’re gonna have to get used to the ups and downs. So, you know, that means when you have a trading plan, and it’s been working, but then it stops working, because the market changes, then you as a trader, you have to trade with, you have to change with it. So you have to either trade a different plan, or get a different strategy. So, you know, like, like I said, in the financial crisis, I knew a lot of guys, and I was one of them, that was just doing iron condors all the time, every month, iron condor, easy, easy, 10% every month, but then the market changed, and the condors didn’t work anymore. And there were people that didn’t adjust, and they didn’t change themselves. And they lost whatever money they had, they had to go back to work. You know, they just couldn’t make that change and shift. So now we’re in a more volatile market. So having resources on your side, you know, having a community having a coach or other people that are trading working with you, it’s more important now than ever before. You know,
Mark: Now, I think it’s been very worthwhile today is reading that was fantastic. It’s sort of revisit, there’s so many things that have resonated in there with that. It’s listen to podcasts, and people’s success stories has been fantastic. And what you said today, certainly put a lot of thought in my head, where I definitely need to revisit a lot of those points that you’ve made today. I know I can do it. I know I can do it. I just just got to break through that ceiling. And I suppose I’m still going to do that.
Allen: Yeah, I mean, by talking to you, I know I can tell you know, you have the desire you have everything you need, is there just there’s just something there’s just one or two little tweaks that we got to make up here. Once that clicks, then then it’s gonna start working. That’s all that’s all it is. And..
Mark: I suppose to claim is definitely one of those things, the wife and the perpetrator. There are three things I’ve probably taken out of today’s discussion.
Allen: Yeah, and if you do the right thing, you know, she doesn’t know she doesn’t have to know how to trade. She just has to be able to ask you the questions. Like, Hey, let’s go through every single trade. What’s going on in the trade? And what are you going to do if it goes bad? You know, and when. And if you haven’t done it, why, why didn’t you change it?
Mark: Follow the 25% loss
Allen: Yeah, if that’s if that’s the thing, then die she comes in, and she’s like, Okay, what’s the trade? Apple? Okay? When are you gonna get out? When I’m down 25% Okay, where are you right now? I’m down. 27% Why are you still in the trade? Okay, I’m getting out right now. And then that’s it, that will keep you at your losses to around 25%. And so if your gains are 10, and your losses are 25, you should you shouldn’t be profitable. You know, the numbers just worked out.
Allen: Again, markets a little bit crazy right now. But once things, once thing settled down. It’s gonna, you know, everything’s gonna clip again. So even now, like we had, in you mentioned, the passive trading formula course, you know, we had a, we had one of our students on this week on the last call, and he said, Yeah, you know, I did nine credit spreads this month. And they all won. You know, even in this craziness, he had nine trades, they all won. So, you know, there’s still people doing it, it’s still working. So give me give me give me give me like to take like two things, you’re going to do two steps, like two activities or two takeaways that you get that you’re going to implement?
Mark: I think I’m gonna revisit the pilot training, I’m definitely gonna look at that and try and utilize that more. Okay, sure. And I keep thinking the wife, I’ve got to bring the wife in, but I don’t want to do that. That’s, that’s gonna be hard.
Allen: Why is it gonna be hard?
Mark: Well, anyway, she’s not interested for a start. But if she..
Allen: Is she interested in the money? Yes? That’s it. She doesn’t have to care what you’re doing. You just have to ask you questions. You know, and it’s just, you know, like, for as a man, as a husband, you want her to be happy and you don’t want her mad at you. And that’s the that’s the emotion. Right? So if it’s if it’s the wow factor. Exactly. Yeah, exactly. It’s the will factor. Oh, damn well. Okay. All right. So I hope this has helped you. I want you to stay in touch. Keep me apprised of what’s going on? And if there’s anything we can do, please let me know.
Mark: I’m definitely going to be in a much better place. Next time we talk.
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