 Hey, everybody, it's Brian and in this video, we're going to talk about the iron condor with magic eight ball. If you don't know what magic eight ball is, it's a stock market prediction engine that I designed. The link is down below. All right. So first off, what is an iron condor? It is this, it is a huge range and this graphic is a bit misleading, but you have a range where you have max profit and then anything outside of that you lose rapidly and then it goes down to max loss. It's a little bit misleading in this graphic because we use it slightly differently. Let's dive in and take a look. All right. We've touched on what it is at a high level, but really what is a condor and how do we use it? Let's go into magic eight ball. Let's go down to whatever we're trading. We're going to do SPX and let's go down to the newest prediction. And right here, you see every five minutes or whenever this thing kicks out a prediction, it's doing trades. We got a butterfly iron condor and a vertical. We're going to just grab this iron condor. It's a neutral biased with a wide range. We're not joking when we say wide. Let's go ahead, go into think or swim. We're going to go ahead and delete that. We're going to go to our order entry and saved orders and just paste it in. Unlock it so we get the current price. Notice it is 45, 50, it's right around in that range. Now rather than just blindly hitting confirm and send, we're going to right click and analyze this trade. And you can see this is a big condor and this is huge. This is going from $39.09 all the way over to $39.80. So big, big condor. That's exactly what we're talking about here is this massive range. Now these things are constructed so that you get very low profit, look at this little box here. You get low profit and you have a bigger loss. You may be going, I don't want to do that. There's a catch. This range is so big, the market would really have to move against you for you to lose money. Basically, huge shout out to AxeOptions, there's a gentleman in there. He constructs these things. He showed me how to construct this and he's absolutely brilliant when it comes to these condors. I think I've seen maybe one or two of his fail and he does not take them to max loss. He cuts his losses early, I mean 99% of the time he's making money. It's ridiculous. So when you go in here, understand what you're doing. You're making this gigantic condor and this thing really looks at Delta and it finds the market edge, meaning the edge of profitability where you're just not going to make any money in this option chain. So if you look in this option chain, it's really just a massive condor. All right. So now that we understand this, let's dive in and take a look at some of the components. Why would you use an iron condor? That's a question I'm asked quite a bit. Honestly, stability. I know you may be thinking, now wait a minute. If you're only making $50 and you're risking $1,000, this market would have to really move against you. So you would use a condor on days where the market really doesn't know what the hell it's doing. Pardon my French, but look at this. How do you even begin to trade this thing? Just as a mere mortal. This is perfect for a condor. Look at the directional bias. It's going directly sideways. This is perfect for a condor. You enter this trade and you just watch your money grow. Now this is also used to really mitigate risk and what I mean by that is this market is so choppy. If you were to enter a vertical here thinking the market's going to rip up, you're going to lose your butt. And if you entered a vertical here thinking the market's going to keep going down, you're going to lose your butt. So you're going to lose either way. So really it's about stability and risk mitigation. Let's talk about when to take profit. That's always a tough question and honestly I'm no expert but the condor is so big and your profit is so little. When do you actually take profit? Well what I was taught again by X options and members in there is you enter this trade early in the day and you just let your profits grow but you need to make sure you collect that profit when you can. So we're going to set slices at expiration and what I do is I kind of move these here like this and we got 50 bucks. So I'll look at this magenta line. I'm looking at the number down in this box and I'll look at this magenta line and go okay so two times that is going to be my max loss. So it's about right here and then... So basically if the market were to move against me and go beyond these barriers that's when I would take my profit otherwise I will just ride this to the end of day and if this thing hits say like 49 or 48 dollars and I have to run to the store or something I would just close the trade and collect my money. There's no sense in risking $1,000 to potentially make 49 bucks. Unfortunately this is the type of trade where you do kind of have to babysit it so if you're just sitting at your desk watching YouTube videos this is the perfect trade just to collect money all day long. Now let's talk about the scary part about condors which is when to close these things. Let's just say the market moves against you and it moves against you rapidly. I mean if we zoom out here we can probably go to a 10 day and we can see yeah the market's not usually kind so like this would have been a bad day for a condor right here. You can see how it started here and it just went down down down all day and then yesterday same thing but today it's pretty stable. So if you were in a day like this where the market just moved against you all day what's going to end up happening is you'll see this price move towards your threshold and when it gets to this point you as an investor need to make that decision when to cut your losses and honestly I would much rather take a two times loss than a large $950 loss. You got to remember that as the day goes on this profit curve is going to go up into this blue line and you can actually start adjusting these lines out as the day moves on. So typically you enter these condors first thing in the morning and then as this magenta line grows you can start moving these out. Now I will warn you what I do it is a little bit different than a way I was taught in X options. He will actually set individual stop losses and if he hits that he just hits the eject button that's the actual sound effect that I make that sound. That is usually the sound of me crying inside because I was really hoping my condor would win. I've done these personally and honestly about 90% of the time they win. It's just that 10% you really got to watch because when the market moves against you it will move fast. Happy trading.