 Good evening everybody soundcheck This is Paul speaking can everybody hear me, okay, and you should also have slides up that you can see Slot type of slides says trade management and using options everybody have that Good good. Good. All right. Let's get going. We're gonna go for an hour tonight for 30 to 5 30 Trade management and using options. It's gonna be a little informal discussion about a few different topics and There's a few things I promised you that I would go over tonight. So let's take a look Here's our contact information if you need anything from the stock squish our website's phone number You talk contact myself or Melissa Paul or Melissa the stock switch calm Disclosure as you know trading can be risky Promise tonight some things that I said that in an email that I found out that I would go over the number one reason That experienced traders often struggle to profit consistently Things you can do the next day after this to improve your trading the single most important part of a trade that you can control and Proper use and some fallacies of options Right season people log in here at last minute you guys okay you guys that sound everything It's a bunch of you log in here right at 4 30 You guys that sound you should have chart up in front of you there all right great who may be interested This topic before I even pulled the slides here. This is for What usually makes up a large group of traders when you very first start trading you have to learn What to do you have to get some education a lot of people will just get a general technology education People the doctors take a course to teach us about gaps specifically, but regardless The people I want to talk to are the people that Once you have some kind of education and strategy in place You have to do that first or you can't even begin once you have that sometimes people still Struggle Yeah, can't send anybody over Why where are they Am I in the wrong room or something time I'm I in the wrong room or something wrong? Where are they coming from? Yeah, yeah bring them over The people I'm talking to you're the ones that have come to realize you've been trading for a while You have the strategy, you know it works. You know you're gonna make money But every trade you seem to struggle every trade. It's like you get a winning trade You make some money You have a losing trade you've losing trade you have a couple winning trades, but then you don't make much money People tend to get in a cycle where you Have a couple losing trades and then when you have that nice winning trade instead of carrying it out to get you profitable overall You sell it very quickly because you say well if I sell it now I'm only down a little bit of money for the week or for the day and The cycle continues you lose take a full loss And then when you win you cheat your winner because you want to get back some of the money And before you know it pretty soon you're not actually trading to make money You're actually trading to lose less money And that's a very dangerous spot to be and it's where a lot of people spend a good part of their trading career So once you Understand the strategy what you're doing the next thing you have to do is learn this next process I call it management in general I call management though a very very great big topic a lot of people refer to management is just what you do On the way to a target, but I consider management to be there are ways you can manage an entry Different than what you have learned the ways you can manage a stop different than what you've learned There are some of those profitable things you can do and then of course There's how you manage your trade if it's going well or if it's going poorly And this is where most traders actually lose The greatest part of their money So if you're good at spotting plays, but you've just been breaking for a long longer than you care to admit But you're sure next month will be better. This is The person I'm talking to these are the things I want to go over tonight And things you may be interested in learning more about in the future um I've been doing this a long time and one of the sayings that I've come around to say unfortunately is that Um, you you have to just study a while and get pretty good to be able to identify charts to be able to tell When a stock's moving and where it's going to move and when it's going to move and that takes some good skill But even when you have that skill, I still say those people are a diamond does I know a lot of people that can see chart movements that can read your chart, but they can't make a penny What's missing? What's missing are the things I want to talk about tonight Are any of you in that category by the way any of you in that category? That makes am I talking to you? Good chart ranger, you know what's going on. You feel like you got a handle on things but on the other hand You just can't pull the profit out at the end of the month, right? You're very confident You're going to get it but it's been week after week month after month And you're starting to say what's going on here and you start doubting what you're doing, right? This is I mean seriously. I mean I think some 80 percent of people go I know a few handfuls of people 10 percent of people that learned a strategy and they just had the Natural gut to just go out and trade and just be able to do it, but it's not the norm the vast majority of people Struggle because of the emotional things come into play it's simply called fear and greed you hear that a lot But you may not understand what it really means because fear and greed really is What takes a person who has winning plays even put in front of them? And still can't manage to win It's it's it's almost comical, but it's true and I'm sure some of you have seen that happen There are literally people you can hand them winning trades Um, you can hand them three out of four winning trades and they'll lose money on the day. It is amazing Is this you you've noticed that frequently you get out and you see in hindsight You shouldn't be getting in just about at the moment you got out This is why bottoms form because a panic happens the snowball effect everybody gets out Sellers are all gone the stock reverses and goes higher. We have to learn how to avoid that We don't want to be the person who exits a trade at the lowest possible moment before it starts to move in the desired direction You're tired of those nasty market makers and other people shaking you out of plays to go on and be big winners At some point People get frustrated and start blaming everything in the world, you know, they start blaming I've even heard the market maker conspiracies that market makers are sitting around just waiting to take your bids and offers Run you out of the game Believe me. That's not true. I I've I've not been a market maker. I've never worked in the market I know enough of them and And they laugh at me when I say that people say that because they're doing all they can to keep their shirt on as well And yes, there's things that happen in the market and there are things called hfts that can Make things hectic, but nobody's out to get you nobody's making you stop out and if they are That's part of the game and it's part of what we do here You have to learn how to trade around that and not just blame Everything that happens and never improve you have to improve if you want to make money You start asking yourself when it's going to be time to stop focusing on minimizing losers Which is taught to new people and focus more on maximizing winners. This is a big transition. It's hard for people to make There is nothing wrong with protecting money, but we do that. How do we protect money? Somebody tell me right now. We come into the marketplace and say, hey, I have to protect your account. We do how do we do that? How do you protect your account somebody everybody? How do you protect your account? See the one word will do it I'll give you a hint is if you're driving it's red and it's an octagon shape If you're trading it's something that you that you use what do you do when you're trading You right put in a stop right you have a stop to protect you Now you don't have to take another six layers of protection and continue to try and shrink that stuff shrink that stuff I have nothing against minimizing losses if that is the thing that actually maximizes your profits But most of the time a lot of the time minimizing your losses is not the route to maximizing your profits. They're different things And many new traders get in scared mode and they're always trying to minimize profits And you know what's going to happen if you focus on minimizing profits, you know what you're going to do You're going to have an entire trading career Of minimized profit of I'm sorry. I've been saying that backwards for several sentences Most traders focus too much on minimizing losses instead of maximizing profits And if you minimize your losses continuously, that's what you focus on. That's what your career will become A whole series of minimized lost trades and that does not make money So we have to learn to see the difference and be able to analyze the results and understand what we need to do When it's time to minimize losses one is time to worry about more about maximizing winners If you've been trained to technical analysis, there's a good chance you feel you know your strategies and they work Whether they're self taught or learning a class on the internet the odds are strong But despite your enthusiasm, you're not making money you want maybe not doing better than break even maybe break even and losing on commissions There's a reason for this and there's 90 percent I know it how do I know it well because I've been there's a long time ago for me But I understand and I work with people all the time on this and this is a common process people go through And this is not as you know glamorizing is learning a strategy Everybody who thought learns a strategy in a while this is going to be great And it is you know a lot of strategies work really well But like I said I've seen traders with winning strategies that they just can't turn a profit because they are not Handling the winners right they're not handling the losers right or a combination of both When you learn strategies You take a long time learning whatever the strategy is correct. You spend a whole day two days Whole you know weekend of tapes the whole class in person whatever it is Learning a strategy, but then when it comes to learning how to enter that play Or how to manage the play how much time do you spend on it? Generally almost zero right Here's the entry used and here's how you manage it is usually as an afterthought and it takes a few minutes But the truth of it is those entries and the management you're going to use are what's really going to determine your profit And so have you come to realize that already? How many of you have realized that already that is not just blankedly known some strategy It's really understanding how to apply it how to get into it and maybe even beyond What the strategy teaches you is the proper entry and I don't know really of any class any course any strategy That teaches any kind of advanced management at all other than simply, you know, here's the basic thing we're going to do we're going to trail the play based on blah, blah, blah And that rarely is good enough to really make you a good trader to really bring in life What are some of the entries that you've known? Well, here's why I ask you a question here folks The presentation that I brought here tonight is like two hours long. It goes through three aspects entries management and and and exits Managing the entry managing the play managing the stop actually Which one of those did you guys like to talk about take a vote real quick? What do you want you want me to focus on? Entries management or stops the management of each one of these to me is critical I I don't even know which I like the best I think the management stops in my career is one of the things that's made the most money for me Management of entries to me is probably the most important thing management of the play in general If there's so much to learn about that which one do we want to talk about? We'll take a vote majority rules which one everybody type for me manage entries Play or stops which do you want to talk management of which entries plays or stops? Entries plays or stops and we got a few more votes out there entries plays or stops What do we want to manage? And entries plays or stops By the way, this these topics I can talk about for eight or 10 hours or 12 hours. That's why I actually have a class about this They'll be teaching tomorrow night. So if this topic really interests you To me, there's nothing more important than really understanding this topic if you if you learn it on your own, that's great It usually takes kind of years to learn it properly So it's something that I like to teach to people But tonight I want to give you, you know, I'm gonna give you all I can here tonight for some ideas It looks like close call here Entries and I'm gonna go with the stops. It looks like all right I'm gonna go with stops here So when you learn strategies takes on time, blah, blah, blah And then management has mentioned only as an afterthought or maybe not at all And again, the concept is far below the sophistication that the strategy showed And you were likely taught to use a stop a good idea But I will also bet you that the stop you were taught the way it was taught has cost you more money than to save you This is something I would like all of you to do. One of the things I promised you that I would do today Let me look at my list here And let me give them one of them to you right now because since we're going to go on and talk about management of stops I want you to Number one reason that experienced traders struggle to profit consistently And it's because of the management of their plays. You probably know that already. Okay It's because of the management of their plays Taking winning plays and being unable to really Capture profit at the end of the month because the winners and losers don't balance out Um Things that you can do the next day to improve your trading here is something that will raise your eyebrows like crazy Um, there is something I I do with groups of which 80 to 90 of the people who do this are in disbelief and Out of those 80 or nine percent that are disbelief 10 of them Have a revelation that they write me a two-page email about And this is the biggest thing I can give you tonight to open your eyes to help improve your trading And it takes some work on your part But people who do this are what I just call shocked and amazed a matter of fact I tell you when you drive me an email the title it shocked amazed And here is what I would like you to do and Again, I've been doing this a long time I say this just so that you believe carte blanche what I say And don't question it, but if you do this it's an hours worth of work But it will help you more in your trading than anything you will ever do in your career unless you've done this right And here's what I'd like you to do. I'd like you to do a check of your management Okay, it's a very simple concept I want you to go back and take your last 20 trades now. This applies particularly well if you're day trading You can do it if you're swing trading along from trading What's a little more difficult to do because it takes a long time if I want you to go look at your last 20 trades Now I don't know how frequently each of you trades, but I don't want you to take more than four trades a day If you do do more than that for some reason So in other words, I want you to take 20 trades and go back at least five days And if there are more than four trades a day, take them randomly. I take every second trade or something Whatever it is. Okay, so you end up with 20 random trades going back over at least five days clear everybody And then I want you to take those trades and you're going to have You know, hopefully you've recorded your your entry your exit in the profit or loss that you made right And the grand total profit or loss for those 20 trades I want you to go back And I want you to write a new profit number for each one of those trades And I want that profit number to be What would have happened if you never managed the trade now I'm not saying that you didn't ever stop it out. You still the stop place What I want you to actually to do Is I want you to take To change the stop to be one and a half times what your stop was so So I don't confuse your so if you had a play where you you entered something I'm gonna type on the screen here at at 22 20 And it stopped out at $22 Okay, I want you to go back and recalculate all your trades and pretend your stop was 21 90 And then I also want you to Then I also want you to go and calculate what would have happened if you never managed the trade and in other words You just let the trade go to your target and if you didn't actually have a target written down somewhere Then just take the trade to the end of the day Okay, so that means that if the play went down to 22 95 21 95 and then rally to a target instead of a loss on that trade you had a win of whatever your target If it goes to 21 90 you would have had a loss that'd be one and a half times your normal loss Okay, so I want you to expand your stop 50% and then I want you to not manage and simply See what your profit would have been at the end of the day or at the target You picked ahead of time if you picked a target and I want you to do that for each of the 20 trades It'll take you about an hour to do that and then I want you to recalculate your new profit Is that clear everybody? I know it's a little confusing. So let me know if you have any questions We're talking about taking your last 20 trades You excuse me real recalculating your profit By saying I never manage. I'm not going to manage the trade at all I'm only going to exit if it goes 50 percent past my stop And I'm going to exit at the end of the day. We're at my targets and recalculate your your profit 80 percent of you are going to be blown away by what you're going to discover when you do that And you may be saying right now. No, no, that doesn't include me. Just do it and you will be amazed for the most part What a lot of people find is that they spend a lot of time worried about management and they manage to their detriment They take a lot of time Managing but they don't have a system to manage by they don't have a process by which to manage They just stare at the screen. Give me a show of give me a yes or no Give me a sure or false or yes or no when I get in a trade I continue to stare at the chart and exit whenever I feel it's appropriate sure or false When I get in a trade, I stare at the chart And I my management consists of exiting whenever I feel it's appropriate The opposite would be to say, well, I don't even watch the trade. I walk away and just leave it set or It would be I have a very preset management style Which follows very specific rules that I follow. See most people Virtually, you know, 80 90 percent of the people even of experienced traders Really don't have any kind of real management playing when you get down to what they'll say they do In their heads somewhere, but the problem is in the heat of the moment. Guess what you don't follow it You don't do it You just get out the first little sign of weakness because you're afraid it's going to turn into a loss You take lots of little profits Excuse me, which are wiped out by one normal size loss excuse me so this is Turns out to be one of the most important things I I want to go I'm going to go into and talk about managing the stops as the three things rather than the other two But one of the things I promise I would answer a few tonight is the single most important part of a trade that you can control And I want to go into that just real quickly that part of the trade I want to do this slide too. Also, this is a generic slide about things I don't know if some of you have studied, you know, the concept of the four levels of learning I'm not going to you know, take a lot of time going through this But it applies tremendously well to trading The highest level of learning over here is unconscious Competence way on the right And I have LeBron James. There a little picture of him unconscious competence That's when you are a master of what you're doing. You don't have to think about it It just becomes second nature in sports. It becomes physically ingrained in your body and your nervous system A mental game. You don't even have to think about what you're doing. You just do it out of habit Conscious competence means you're an expert of what you do, but you have to focus and think continuously to keep yourself in track with what you do Conscious incompetence is when you're not good at what you do yet, but you know what you have to do You know the goal, you know the flaws, you know the problems The worst spot to be in is unconscious incompetence And that's when you're not good at what you're doing and you don't even know what it is that you don't know A lot of people that hop from trading room to trading room webinar to webinar They're in this stage here where they probably know they don't know What to do yet, but they don't really understand the body that there is to learn out there The information that there is to learn that would change your lives When people at least discover that and they say hey, you know, there is really a lot to learn and they begin to learn It doesn't become consciously incompetent. That's the first step to becoming a good trader You can't become consciously competent until you're consciously incompetent Um, so this is the learning process that traders spend most of their time Be going from conscious competence to conscious competence. This is learning process Trial and error getting better conscious competence. You can live in all your life Really good traders can become unconsciously competent That's that's the goal, but the problem is a lot of people are in this here Or even the things I'm talking about tonight They don't even realize or understand what a tremendous wealth of knowledge is out there to have to know and understand To continue to proceed to become a profitable trader because it goes beyond just knowing a strategy I think most of you know that or you wouldn't be sitting here listening to me right now, correct. All right. Um I want to So these are some of the things we're trying to avoid. I'm not going to go through this one here This has to do with trade management in general, but we all know You know, we get in plays and it seems like We get into play And it stops out when it stops out almost immediately, correct When you're in a play that doesn't work It's like almost immediately bam bam bam boom stops out done not all the time but most of time And that's something that is very important to understand the reason why that happens and how you can go to avoid it but again, this is Not the prime to focus on tonight because like I said this I brought two hours of material and I have an hour. So I'm just going to go right to I want to stop on one slide about entries. The entry is everything is one of the things that I say Here's what I want to get across to you on entries Do I have this slide in here about this? Yeah, this is what happened to me recently. I want you to look at this slide And this is something that maybe happens to you. This happened to me exactly as I did it. I screwed up a trade a while ago And I want to share with you because It's unbelievable how the snowball effect happens. Okay. Here's here's a play Don't worry about my strategy why I'm getting in here's where I should have gotten it right there. You see that line everybody That's where I should have gotten in the trade Excuse me. I don't know why I have a try so I missed the right entry And you know what I said, I said what a You know, a lot of people do including myself sometimes, you know what I know this trade is going to go a lot higher I'll just get in late. Okay, so I got in there. So you have second line everybody That's where I got in So that first line can you guys see these lines? Okay. I I don't see my arrow showing up So you got to look at those first lower lines where I should have gotten in according to my strategy The second line is where I actually got in just thinking at okay Now Here's where things really start to fall apart. Okay, if I would have gotten in at my first entry I would have sold half the trade at that first line up there because that was a two risk reward profit already Okay Yeah, there's yeah, they'll be recording if you uh, you'll be out on youtube um So I should have sold I could if I would have gotten it properly I would have sold half And then once I sell half I could care less about the back half because you know, I'm already profitable So I would have let this go and it would have gone on to be a huge back half winner So I would have had a first half targeted two hours a second half targeted five hours great trade But here's what actually happened to me and see if you can follow this thinking I get in really late I didn't sell anything and now I'm back and I go negative on the trade you see on below that below where I got in right and I'm Approaching a stop and I'm thinking wow. This really is botched up and sure enough I don't like to get out of these but it did something where it kind of bounced It came back and I sent my stop and it took me out and I stopped out for a half of a loss Because I hadn't sold anything yet So the late entry is not just a matter that you think well You see my thinking was stupidly even though it was recently you still think this way during the days and times Well, who cares if it's late entry. I know this thing is going to go really far And it's still going to be a good trade But then what happens to you is all this need go negative And instead of doing half at a profit Then having the guts to hang on in the second half through that pullback and getting a great trade out of it The entire trade goes down the toilet just because the entry was off. Does that make sense to everyone? And does this does this do you see this happening to you? Do you see the concept I'm talking about? You have to have an exact plan of what you do. You have to follow it as soon as you get off that plan It's not like oh, I'm in 10 cents late. The whole trade is botched and it affects your thinking what you do so the the To me the most important part of a trade Is getting great entries and I'm not talking about any of the entries that you would use in your normal strategies I'm talking about advanced entries that can help keep you out of trades. That is the number one goal of a trade of an entry Main purpose of a great entry is to keep you out of a losing trade. That's the number one job of a great entry most people don't even realize that or understand it and If you can understand entries better they can help get you In the place sooner that you should be in keep you out of the place You shouldn't be in naturally not all the time but a great part of the time That can help you greatly to increase your profitability, but again, we're not When you guys vote or we can talk about managing the stops not of entries so much This this though this answers the last question that I promise you tonight Most important part of a trade you can control now a lot of people argue that the accident general is the most important thing They're all important parts But the thing is I never know where an exit is going to be to be honest with you. I mean Targets are very I've been trading all this time. I still can't tell you where a target is exactly I tell people you have to To be profitable you have to know the right zip code for your target You have to know is this thing moving 20 cents or two dollars. You know what area to zoom in on As the area to focus on for your profits, but you're never going to get targets great I mean they're important, but you're never going to get them right Entries can be made almost perfect if you know how to do them And that's why I think entry is the really the most important part of the trade that you can control because you can control the entry 100% Okay, so let's talk about stops for a minute All the stuff I self taught myself none of the stuff you hear from me. You'll hear anyone else This is all out of my head. I've been teaching it for years and years and years You may hear other people duplicating in other places, but this is nothing I read or regurgitated a matter of fact when I was trading this stuff wasn't around there was very little education on trading This is stuff that I just create a lot a lot of it I created because I did a lot of record keeping and I went back and I constantly was looking to say How can I improve this? How can I improve this? And you have to be careful because you don't base everything on how to improve one trade. Okay Anyone trade is going to fall through the cracks. You have to look at the majority of trades You've got an average if I change this management stuff I change this entry point on all of these trades will it be more profitable over the course of 20 30 40 trades Not over any one trade And the same thing is true with Management of stops When I found out how to effectively manage stops. It was a single greatest thing that helped my profitably more than anything else So food for thought was the purpose of a stop how much money is saved using tight stops Does the tight stop save you money even on that single trade? Go back over your trades use my analysis You have to use the stop you've been on trading when that day comes Let me see where I'm going here and I'm going to come back to that Okay So here's some of the bullet points on stops Excuse me Purpose of a stop purpose of a stop is to keep your account intact Okay Is so that you do not have a loss on any trade or any day that makes it difficult to come back for the day or difficult Come back for the week. Okay I think some people are so they have this idea stops so burnt into their head when they start trading and are so afraid of the concept that They start to think that well if I was supposed to lose more than $300 and I lost 350 I'm a bad trader That's not really purpose of stops at all Using tight stops is a fallacy. I mean if you're going to risk a certain amount for trade It doesn't matter if your stop is tight or not if you're risking 300 bucks So losing trade is 300 bucks a tight stop does nothing more than make you stop out more often So you have to be very careful about that and if you're using a tight stop and then Not sure sizing it so that it is the same size risk about as every other trade Then that winning trade is going to be lost also and that really doesn't make sense Then you're varying your sure size based on random events that The trading strategy you're doing Now I want to be be careful it is critical you do use a stop on every trade However, management of stops is something that I've done and again this class that I teach we go over this for several hours I mean literally about two and a half hours we talk about this topic because it's huge I want to give you a taste of what it's about There are more intelligent ways to use stops when most people are talking This unfortunately is what happens to most people If this is what you're doing, you're very likely losing money every day, right? You have some kind of setup come along. I don't care what it is. Whatever it is But you you decide you have an entry point You get in the trade and it stops you out right You get out of the trader to full loss And you look back at the trade 20 minutes later or half a day later And boom You not only came back. It's at your target and you got out exactly at the low of the day, right Is this is this happening you guys? I I mean everything happens once when this is happening more than occasionally everybody Is this something that happens to you where not just that you stop out anybody stops out But you stop out and then you find it comes back to be a great trade See what happens to a lot of people is I can honestly make the statement that for most people most of the time at any given day If you would just stop using stops you'd actually make more money And any single day that you picked Now i'm not saying you should do that because what will happen is you'll have a disaster day where you lose More than anything else you made, but if you looked at one average day And you look at your record if you're a reasonably good trader meaning if you can find plays if you have winning plays the odds are That your continuous, you know trying to manage things get things tight is continuous hit of stop after stop after stop Is costing you more money than if you would manage the stop properly and let some of these go on and be bigger winners this Kills accounts this concept that i'm protecting my account. Yes, you're you're managing You know, you're trying to minimize those losses or follow a consistent loss pattern But continuously losing doesn't make money for the account. Forgive me. I'm getting over a little bit of a cough and I thought it was gone. I still got a little bit now that i'm talking You can prove it to yourself. Check it right just the test. I told you to do already right To go through and just to see what would have happened If you would have managed things a little bit differently one of the secrets You have to tell you to learning to do this properly Do you want to not even bother to take a class or learn any more about management? The secret is very simply is do some great record keeping go through and test every theory that you have about entries management and stops And focus on the ones that make you the most money. You can do this yourself. That's what I did If you want to take a shortcut, there's lots of great tips I can give you I'm going to give you some tonight and then like I said There's an eight-hour class that I teach it goes through that's about seven hours, whatever Um Here's another one to think about of your trade to stop out. When do they stop out? Um, you'll find that most of the time 80 of the time your trades stop out Very quickly after entry like you enter the trade the next bar or two it stops out and whatever happens happens Now keep in mind if you if you don't know a strategy if you don't know technical analysis if you're just a bad trader Um management's not going to help you no offense But you you can't squeeze blood out of a turnip if your trades all go the wrong direction immediately and continuously forever You'll never make money I'm talking to people who have a pretty good handle on things that at the end of the day look back and you say, you know what? Those trades I took today the trades are going to take, you know, they they did well I mean they moved the right direction. I didn't manage this one right I didn't get all the money out of that one, but you're the people I'm talking to you the ones that Have a good feeling for the chart that can generally catch movement, but you're just not making money right now These tactics are the most important thing that you could ever learn Um You can't go broke taking a profit is to me the most Devastatingly wrong line in trading that I've ever heard Said by rookie amateurs And while theoretically it's true if you never had a losing trade You're right. You wouldn't go broke you make money, but everyone is losing trades you're always going to lose trades And the excuse that people use all the time to just exit a trade whenever they feel like and say well I'm up money. I can't go broke if I take a profit Well, so you make a little money you make a little money and then you lose the next two trades and you're way in the hole again I'm not advocating that you have to go for big targets. It's not at all my point My point is that you have to manage the relationship between your targets and your management In a way that's consistent all the time in a way that makes you money I don't care if you're a scalper going for 10 cents with 10 cent stops If you're a day chair going for two dollars With uh with the 50 cent stop it doesn't matter The point is is that you have to follow a method of management That allows you to get to your targets in a certain percentage of the time And if you're managing so tight that you're you're clipping trades out The majority of time when they go on the targets that also has to change So this is the analysis you have to do Um The saying is probably ended more careers than any other saying in trading One common ad is as completely wrong-headed. You can't go broke taking profits That's precisely how many traders go broke while amateurs go broke by taking large losses professionals go broke by taking small profits Everyone has their own style Small stops large losses these terms are all relative Whether you hold stocks for 15 seconds or 15 months There's a balance that occurs that maximizes your trading results not stopping out too often but yet getting the meat of the move Most traders are nowhere near those balance There's a very obvious reason why the biggest emotion in the market is fear of being a loser This is something too that if anything could help you right now it's understanding why we do what we do sometimes Given the two types of trading styles where one trader over manages and gets out Very early with minimal loss or minimal profit and the other traders hangs on forever 95 of the traders are the first one 95 percent of the people Over manage overreact take very small profits because This is where fear comes in in the fear we talk about fear and greed and trading Fear is stronger than greed Person who hangs on forever is greedy the person who sells quickly is fearful What are they fearful of well, they're fearful of being a loser Because once their trade goes green They feel like a loser when it goes red and they don't want that to happen Therefore they start moving up stops or taking profit very quickly So that they're green and they feel good about themselves Um The problem is though why you feel good about yourself It is very likely not generating profit for you because that type of trading style of taking small losses and letting Small small gains and letting losses go to full amounts Is not likely going to generate a strategy is going to make money if it's almost impossible to do that But you feel good about yourself Because a lot of the trades you get out green And this is something you have to realize and you have to change trading is not Following your normal set of emotions and this is why most traders coming to the market that don't try to learn what to do 95 percent and I believe is even higher 95 percent of people come to the market Don't try to learn what to do lose because following your emotions following your natural senses Is almost 100 backwards in trading across the board all the time So we have to do something different We have to be different than the average person Here's a quote from me. I don't care how much you study how much you pay or how hard you try eventually your success as a trader Will come down to how well you manage period Yet the average trader Doesn't even have this on their agenda as a thing that's important If a strategy doesn't work, you know, most traders do They go out to find another strategy Even if they have to pay for another one or take another class or take another, you know Spend another weekend studying something and they keep popping the strategy to strategy never understanding that They're very first-rate And they're very first-rate And they're very first-rate And they're very first-rate And they're very first-rate And they're very first-rate And their first strategy is probably fine. They're just not implementing it correctly or properly I've never, it's very difficult to find a strategy that really Totally encompasses everything about a trade From really the proper entry To really managing properly to really the proper stop most strategies are just a general concept Of here's how you find movement in a certain direction And that's great, that's all they have to be that's all we need if we know how to manage the trade. It takes a while to become a great chart reader, but even at an excellent level, chart readers are a diamond dozen. It's what you do with that knowledge that matters. That is what separates the wannabes from the pros. Ask yourself how many times did you have the right play at the right time and made almost nothing. The thing is we don't like to admit this because we tend to continue to say, well, I'll fix it tomorrow. I know I did that today, I'll fix it tomorrow. But the problem is it never gets fixed. It never gets fixed. People send me their records. They try and work with people. I see them. And the problems that are there this week stay there next week. Nothing ever changes because people like to just learn a strategy, trade during the day, close up shop at four o'clock, come back the next day and hope that something different is going to happen even though they're doing nothing different. So the definition of insanity, right? Do the same thing day after day and expect a different result. It's not going to happen. The definition of trade management, the bouncer, you protect your profits, maximize your targets. I have like five minutes on this topic left and I wanted to, and I said we're going to focus on the stop part of that. I wasn't going to go too much into the entries or the management. On the stop part, there are things you can do to what I call manage stops. And people often take this the wrong way because they think it means not following a stop. That's not true. If you follow a plan, you're a good trader and that plan may involve altering a stop for certain reasons at certain times. They don't do it all the time. You only do it on certain setups in certain ways. It has to be limited. And sometimes it makes you lose more money. But when I do this, this is on my track for a long time. Whatever money I lose managing a stop, I make back more than triple in gains by managing a stop. Now, if there was anything in the world I told you that you would make triple your money on, you wouldn't even question it, right? Wouldn't even question it. As long as it did not involve the concept of having an unlimited loss, the greatest part of the problem. If there was the possibility you could have a huge loss that really occurs. But that's not the case. There's never any chance for any kind of an exceptional loss. And yet any money you spend doing what I teach, you make back three to one. At least I do on my trade. Now that's going to be different for every trader. It depends on the trades you take and how you enter them and a whole lot of different things. But generally speaking, again, what I teach for me makes more than triple what I lose in terms of managing the concept of a stop. Now you have to do it properly. There's a very specific way you do it, a very scientific way you do it. I talk about it for just this part of it. I talk about for over an hour or more and the whole concept we talk about for about two and a half hours. But I spend that time because to me, this is probably the single greatest thing that helped me make money way back when. And probably one of the things I would hate to do without. I would have a hard time trading if I didn't understand all the stuff about management stuff. When I talk to other people, they don't even know what I'm talking about. So I'm just trying to say there's a lot of stuff out there to learn on this topic. I think it's a single most important topic in trading. And you can do what you want with that knowledge. If you do nothing more than walk away and say, hey, that makes sense. I'm going to try and figure this out. Try and figure it out. If you want to jumpstart and come right to learning this, like I said, I'll be teaching a class tomorrow night. It's been on the schedule for a while, but I'm doing this tonight in classes tomorrow night. Not tomorrow night, tomorrow during the day. I'm sorry, tomorrow at 11 o'clock. So for some of you interested in letting me know. And then with that, I want to go on to the second part of this conversation, which is some basics on options. A lot of people I've inched, let me see if I have any else here because I'm not going to talk about management tonight. If you join late, I have like two hours of material here and I only have an hour. So I had the class pick what we talked about. We talked about management stops a little bit. So if you're interested in this class that talks about these topics in general, it's tomorrow Tuesday from 11 to five. You can email me. Melissa is doing a 40% off sale. So this is a rare opportunity to get this class really cheap for 1200 bucks. It's all day tomorrow. If you're interested, let me know. Obviously you got to sign up by tomorrow noon or something like that. So with that, let me go on to the second part of this and talk a little bit about options. Options are something that are interest a lot of people. Melissa has a gap options letter that goes out and interest a lot of people. She's done very well with her calls and has generated a lot of interest in options and the two of us also do a class on options. It's going to be a week from now, but I want to give you some basic concepts and options and go over a couple of things here tonight. This is a table of concepts for the class. We talk about the basics. We talk about the complicated, but made very simple how to use them, the benefits. I'm sorry, ignore. Sorry, bad slide. I copied and pasted from the wrong class to ignore that. But the option material, whenever I teach, there's something that I've come to make my mantra and that is this, that if it doesn't make you money, I don't want to talk about it. People bring up stuff all the time and I say, yeah, that's great. If you're sitting around a cocktail party and you want to talk about trading, that's nice to know. But you know what? That's never made me a penny. If it's never made me a penny, I don't want to talk about it. And that's true with a lot of stuff and options. I hear people teach options and going on and on and on forever about all this stuff. And you know what? None of it has to do with making money. So let's get down to making money. Some of the basic things I want you to understand about options and go over some of the fallacies of options. How many types of options are there? Everybody, how many types of options are there? It's kind of a trick question. A lot of people get this confused. How many types of options are there? Give me a couple of quick answers. A bunch of you're listening here. Just throw a number out there. How many types of options are there? Right. Everybody's got this, I think. There's only two types of options. There's two. There's puts in those calls. There's all there are. There's all there are in the whole world. You can buy and sell calls. You can buy and sell puts. And when you put those combinations together at different strike prices, there are a whole myriad of strategies you can use with options. There are literally infinite strategies using options. I'm going to say infinite, maybe not infinite, but there are more strategies than you could list here in a half hour, using options in their name. They're not named. They have different names. Who cares? I don't care about names. But what options actually really do is that they simply skew the reward to risk at any given trade. And I'll talk about that in a second when I mean by that. But one of the fallacies of options, options are not a strategy. Options are not a strategy. I hear people say sometimes, well, should I learn how to do this or should I learn options? Well, options are just a different way to skew the risk reward on the underlying thing. Now there's options on a lot of things. We'll talk about equity options. If you have a stock like Microsoft, if you're bullish on Microsoft, you could buy Microsoft to stock, right? And if it goes up, you make money. You also could do various things with options to make money if Microsoft goes up. You could buy out-of-the-money calls on Microsoft. You could buy in-the-money calls on Microsoft. You could sell puts on Microsoft. You could sell in-the-money puts. You could buy a call sell a put. You could buy and sell two different calls. You could buy and sell two different puts. There's various things you could do to capture a movement on Microsoft. And each of them would have a totally different reward-to-risk parameter. And that's what options do for you. Let me go to the next slide first, and I'll come back to this. A call option is an agreement that gives an investor a blah, blah, blah. This is what we're not going to talk about in class. I mean, I don't care if you know the definition. Here's what you need to know is that if you think a stock's moving up and you want to risk a certain amount of money and you think it's going to move $5, what's the best option combination you can use to capture that movement? That's what you need to know, right? Not all the blah, blah, blah. Here's one of those slides I did. This is just the middle of the thing, and I just want to show you how clear and concise we are talking about all this different stuff. But let me give you the examples that I mean about skewing the rewards of risk. One of the things people like to do is to just buy calls on something, okay? If you buy out-of-the-money calls, that means like if Microsoft said 25 and you buy a $30 call, well, it means that you're betting Microsoft can get over $30, and if it does, you could make a lot of money. But if it doesn't, you're going to lose all of your money. But the thing is, the calls you buy are very cheap. It's almost like kind of like buying a bet on something. I'm betting Microsoft's going to get to a certain number. So when you buy calls on something, you're willing to lose your entire investment, but it's a small investment. Maybe you risk $1,500 buying, you know, 10, 15-cent calls on Microsoft, you know, whatever it is. So you have a limited risk, and you can never lose more than that amount. That's something that may interest you, right? And there's times you may want to do that. There's other ways that you can use options. You could use options, for example, if you think Microsoft's moving up, but you're not sure how far. Now, let's say Microsoft said $26. You could sell $25 puts on Microsoft. And when you sell a put, the money is immediately put in your account. So you make $800, you put in your account. Boom, that sits there. And you get to keep that money. If Microsoft moves up like you think it would, you get to keep that money if Microsoft goes nowhere. You get to keep that money if Microsoft falls, but doesn't fall more than a dollar. If it falls more than a dollar, you lose some of the $800 for every penny it falls. You lose another $0.10 profit. But the point is that these are all the different combinations you can use to try and capture money with options. That's what they do. They are not a separate strategy. And there is no such thing as an option strategy that does not rely somewhat on understanding and knowing where the underlying price is moving. In other words, there are many options strategies to try to take the underlying stock out of the equation called delta neutral theories and things like that that try to minimize how much you care about where the stock is moving. The truth of it is, if you know where the stock is moving, it's always going to maximize your ability to use options. Now, if you're playing the stock, you have to know where the stock is moving, right? No question about it. If you use options sometimes, you care a little less about where it's moving, but you always need to know where it's moving to maximize your profit. So we have to still be chart readers. We still have to know where the stocks are going, but then options give us an opportunity to severely alter the reward to risk that we would normally not have any choice of in a stock. If you're taking the stock, you know, boom, you're trying to get it to move a certain amount while risking a certain amount, those are all random numbers. With options, you really lock in those numbers and you can hold them to a very, very fixed parameters in terms of what you're risking and what you're going to make. When you're selling calls or puts, it can be very, very high batting average. You can be right a lot, but you're actually willing to lose sometimes three or four times the amount of money that you make when you win, but you're right 90% of the time or you should be right 90% of the time. If you're buying calls out of the money calls, it's a very simple thing to do, but it's also the greatest losing strategy if you do not have special knowledge about where the stock's going. Now, this is what Melissa does. She's very good at knowing when the stock's going to move based on what it does after it gaps, and she's done very well with her calls, but for the average person to just buy a call out of the money, it is the single greatest losing investment. 95% of all call options expire worthless, which means that if you bought it, you lost all your money. We were talking so many days in the room was asking me about a play on a stock that already moved a lot. I said I still think it's higher, but it had a big part of the move, and the question was, well, how do the options look on it? Well, you don't want to take out options if something is going to move up slowly. If you take out a call option on something that you think is going to move higher, it may move higher, and you may still lose all your money, and that's something people don't fully understand. So what we're going to do in this class is Melissa takes day two where she takes practical applications options and what she does with them. Day one, and we're going to run through everything from the basics right through the most advanced strategies there are, even iron condors and everything else, they're all fancy names. Once you understand how these things work, you're not really that taught to figure out. Here's an example from the slide here that talks about the difference between buying and selling. A lot of people don't even know you can sell calls as well as buy calls. So just in this example, just to give you an example of what we're going to talk about. Price of the stock is $31.50. The strike price is $35.00. Time to expiration is 10 days. Price option is $2.00. If you bought this call, it would cost you $2,000. If the stock moves from $31.00 to $35.00, you lose all your money. Even though you want the stock to move up, it can move up $4.00 if you lose all your money. If it closes at $37.00, you make money. Max loss is $2,000.00. Max profit is infinite. And as it moves above $37.00, you start making money very quickly, very quickly. Like at $39.00, you'd be doubling your money, et cetera, et cetera. This is an out of the money call to be as a very low batting average and a high reward to risk. If you sold this call, 10 contracts, you get paid $2,000. If the stock closes at $35.00 or lower, you keep all the money. If the stock closes at $37.00, above, you lose money. You protect that, so it's not infinite. This is an out of the money call, typically a high batting average or lower reward to risk. So these are the type of things we're going through. And obviously, I jumped into some of the slide. I just want to show you the detail and the depth we'll be talking about on all these. And this is actually a fairly simple slide. It just talks about buying and selling calls, which is more toward the beginning of the class. But when we start from the step one, we're going to run through and go through everything there is to know about the various combinations of synthetic purchase of stock and all those good little terms and go through and really understand all there is about buying and selling calls and puts. Those two things, calls and puts, you can buy and sell either one and those combinations can come together to form a really wide variety of strategies. Here are some of the strategies. Selling covered calls and puts, synthetic stock purchase sale, buy short stock and we can put to you buying, selling deep in the money options, buying calls and puts, at the money, in the money, out of the money, selling calls and puts, at the money, in the money, out of the money, selling spreads, buying spreads, butterfly calendar spreads, diagonal spreads, condor spreads. I'm sorry. I coughed there and my mic never came back on. Excuse me. Yeah, I know you got me now. So... Where did it... You probably didn't hear this slide. I was just saying that buying and selling calls and puts, two things, calls and puts, buying and selling can come together to make a whole myriad of different strategies. These are the strategies we'll be talking about that day. Selling covered calls and puts, synthetic stock purchase or sales, buying and shorting stocks having it by having it put to you. Interesting long-term strategy to actually instead of paying for a stock to actually be paid to buy it at a cheaper price. How does that sound? Somebody pays you to buy the stock you're going to buy anyhow. There's something you can do for longer-term players. Buying calls and puts, at the money, in the money, out of the money, selling calls and puts, at the money, in the money, out of the money, selling spreads, buying spreads, and then butterfly calendar spreads, diagonal spreads, condors. And there's a host of other terms, too. But once you get the hang of it, you'll understand all these different parameters. And we talk about using options. So I want to give you some of the knowledge tonight, and then there's a lot of stuff that I'll be going through on day one, going through the basics, both advanced. Melissa on day two will be talking about her application of this for a couple of hours to what she does with her gap calls. And this is also part of the 40% off sale, and that's going to be next Monday and Tuesday. Okay. So I was just saying that if you have, we're right at the end of the time here, if you have any questions, let me know. I'll gladly take any questions you have, but you can hang around a couple of minutes if you want to. Otherwise, I hope I got across the four things I promised I would tonight, the number one reason that experienced traders struggle, things you can do tomorrow to improve your trading, the single most important part of trading you can control, and the proper use of fallacies of options. Hopefully, I got across the basic information. Hopefully, you can take some of that to help your trading tomorrow, if that's what you want to do. So if any of you are interested in taking advanced management class tomorrow, let me know today or tomorrow, because the class starts tomorrow at 11. So obviously, you got to sign up for some time early tomorrow morning. Okay. Any questions, anybody, anything you want to talk about at all? I can hang around a few minutes if you have anything you want to go over. Questions on anything? Feel free. You guys are kind of a bunch of you here, but you're kind of a quiet group. We have a few questions as we went through it, so don't be afraid. Any questions anyway? Do you guys enjoy? Hopefully, you enjoyed the presentation to some extent. Worth your time here? Worth your time? Worth the hour this afternoon? All right, great. Yeah, there'll be a recording. You can get it on YouTube or email me if you don't see it out there. Okay. My email is up there. My email was up there. Yeah, recording on YouTube, right? But what was the single most important one? What I talked about if you missed it was the concept of while managing the trade, managing the entry, managing the stopper are all important. I feel in a lot of ways that managing the entry is the most important thing because missing the entry often has a snowball effect, and I went through a trade where that happened to me. It can happen very often where you missed the right entry. It affects your decision where to get out, it affects your decision how to manage, and pretty soon what was for me the best trade of the month I actually took a half loss on. So I feel that you have great control over your entry and if you lose that control it can really botch up your trade more than anything else. All right. That's the last question looks like that, right? Thanks everybody. We'll see you guys maybe with some of you in class tomorrow at 11 o'clock. Otherwise, we'll see you at the next event or in the room if you're in the room. Okay, so take care guys. Have a good evening.