 Welcome back to the Trade Hacker Mindset. In this episode, we've got a special guest with us today, one of our community members, Dick K. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, welcome back. So we are with one of our community members, Dick K. I've been really looking forward to this conversation, Dick. You and I have interacted quite a bit with just messaging and in our community, but I've actually never had a chance to talk to you directly. So welcome. I'm excited to hear more. Well, thanks, Steve. It's good to be here with you and catch up. So one thing I actually was wondering is that I never asked you, how did you originally come across navigation trading? How did you find us? I believe I found you through Option Omega. I think maybe one of the times you did a presentation, I joined and I was really interested in some of your longer term strategies, hedgehog, iron ducks, things like that. They were relatively new to me, although I've been trading for quite a long time and really had an interest to learn more about those strategies and honestly stayed for the community and because of you, Steve. Cool, well, that's awesome. Appreciate that. So you said you've been trading a long time. How long is a long time? How long have you been trading? So maybe I'll separate a little bit between investing and trading. I guess I started buying stocks with the Motley Fool back in 91 when I was still obviously working full time. They'd put out recommendations. I'd put in my order after hours or in the morning and hope it was filled in the evening. I did that through, say 93, 94. That's when I started getting into options. At that time, I guess I was writing covered calls. If I remember correctly, 94 was a relatively flat year. So the idea of writing covered calls really appealed to me. So I started writing covered calls 94, probably 96, 97. I got into buying leaps and maybe doing some shorter term strategies. Mostly based on the Motley Fool's recommendations at that time. And your covered calls that you started with was that because you already had long stock positions and you were just trying to collect that premium on them or were you initiating them as new strategies, as new trades altogether? It was a little bit of both, Steve. Some of it, some of the strategies were just basically income producing strategies. So I would buy the stock with the idea of writing covered calls. And some I was just covering positions that I currently had in my investment portfolio. So you got bit by the option bug. Started buying some longer term leaps. You said, forget about this stock. I can just buy the options. And that was kind of the next phase. You know, I guess that kind of went status quo until I left Bank of America in 16, with maybe some hiccups in the middle of the road, so to speak. I became a little bit more active, but the challenge with that was that I would become busy with work and totally lose perspective of my portfolio and the positions I had in one. So it ramped up a little bit, say prior to 16, but then there was a time a couple of years before that where I just, I needed to cut it way back because I was making mistakes just because I wasn't focused on trading. I was focused on my career. And then you retired in 17, is that correct? 16. Okay. 2016. I did a little bit of consulting. I worked for one of these startups I was involved in or had invested in, and I did that through 2017 when I really started to become more active. And I could focus on trading with a much greater intensity, I guess. And so when you started to become more active, when things started slowing down in your career life, what were kind of the strategies that you started with? I was still doing swing trades basically based on technical analysis on a daily or weekly chart. Wasn't doing anything really short term at all. So maybe writing an option eight weeks out, three months out, maybe selling some calls against it if the market got soft. But that's really kind of how I got into trading on a regular basis. And so at that point, were you still buying options or were you selling puts for swing trades or what kind of? No, I've been an option buyer primarily until end of 21, early 22. Okay. And so it was all directional. All directional selling calls against it even out some of the bumps in the road. Gotcha. And then when did you transition to more of a Delta neutral premium selling type strategy? Yeah, so 22, end of 21 and 22 was tough for swing trading. At least it was for me. And although I had been profitable looking back at the end of the year, I had some really rough quarters and I didn't feel real good about that. So it was the end of 21, end of 22 when I got into more double calendars, iron condors, strategies that are in that vein. And how did you initially go about learning those? Were you watching tasty trade or just YouTube videos? Did you follow somebody's specific, what was your kind of your path to learning those? So read a lot of books, watched a lot of videos. Was the primary reason. I'd always been into back testing, whether it was CML or Wall Street. I liked the idea of increasing my probability of success by what has happened in the past. So I always had liked that aspect of trading, but with option Omega and the ability to focus on strategies that I couldn't back test anywhere else, that really got me going in that direction, iron condors, calendars and the like. Gotcha, okay. And so today, what would you say is your absolute favorite strategy if you had to pick one? Wow. So I don't like to have one strategy because I think that reduces my probability of success on a weekly basis or a monthly basis. So I would say double calendars, number one probably, and then zero one day condors. Okay. Yeah, I mean, I would answer the question the same way, right? I mean, that's like asking you, Dick, which one of your children do you love the most, right? Exactly, exactly. Yeah, and to that point too, I mean, I think it's important. I mean, there are certainly some people who focus on one symbol, one strategy, and you can be very successful doing that. That's definitely not ever been my cup of tea. I mean, I really like the idea of diversifying, layering in with different strategies at different price levels, at different volatility levels and things like that. So it sounds like you're kind of on the same page. Yeah, I mean, clearly, there's uncertainty in the market. And if your whole game is based on the one pony show, I think that's tough. I think it's going to be tough to keep your mind right and harder to keep your risk under control. So yeah, being diversified is, for me, how I really like to trade. And so was there a, I don't know, call it a turning point? Was there a aha moment? Was there one moment in time where you really kind of turned the corner in your trading and you were like, okay, now I got this. This is something that, yeah, my career's over. I'm a full-time trader, but you weren't really sure that you could do it full-time, but was there one point where you were like, okay, I got this? So I think in mid-20 to early-21, I really started to focus on the process. I think I had read Mark Douglas's book three or four times by then, and it just really kind of started to click for me. I remember back in that time when I would ask my wife, don't ask me how I did today, ask me if I followed my trade plan, because that really became what was important because I knew if I could execute on my trade plan, I would be successful, consistently successful. And if I had to put my finger on one time and one element, it was really when I started to focus on following my plan, calming my emotions, everything Douglas talks about in his book. Yeah, that's cool. It's amazing that that moment for nearly every trader I've ever spoken to is when they start focusing on themselves as opposed to the indicator, the strategy, who they follow, those kind of things. And so it's pretty amazing that that just continues to be the answer. Right, right. Yeah, I completely agree. I am not of the mindset that you can only have control of your emotions. I believe you have to have some understanding of the market, what's making it move to some degree. With that being said, I don't have a TV in my office. I don't watch the news, maybe on Fed days, I'll throw on CNBC, but I don't care about the news or what's really going on, more just what's happening bar by bar in the market. And so when you're evaluating, when you're in trades and you're evaluating them, I've heard you make a couple of comments about different tools you use, whether it's technical analysis type tools or internals or things like that. So when you're trading, where do you draw the line between trading your plan based on a back test and being a little bit more discretionary with the tools that you're looking at? Right, so in a time like we're going through with zero TE trades, they're not as profitable because the lower volatility, they can still be profitable, especially at certain times of the day, but I put more weight on my experience on the internals, what I'm seeing happening in the market when maybe a back test is transitioning. I think you know my morning zero DTEs, I've really stopped doing those, something with a much later entry in the morning and smaller size because it hasn't been back testing as well the last 60 days. So a lot more discretion on that trade compared to the five calendars all open up today on Friday, my big day for calendars when I'll follow my plan to the letter. So- And how many different positions do you have on at any given time? So in my, just speaking of products that I back test, I think I have 21 or 22 in my portfolio that I in option Omega. So if the criteria of the back test is met, call it 21 in a week. And then I still have a lot of stocks that I still invested in that I like, I like Google, I like a lot of the big tech names and have and when the market gets soft, obviously I'll cover them. So I don't know how many that would be if I included my investments as well as my trades. Your active trades you may have as many as 20 or 21, but you have other long, more long-term, you would consider long-term investments outside that. Correct. And I might, you know, I might, there's some setups that I like, I trade the futures, I trade any commodity. So, you know, if I find a setup that I really, really like or I happen to see it, in a discretionary, I'll take the trade. Gotcha. So maybe throw in a couple more of those a week. So you shared with me one time, not too long ago, you shared with me kind of your spreadsheet. I gotta say, that's pretty amazing. I mean, it is very detailed. I mean, you have it down to the, here's the strategy, here's the margin required, here's kind of the back-tested profit. I mean, it's a pretty dynamic sheet. Tell us a little bit more. I know it's without seeing it, it may be difficult, but tell us kind of how you process all these different strategies that you're trading on a daily basis. All right. So I enjoy technology and I use a lot of technology in my trading. So, I update all of my back-tests every night. I say, I don't, I have a program that updates all my back-tests. Then it runs my portfolio and I export it into Excel, where I can look at, you know, how every strategy performed that closed yesterday. I double-checked to make sure I opened up the correct strategies. But it will tell me, you know, any one of the strategies in Excel, so I don't have to go back and forth. I can view how each strategy has performed of the last week, the last month, the last three months. I know what my projected margin requirements are gonna be for the next day and that's really more for planning because you're doing a lot of calendars, you don't want them overlapping, so I have a number of accounts that I trade out of. So, did I hear you correct? You have technology, kind of an automated system that pulls the back-tests from Option Omega into your spreadsheet and updates your portfolio, your back-tests every day. Correct, it's not like an API or anything, I just run some macros that will go into Option Omega, update my strategies, and then update the portfolio and download it. So, if you download in the portfolio, I think there's maybe 5,000, 6,000 lines or records in Excel that I can slice through very quickly without having to go back and forth between Option Omega and a number of times during the day. So, then you start your day, you've got your sheet, you've got all your updates, you've got your position size based on margin required, all that good stuff, then you have it kind of designed from a perspective of, okay, today Vols contracting or just today's Wednesday or whatever it is, and so then you have your list of trades of like, okay, today's Wednesday, here's what I'm gonna do. Is that kind of the high level? That's exactly it. I look at the trades, I'm gonna be opening up today, I looked how they performed the last week, month, 60 days, I can't say I do that because I have a good feeling of how the trades have performed. But yeah, then I put together the lists of trades I anticipate opening during the day. I checked the trades that closed the previous day and make sure that the back test was, or my results are close to in line with the back test results. And if they're not, I wanna figure out why, what did I do wrong, what could I have done better? But yeah, all that is part of my morning routine. Gotcha, cool, very cool. And so, of your process, just of your process of trading in general, is what's one thing that you find most difficult to follow? I mean, is it position sizing? Is it actually pulling the trigger on taking a trade because you're not sure, like what would be one thing that's difficult for you to just absolutely follow from your process? You know, I feel like I've made a lot of mistakes during my trading career, especially early on. Honestly, I don't struggle with pulling the trigger on the trade. Position sizing, I know what that's gonna be before the day starts. So that's not a question when I exercise the trade. My risk management, I feel, is very much in check. I mean, probably, what I would say I struggle with most is that some of my back tests have rather large stop losses, 200% in some cases. You know, the return is amazing over six months, but you might take some big hits on a daily basis. And so, second guessing the back tests when you're getting close to hitting that stop loss, and maybe you wanna get out at 150% versus the 200% stop loss. So to not stick with the trade and see it through, follow the back test, especially on those trades with the larger stop losses would probably be the biggest challenge. So you wanna, you have a tendency to wanna pull the trigger bail quicker than what the test is showing, gotcha? And it was interesting, probably four or five weeks ago, I was taking a ton of heat on a good size iron condor. It was within my risk profile, but I was taking a ton of heat and I pulled the trigger. I got out at, I don't know, call it 130% loss. And I looked at it the next morning and it went back to full profit. So yeah, I mean, you still make mistakes like that and that struggle to stick with the plan, especially with the large stop losses is what's hard. Right. So kind of dovetailing on this topic of making mistakes cause I really think that people learn the most from their mistakes or hopefully from other people's mistakes. That's a tough one for me. I usually have to hit myself across the head with a mistake before it gets to me. But, and this could be in the last year, six months, two years, five years, whatever. What's the biggest trading mistake that you've met? What's the biggest trading blunder that you've gone through that always kind of sticks out in your mind? Like I'm never gonna let that happen again. Yeah, so when I was still working full time, it was 2015, I sold some calls on the VIX and the VIX went up like two months in a row. It was relatively high. And I thought, this is a no brainer. So I sold the calls and then work just exploded. My risk management really back in 15 was non-existent. So work exploded and the VIX exploded at the same time? Same time. So yeah, that was a six digit loss by the time I kind of focused on, oh my God, I looked at it, weeks had gone by. Maybe it was a 60 day cell and I took just a huge bath. Gotcha. So when that happened, did you stop trading for a while altogether? Or what was your mental state at that point? I didn't stop trading. I mean, I had none of the disciplines that I do today. So I really just scaled my size, made sure I had a process even if it was like, okay, Dick, you gotta check every day. You gotta take 10 minutes at least to check your position because I didn't get that deep into hole overnight. It was a number of weeks that the VIX continued to go up and I was still short. Gotcha. So in 15 it was just, all right, you gotta take 10 minutes every day and review your positions because I wasn't trading full time. Gotcha. Those are painful, expensive lessons. Or sure. But it probably still affects me today in that I check my positions at the end of the day, make sure my closing orders are in place where I wanna close it. And I do the same thing in the morning again. So I have that kind of redundancy now built in and probably to a great extent, that loss in 2015 is still resonating with me to some degree. Some place deep in my mind. Well, I'm sure your accounts are much bigger now. So if something like that happened today, the loss would be maybe seven figures instead of six. So while it was expensive back then, it probably helped save you some money in the long term, right? Yep, yep. Exactly, exactly. Cool, so you've talked a little bit about your processes from a trading standpoint. What about your routine or things that you do that are kind of not trading related like from a just a mindfulness or I've heard you say that you regularly meditate on a daily basis. Tell us a little bit about your routine. Pre-market, maybe even during the trading day when you're in trades, things you need to do or post-market or whatever your routine is around those things. Sure. I am a very early riser. I'm usually up between four and 430. No alarm, that's just when I get up. I meditate during that time. It might be sitting outside in a sweater and looking at the lake. The moon's still shining on it, but just being awake but calming my mind. And I really think that is important as it unfolds throughout your day because you have a greater sense of calmness and awareness to be able to interact with your family better, trade better, make better decisions. So that's part of my morning. And then usually before the market opens, five minutes or so before the market opens, I take some time just to do some deep breaths to take a break from thinking about the market before the market opens. Part of my routine is to review the markets. I'm heavily focused on what happened yesterday, evaluating what I did well, what I could have done better. But then I like to take that a couple of minutes before the bell rings to kind of clear my head. What would you say to listeners who maybe have never done any kind of meditating or breath work or anything like that? We, as you know, we recently started a mindfulness channel in our community and it's led by Bianca, one of our community members because that's really a big focus in her life. It's certainly not an area of expertise for me. And I know when I first kind of started meditating on a consistent basis or doing some of these things, it was very uncomfortable, it was very weird. What, for listeners who have not done any of that, what kind of advice would you tell them to as far as getting started or how did you get started? Right, so I believe I got started with an app. And I would say that it's like the first time you work out. It's hard, you feel like you're not doing it well. You don't have the control of your mind that maybe you feel that you should and because of that, you think right away, oh, it's not gonna work for me. But, and I think I've said this before, it's kind of like your brain is a muscle. You have to make it stronger by practicing something again and again. And maybe it was three months, maybe it was four, I don't remember exactly, but you just hit this point where if you don't do it, you really miss it. So I would say you can't give up early. It takes time, just like it takes time to develop any muscle. And although you can read a lot of books about it, you can watch videos, you can hear other people talk about it, until you really get into the practice, speaking for myself, I didn't really understand the benefits that it would bring to my life. And not just trading. I think I'm more present with my wife and my kids. I sleep better. Yeah, it just takes a little time to get into the practice and don't give up early because you don't feel you're good at it. Very good. So when you're going back to your daily routine, your trading, tell us a little bit about that. I mean, are you locked in from bell to bell? Are you putting on trades and you're going about things? Tell us how trading fits into your lifestyle and what that looks like on a daily basis. Right, well, as I said, I get up early. But then when my wife and the kids get up, I take a break for an hour and a half or so, have breakfast with the kids and my wife, Kim. And how old are your kids? I have a nine-year-old and a 12-year-old. Okay, cool. Every morning, I have time with my wife, my kids. I take the kids to school. And then I'm back in time half an hour or so before the market's open, tie up any loose ends, and then take that five minutes before the bell to refocus myself and prepare for the day. As far as my routines during the day, the first hour really seems to be when I have the most going on. I'm taking a break at some point in the day, just getting away from the screens, whether I'm going for a walk with my wife or we're going out to lunch or I'm getting in a workout. Every day, I need to take some time away from the screens. And I might have other things. I have other things in my life besides trading, so. What? Yeah. Other things besides trading? I don't understand that. So yeah, I'd say between nine and four, I'm in front of the screens 80% of the time, but not close to 100% of the time. Gotcha. On most days, on most days. Gotcha. So at some point in the midday, you're out getting some fresh air, getting away from the screens. Exactly, exactly. And no need to disclose location by any means because I don't want my fellow trade hackers looking you up and finding you, Dick. But I understand you have a kind of a place that you go during the summer and you have a different home during the other months of the year, right? Right, we just moved to Florida from up north on the east coast. Okay. So we live close to the beach, so enjoying the beach life, so to speak, during the colder months. And in the summer, we, to Michigan, and spend our summers on a lake in Michigan. Oh, that's beautiful. That's great. So when you're doing things outside of trading, what are some of your favorite things to do outside of trading? Most of what I like to do outside of trading is my wife and kids. I spend a lot of time with the kids, whether it be sports or just traveling, doing something with the kids. We do like to travel, play a little tennis, a little pickleball, but a lot of my life revolves around my family, which is just how I want it. Yeah, that's amazing. That's amazing. That sounds like a great life, my friend. Oh, thank you. Well, we can go ahead and wrap things up here, but if there's anything else, is there anything else that you wanna listeners to know about you or any advice you have for them from a trading perspective or just life perspective? I really believe that the mental aspect of trading is the most important. If you don't have control of your emotions, of how you feel about money, of how you feel about losing, I think it's gonna be really hard to be successful as a trader. So those are things I think you have to work on as much as any other part of trading. You have to understand yourself. So you mentioned a couple of things that you started with. You mentioned Mark Douglas trading in the zone. You mentioned from a meditation standpoint, you kinda started with an app. Was that the Calm app? Or Headspace? Headspace, it was Headspace. Yeah, Headspace, exactly. And so those are a couple of resources. What other, any other books or any other resources that you'd suggest for new people trying to focus in on that aspect? You know, I just love to learn. So I think any item that helps you learn about yourself is a value. I don't know if I could put together a list of 10 things because I feel like I ingest everything that comes my way about that. But trading in the zone by Douglas, Mark Douglas is, if you can read that book and understand it and internalize it, that would probably do the trick for most. Yeah, I know I find myself reading it at least once a year. Exactly. And I mean, I've probably read it, I don't know, 10, 12 times and I still pick up something new every single time. Absolutely, absolutely. And I did my first 12 episodes of this podcast were breaking down different concepts of that book and I still get it as something new every time I read it. Exactly, exactly. Yeah, and in fact, I'm going through your earlier episodes and like you, although I've read the book numerous times, I'm picking something up from listening to the early podcast that you put together. So thank you for that. Yeah, yeah, that's awesome. That's what I did it for. Well, cool, Dick. If nothing else from you, we'll wrap this up. I really appreciate your time, just your insight, your experience, just how active you are in our community. I mean, you've got kind of a very giving way about you and the community. I mean, you've helped other people. I mean, with your experience, I know you probably get messages and questions maybe more than you prefer, but we always appreciate your activity in the community and what you've done to just kind of help everybody out from your perspective. No, I think that's part of it is giving back and I enjoy the community. There's some great people and happy to help anybody in any way that I can. That's great. Well, Dick, great time, great conversation. Look forward to continuing to see in the community and thank you for everything. Thank you, Steve, enjoyed it. All right, take care.