Do you have any testimonials?
Yes. You can see the testimonials by clicking here.
Why is your strategy so consistent?
I think there are four main reasons why my strategy is consistent: 1)
I start with a trade that is adjustable. Most of the common trade
types start with a structure that is not very adjustable; especially
once the trade gets into trouble. 2) I enter the trade planning to
adjust the trade. Most options traders only think about adjusting when
they find that their trade is in trouble. 3) My profit target is only
a portion of the total available profit. Waiting around until
expiration week to get 80% of the profit in a trade simply gives the
market more time to make an adverse move. 4) The last and less
important aspect is what I adjust with and when I adjust. This is the
only thing that is different between the Original, Aggressive and Advanced
adjustment approaches.
Why do the monthly performance results differ from the broker statements?
The backtest results match exactly what I demonstrate in the course
videos using real data from the past. The broker statements are the
result of real time trading in a real account. January thru August
2009 was using the original strategy and October thru December 2009
was using the aggressive strategy.
Can you provide more detail about your strategy?
I teach a specific index options strategy that is rules based and
easy to trade. I start with a complex, multi-legged position and then
adjust it as the market moves. The idea is to make money from the
management of the trade instead of from what I trade or when I trade
it. All legs are in the front month and the trade is always a fixed
risk/margin trade.
How is the course delivered?
The course consists of 18 hours of computer based videos. The course
starts with some videos on theory and the rules. The strategy is not
that complex and this section represents a small portion of the 18
hours. The real benefit of the course is that there are also 48
monthly trading videos/recaps where I go back in time and trade the strategy
forward one day at a time using real data from the past. The
performance of each of these trading months are reflected in the
Monthly Performance numbers posted on the website. Once you are done
with that, there are not many gray areas left.
Do your results include commissions?
Yes. The results do include $1.50 per contract commissions.
Do you recommend a particular broker?
I don't recommend a particular broker. However, here are some links to get started:
thinkorswim,
tastyworks,
TradeHawk
How much money do I need in an account to trade your strategy?
To trade the Original adjustment approach you would need at least a $5,000 set
aside to trade one unit of the strategy. With the Aggressive and Advanced adjustment approaches, we use
a $4,000 set aside. Not all of the $4,000 is used up in margin. There
is always a cash component available to make adjustments. You can
trade as many units as you wish.
Why didn't you use all of the $30k in the demo account?
The demo account was setup to demonstrate trading one unit of the
strategy. The $30k balance is simply the balance of the idle account
that was transferred to thinkorswim to setup the demo account.
Does the strategy work on stocks, futures or stock indexes?
In the course, I teach and demonstrate the trading strategy using the
Russell 2000 (RUT) Index Options. I believe the strategy could be used
on other trading vehicles but I do not cover that in the course.
However, I do discuss what factors should be considered when choosing
an underlying trading vehicle.
What would cause a loss with your trading strategy?
When you enter the trade, your broker will charge your margin. That
margin value represents real risk. Even though the track record does not show a loss,
that does not mean the strategy is risk free. Our position is
actively moving in reaction to market movement. Therefore, our
position is not just a sitting duck waiting for the market to do
something in particular to hurt us. To produce a loss the market would
have to move in some very specific ways, a number of times. This is
less probable and would be contrary to normal market behavior. The point
is that, compared to many of the other options trading approaches, our
strategy provides the more improbable chance of loss. Not impossible
but more improbable. Until you actually learn the strategy, this may
not make complete sense to you. However, once you see it in action,
you will completely understand your risk and you will have the tools
to manage that risk.
Are there any prerequisites for the course?
You should understand the basics of options trading and in particular
the basics of options spread trading. We do not cover the basics in
the course. If you need this kind of training, I would recommend The
Options Institute
site:
The Options Institute
Is the strategy hard to follow?
If you have any options trading experience, you will find the rules to
be very simple follow. The strategy is rules based and easy to trade.
If a trader follows the rules as outlined in the course, should his results
match your results?
Individual results will vary due to the specific timing and execution
of orders. The strategy is very robust and differences in timing and
execution should not dramatically affect the profitability. However,
it might create differences in actual results.
In order to implement your strategy, what software, data or other information
services do I need?
You do not need any special software or services other than possibly
your broker's software.
Do you recommend a specific broker?
I do not recommend brokers. However, I do use the thinkorswim software
as an example in the course. Commissions are insignificant when
compared to our profits so it is not important to find the broker with
the lowest commissions. A decent options broker with decent execution
and risk based margin should be just fine.
How much time do I need to devote to the monitoring the strategy during the day?
There is potentially some involvement required during the trading day
to manage the position correctly. However, you should not have to be
in front of a computer for the whole trading day. We adjust our trade
when certain price points are hit. These price points may or may not
be hit on any given trading day. On some days, multiple price points
might be hit. In order to keep track of the market, I and many of my
students use an iPhone or a Blackberry. When our price points are hit,
you can either call the trade in or use a remote computer of some
kind. I and many of my students use a Netbook computer with a Verizon
wireless modem or some similar setup. When our price points are hit,
we are not burdened with having to make decisions about what to do.
Our trading plan is set before the day starts and when our price
points are hit, all we have to do execute our trade to make the
required adjustment to our position. Since we are not in a trade all
month long, the time burden is very low overall. In summary, you do
have to be available during the trading day to make adjustments but it
can be done remotely and the actual execution of the adjustments does
not take a lot of time or energy. In addition, we are only in the market
for a small portion of the month so we can relax for most of the month.
What are SmartLevels?
SmartLevels are the artifacts left behind from the Auction Market process. When you know how to identify the auctions (not Market Profiles) that happen in the market evey day, you have key levels from which to implement your trading decisions. SmartLevels are created using a unique implementation of the Auction Market Theory. Once you learn how to identify the SmartLevels, you will never look at a price chart the same way again!
What Tools are Required for Creating the SmartLevels?
To find and implement the position trading levels, you don’t need any special tools other than a charting package that lets you place horizontal lines. You can also day trade off of the position trading levels. For the day trading specific levels, you do need a volume profile drawing tool of some kind. Right now InvestorRT/MarketDelta, TradeStaton and the Rancho Dinero tool for NinjaTrader are the only ones that I know about.
Do the SmartLevels work on Forex?
When trading the Forex, there is actually some “volume” data available. If one trader trades 100 contracts on the S&P 500 Emini futures contract and another trader trades 1 contract, the exchange reports a volume of 101 contracts. For Forex Trading, if one trader trades 100 contracts and another trader trades 1 contract, it is reported as a “volume” of 2 trades. This seems like a big difference. However, because the volume in the Forex is so huge and because most traders are trading more similar volume levels, it does not make a difference for our purposes. I ran a two week study with a Forex trader and the SmartLevels worked just as well on the Forex as they do on the other markets that I follow.
Do these pants make my butt look too big?
Of course not! The pants completely cover your butt and the fabric is wonderful!
How long does it take to create the SmartLevels every day?
Coming up with the SmartLevels support and resistance on a single market each day should take less that 10 minutes. It’s really not very hard when you know what you are looking for.
SmartLevels vs Pivot Points?
SmartLevels primarily use a form of Auction Market Theory that studies the volume traded at each price level. Used properly, this insight can let you know, in advance, the support and resistance levels that the market will react to more strongly. Once you are armed with that information, it will improve your trading no matter what you are doing. There are times when the market is simply trading in a random fashion where any trading approach will find it difficult to be profitable. The key is to know when to be engaged. You want to be engaged when the market will be moving decisively one way or another. Conversely, you want to avoid making trading decisions in areas where the market is primarily behaving in a random manor or is sure to run into support and resistance contrary to your trade.
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