 Welcome back to the Trade Hacker Mindset podcast. In this episode, I've got a special guest with us today. We'll be joined by David Sun. 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 I wanna introduce you all if you're not familiar with him to begin with. Welcome, David, how are you today? Hey, Steve, I am good. Thanks for inviting me to join you on the show. Yeah, so I originally kinda came across, kinda introduced online, I guess, to David through the Option Omega Academy. And we'll talk a little bit about this, but David has a free course on the Option Omega Academy called Spreadsheeting for Traders. And it's really interesting because I've been kinda looking for kind of a performance tracking spreadsheet over the years that does some different things, has some different capabilities, like making deposits and withdrawals and still calculating a time-weighted return and all this good stuff. And then David puts out this course and it basically had exactly what I was looking for. So I reached out to David and I said, hey, this is great. And asked him if he wanted to come on the pod. So honored that you are taking the time with us, David. Yeah, no problem. And it was a pleasure to talk about trading and especially a spreadsheet and geekery stuff. So, excited to be here. Awesome. So let's start with this. Tell us a little bit about kinda what you did, what your background is actually before you started trading. And then we'll get into how you trade and some of your kinda current strategies and structures. Yeah, so my background's in electrical engineering. So nothing finance related. And I got started back in grad school when I was doing my masters. So this was around 2008, 2009 or 2008, I guess. And I, you know, even if you weren't in finance or into the markets, the market made you into it during those years, right? Everyone was kind of thinking about it. So I picked my interest and I was actually gonna start, you know, looking into stock picking but my friend at grad school, he was already trading options. So he got me into it because he was like, hey, you know, he showed me a couple of things. And so interestingly enough, I started with options and not stocks. And furthermore, I started from selling options and not buying options. Cause I think a lot of people would start using for leverage and kind of those leverage bets. So I was starting with covered calls, cash and career puts. That was kinda the first thing I did. I did that on my own, you know, no real formal education and just kind of progressed for a few years. It wasn't until, it wasn't until around 2017-ish that up until then it was kind of nothing really sophisticated and again, just selling puts and rolling them and really basic stuff. I found tasty trade, I guess not tasty live. And that was kind of just whole new fountain of knowledge. And that I think accelerated my learning curve and gave me a lot more concepts, learning about Delta and how Theta, the Greeks and all that. So that made me have sort of a level of confidence. And then I started developing some basic versions of the strategies that currently run and trying to be more systematic. Around 2018-ish, I got the idea to launch my first option based hedge fund. So I did that. And all the meantime, I was still learning and developing and researching and doing more strategies. I launched my second hedge fund in around 2021. And then somewhere in between there, I also started at my own podcast, The Trade Busters. And that's a separate thing. It's not related to the funds, but it was more like an outlet for me to connect with the retail crowd who I sort of still always associated with. I'm wrapped through pasty live and some of the Facebook groups I used to be in. So the podcast was meant to be kind of educational for retail-oriented options-based trading. And that itself has kind of grown and evolved. But this is kind of a high-level trajectory. And that kind of caught up to where I am now. So I know that was kind of like a quick 30,000 foot view, but I'm happy to dive in if you have any more specific questions about that particular timeline. Yeah, no, that's great. So you mentioned you have a couple of different hedge funds. Why do you have multiple hedge funds? Is it because they're completely separate strategies that you needed to keep separate? Or what's the purpose around that? A couple of different things. One was it was completely separate strategies in that my first fund that I started with that actually still run, it had a kind of a different mix of strategies. It was seven DTE, so weekly puts. Eventually I added a 90 DTE, kind of the theta engine strategy I teach in my podcast. And then we were shorter term, with one DTE, you know, overnight strangles, and then a zero DTE. And what happened was we had a lot of interest focused on the zero DTE stuff because of the lack of overnight risk. And then I happened to find a partner that was a friend of mine that also was a trading buddy that was into his backgrounds in software development. So he actually built out automation for us to kind of scale up the zero DTE. So we kind of just spun that out into a separate product. So it was a fund that was focused on zero DTE and it was automated. So that's kind of how that came along. Very cool. And so are these hedge funds, are these primarily you and a couple people so you can kind of aggregate the funds or are you actively bringing in outside investors? So as far as owning and operating, it's just me and my partner. So we manage, you know, we're kind of the portfolio managers and the investor relationships and the capital raising kind of all rolled into one. I mean, yeah, but these funds, a hedge fund is just a fancy term for a pooled vehicle. It's just structured as a limited partnership, which means investors just pull capital. So that just allows, it's more flexible, right? You get one large account you're trading and we have an account that kind of does all the accounting in terms of like how much each individual investor's stake is worth, right? It's just kind of the profits are all kind of allocated pro rata. And we just focus on, hey, trading this one large pot. Got it, got it. So I know, you know, there's, I get questions from my community, not a lot, but sometimes about starting a fund so that they can manage relatives, family members, good friends, money, that kind of thing. And so can you talk at all about the amount of time and cost and structure around that? And just to kind of give people idea if it's worth it in certain situations or not from a scalability standpoint. Yeah, it really just comes down to how much money you think you can aggregate and then your fee structure because those two will determine your income, right? And you just have to get over at least the overhead, right? Depending on your service providers, it can be anywhere from 15, 20 to 30 grand operating costs a year. So now, you know, yes, at the minimum, you want to break even, but obviously you want to make some money. So you, because you talked about like, is it worth the effort? So on and so forth. The actual setting up, there's not a lot to it. The attorney will structure, they'll form a limited partnership and then they will form an LLC for you because you're acting as the general manager, general partner of the fund, but that's through an LLC just to give you some protection there. So he does all that work. He'll write the documents, right? So there's no time that that's just money, right? And then really once the accounts are opened and the accounts funded, you just start trading, right? And all of the administration, the paperwork, all that's outsourced to your service providers. So really, again, it's just a matter of like, how much money you think you can raise or how much you can start with or be seated with. In the beginning, you know, you might know, it just, this is case by case, some people have a social circle that they can tap into, you know, to raise capital because you're building a business and you're going to be spending time talking to people raising capital. And so that may end up taking the majority of your time in the beginning as a small growing business. So that's more something to consider. It's really like, one thing is you could, you know, prior to going on the Debra asking around and be like, hey, you know, I'm interested in this, you know, would you be interested in trying to get a sense of how much interest and capital you can start with, so to speak. And then from a regulatory standpoint, are you, your own personal trading, you obviously have a good amount of your own capital in this fund, right? You've got your own skin in the game, but are you able to trade stuff outside of that or do you focus 100% of your trading on your personal capital within the fund as well? There's nothing that bars you from trading a personal account. I personally do not have personal accounts. I just, all my capital that I quote unquote trade would be in the funds. Got it. Very cool. Awesome. Anything else, any other questions around funds that you get a lot that you think the listeners might find value from? I think a lot of stuff is just, how do you get started and how much does it cost? So I actually have this, even the Twitter thread or X thread, if you follow me on Twitter at the trade buster, I have a thread that's literally called how to start a hedge fund. And I kind of break down some of the basics, try to be mystified a bit. And again, there's just the three service providers you need to find. I've actually helped a bunch of people start funds and I've referred my service providers, people in your group are interested, feel free to have them reach out. You got the attorney, you got the administrator and you have the CPA that does your taxes in your annual audit. Have those three in place, as long as you have the money for the overhead, you can get started pretty quickly. So I think once you realize it's not actually as hard as people might make it out to be. And are you using any type of special institutional platform? Are you on tasty or toss or what brokerage? We're on interactive brokers. And there's a lot of professionals and funds that use that. It's not quite institutional, but it gets the job done. And yeah, I mean, I think most people are once you're trying to, you know, manage like hundreds of millions or billions, you probably get someone an institutional broker from brokerage. Very cool. Well, cool. Thanks for sharing that. That's awesome. Sure. Just kind of change gears here. I want to get into kind of where I first reached out to you on, and that is your, the course that you put out on the Option Omega Academy called Spreadsheeting for Traders. Tell us a little bit about that. Yeah. So because a lot of my systems are all kind of systematic in nature. And this isn't exclusive to systematic trading, but I tend to aggregate and track all of the trading data because to have good data, that will help you kind of do a postmortem of your trades after the fact or monitor your strategy and see how they're performing. And a certain metrics you can track, I track something called the premium capture rate. You know, obviously you look at the win rate and the win size, loss size, all of those things, those all matter because you can, for one, compare if your live trading matches back tests. Because we're always updating our tests at the same time as more data comes so we can see if our live trading follows those models. And then you can monitor if generally the performance is tracking as expected as they're going up, going down. And so being able to track is one facet of, and we do that through Spreadsheet, I use Google Sheets. And so, you know, you have to have some familiarity. Google Sheets has some differences with Excel, but the course has kind of best practices, different tips, tricks, and hacks of how to best ways to input data, how best to manipulate formulas, and ways to track different metrics. Not only that, one other thing is I don't remember the course got into this because it's not quite a complete course, but I had tended to, my intent was to kind of add content based on user feedback and user demand. But I also do a lot of tools where, for instance, we might have multiple strategies, and there's a certain set of statistics you can track the equity curve. But I have something called, for example, the Camara Lab. It's kind of a, I always name things based on a function. And literally you can put in different strategy, the performance streams, and tune the sizing of each in order to see how the different strategies synergize with each other and look at the total portfolio and see if, hey, if I size this one up, size this one down, maybe these strategies are less correlated, and how to blend your strategies to get a better, total, smoother, lower volatility portfolio level performance. So just to give you an idea, now that's kind of one of the more advanced things, but those are the kind of things that as I progress with my trading, it's not so much about the trading anymore, but it's so much about analyzing the performance. The analytics helps you extract more value from your own trading data. And that's kind of why I put together that course. And so that course is really a bunch of, again, videos about different ways to use Excel, to use Google Sheets, how to build different tools and just different best practices and tips and tricks. Got it, got it. By the way, the academy.optionomega.com, I will, I'll put the link to your course in the show notes along with your Twitter feed, if people have questions about wanting to reach out to, about the hedge fund stuff as well. Well, and so, and you've mentioned to me, and I don't want to put words in your mouth, so cut me off if I'm saying something I'm, you don't want, but you've asked me and I've seen you in the option Omega Discord asking people, you know, what, what other things do you want from a spreadsheet capability standpoint? Because you are, you're, you know, you're really interested and passionate about building these tools. Talk a little bit about that. And, you know, if there's anything that you're working on or, you know, different feedback that you've received about some of those tracking spreadsheets. Yeah, so for people who have followed my podcast and content, I'm always putting out different tools for Google Sheets. One of them is, for instance, the portfolio tracker that you mentioned, right? I literally, I update it once a year because you have to have all the new trading dates and I'll put out a Twitter post. I'm like, hey, you know, Merry Christmas. You know, the 2024 sheet is available now, so you can go in and use that and stuff. So I'm always about building those tools because, you know, there's stuff out there. You know, there's tracking services, or trade tracking or performance tracking, but you're kind of beholden to how the creator thinks is the best way, right? And so sometimes there's, if you can build it yourself, right, you can make the best tool for yourself. Now, that was originally why I wanted to put out this content involving spreadsheeting. And if for those, if you go look at the course, and I mentioned earlier, the course seems a little incomplete, in fact, some of the videos at the end you'll hear me mention, hey, if you like this content, subscribe to the YouTube channel. Like, it's because I originally wanted to make a YouTube channel and put out the videos there. Now, for various reasons that just never happened. And so actually the current set of courses or videos in the course are actually old videos I recorded and had intended to use as content from my YouTube channel that just never happened. Now there's a couple of new things that I added as well. I added like an intro video that kind of explained why I talk about YouTube and so people don't get confused. But really there is so much, like I wanted to, the point is to take all of the collective knowledge I've gotten from the last four years of building these tools. And you can see some of the tools on my channel, my YouTube, sorry, not my YouTube page, my Google Sheets where I link to like my original tools versus some of the stuff now. It's just like the complexity, the functionality, it's all gotten better, right? Because I've streamed like the process, I've learned different ways to really use some of the more advanced formulas and stuff. So I would love to get that out there but, and you mentioned, the course is free. Now, you know, people, we kind of know that like in marketing, right? Pricing is sort of a way to signal value. So I kind of wonder if making the course free is like ironically not having people incentivized to like take it out seriously because like you said, I wanted to get feedback. I wanted to get, you know, hey, like, hey, I love this content. I have a question, how do you do this? Or how do I do this in Google Sheets? And I can go on and just record a quick five, 10 minute video and put that out there. And unfortunately, like there hasn't really been any feedback and is it because it's a free course or is it because spreadsheeting is too nerdy or is it because the optional mega audience tends to be newer and maybe more focused on trying to do tests and find new strategy, which is great. That's all stuff that you have to get through the process, right? But like it's really once you're kind of stable and you're trading and consistent, that you have time to go back and like, all right, what can I do to add value? I've got my strategy set. How do I add value and how do I get the most out of my trading tracking, spreadsheeting? So maybe it's like a little too advanced. I don't know if you have some thoughts on that, but like that's kind of where my head was and why I made that comment prior to this interview about, you know, I'm happy to get feedback and have people kind of shape the direction of the course, so to speak. Yeah, there's definitely something to that. I mean, if somebody's brand new and they're just trying to figure out their trading platform, if they're just trying to figure out, you know, how to be consistently profitable, that's 99% of their focus. They're not worried about tracking their profits because they don't have profits yet. So I think you're right. I mean, I think where people will really, you know, kind of gravitate to what you're doing is once they've become a little bit more seasoned and now they're looking to really dive deeper into the numbers and figure out how they can strategize and manipulate the data to figure out different patterns in their own trading and become better traders that way. So I think you're right. I think it just may be designed for a little bit more of an experienced advanced trader, but we've got, we definitely have plenty of those. We have plenty of those in our community. I was gonna say, after listening to this, yeah, exactly, I was gonna say, maybe people in your community will kind of pick up on this and maybe take the opportunity to reach out or check it out. Yeah, looking forward to that. Yeah, I would highly suggest it to anyone listening. I think it's a great tool. And the fact that, you know, David's just providing this stuff, I mean, he has nothing to gain except for the fact that, I mean, like you told me, David, you just like being in a community of traders, which is honestly the whole reason I built navigation trading to begin with is because trading becomes a very lonely business, but when you can build a community of people around you that all kind of think and act and have the same desires, it makes it a lot more fun. Definitely. Well, so kind of tying into your spreadsheeting stuff, obviously that is used, as you mentioned, as a way to analyze different numbers, look at different things. And one of the questions that I wanted to ask you was, how do you think about managing risk? And you can go as deep as you want into the actual strategies that you trade or you can stay broad, but how do you manage risk and how do you think about managing risk? Yeah, so I'll start kind of low level and then kind of broaden out because this is actually sort of the trajectory of how I kind of developed because in the beginning it was focused a lot on strategies and just making profit. And people think about usually a strategy is successful if it wins a lot, right? But then what does that even mean, right? And so usually the first thing is win rate, right? So if I win 90% of time, 95% of time, I it's got to be a good strategy. And what's lost often is, well, the other 5%, 10% matters, right? Because if you lose too much, you're going to have negative expectancy. And so in the beginning was about kind of risk management, risk management 101. And for me, it's using simple stops. And I know there's a lot of different thoughts, trends of thought, controversy around what's using stops, hard stops, mental stops and all that. But at the end of the day, I honestly believe everyone is using stops if you're adjusting a trade, right? Because of something, a Delta or at a certain level, right? You basically stopped out of that first trade, right? Or rolling is exiting your first trade and putting on another one. So at the end of the day, whether or not, and how you think about it, everyone uses a stop, right? And if you don't use a stop, the broker will stop you out when you, you know, what the margin call, right? So risk management and stop loss really for me are like one and the same. And so from a trade level, and we talk about probabilities and occurrences. So if you do a trade and you, you know, simply saying, if I have risk two to make one, just use a simple example. And this could be like a credit spread. You enter out a dollar and you exit at three, right? Because if we exit at three, you lost $2. So risk two to make one and $1 is your max profit. So with the risk two to make one profile, you're gonna have a break even win rate of 66.667%, right? Two thirds, you have to win two out of every three trades to break even. And what that means is if your win rates above that, you won't make money. If your win rates below that, you won't make money. And from that kind of grafting or looking for strategies simply becomes, okay, if I have a, you know, I purposely set my mechanics to have a risk two to make one profile. And, you know, and that could apply to any kind of trade structure. Like, and that's just a high level principle. And then you go test different strategies using that, you know, as kind of guide the mechanics. Some strategies will have a higher one rate and some don't, right? And that will let you kind of filter out what strategies are worth investigating. And so the risk management itself can be a key to our profitability. Then once you have stuff you're down on your trading, then it becomes looking at like the portfolio level and drawdowns and how to blend different strategies to minimize volatility and have different, you know, if the strategies are lower correlation and they talk about like one zigs and one zags, you know, so you're not losing everything at the same time. And then you start looking at, because the reason it matters and a big topic of mine that I like to talk about is volatility drag or volatility tax. And that's the fact that compounding is not symmetric in both directions. So if you gain 10% and you lose 10% and you're always trying to, you know, scale as you, you know, trade as a percent of your account, then the compounding 10% is more detrimental than a 10% gain, right? And there's always that kind of the classic if you lose 50% of your account, you have to make 100% to get back to even, right? I'm sure most people have heard of that or just those charts that say like you lose 1%, you have to get about one point, whatever percent, lose 10%, then you have to make like 12% and just gets worse and worse. So really thinking about risk, like the importance of not taking large drawdowns. And so part of the effort of kind of developing new strategies and blending them and trading different things is with the ultimate goal of not taking that drawdown because minimizing drawdown is the key to long-term compounding and having the most success going forward. So that's kind of how I think about it. Like on the strategy level, what it takes to make the strategy, you know, positive expectancy, not, you know, the interesting thing is for a sizing perspective, if you trade too big, you can actually make a positive expectancy, you know, looking numbers into negative expectancy. And it's that same idea. Since the volatility tax, well, it works against any edge you have, right? So if we say, you know, risk too to make one or let's say you have some, you flip a coin and it's a heads, you get, I don't know, $1.50. In tails, you lose a dollar. Now that sounds like a positive expectancy proposition, right? Because you should take that bet all day if you're, you know, $1.50 or lose a dollar. But if it's something about like when 15% or lose 10%, that might still be okay. But at some point, if you're saying, you know, when, I don't know, 75% or lose 50%, then you can see, because remember, if you lose 50%, you got to make 100% to get back, right? So even at 75% gain is not enough. So I think you can see where I'm going with this. They always thinking about the fact that at the end of the day risk matters because of that ever-present compounding effect in that asymmetry. Yeah, I wanna pause for a second and just make sure everybody heard what you said there because I think it's so important. In fact, from my personal own trading experience, you know, I started trading late 1999, early 2000. And I just, I mean, it was more gambling than trading at that point, but I was just trading way too big. You know, at that point, I thought it was all about the strategy or the indicator or all those different things. I was blowing out small accounts. You know, I did that multiple times. I really didn't become consistently profitable trading until after I had been trading for 10 years. So I'm a little bit of a slow learner, David. You'll find that out, but it all came down to position size, you know? And so once I realized that, it was like a crazy big light bulb came on. And it was kind of like, I can't believe that one of the numbers, one of the biggest keys to this whole trading thing is simply position size because I would jump from strategy to strategy. You know, I'd blow out an account and I think, well, okay, well, that doesn't work. I gotta go try something else. But the reality is I was just trading too big. And so I just, I wanted to kind of reiterate that because I think, especially for new traders, that doesn't really sink in until they've already learned the hard way. Yeah, I think you have to come to realize and just to kind of repeat is that size can take a winning strategy and make it into a losing one. And so sometimes people will say something doesn't work when in fact it was just too big. So you don't wanna conflate the detrimental effects of size with the efficacy of the strategy because one affects the other. I think recognizing that and understanding how important that compounding math is, that will kind of help you separate those two. And that will help you have more clarity on like which kind of strategies work and don't work, so to speak. Very well said. So when in your personal trading and your funds or the way that you structure trades, are you mostly trading naked type options? Do you have defined risk, a combination of both? What is your kind of preference or model around that? So this is an interesting topic because I often use the term risk in theory versus risk in practice. So if I have a naked put, right? And again, let's use that example of selling for a dollar and have a stop loss of losing two. My risk in practice is two to one, but this does not account for the fact of gaps, black swans, things go wrong, right? And so in my trading, I have an overnight put selling strategy, for instance, where in the look of my log, and yes, the average loss size is right around two, if that's the way I intended it. But over hundreds of trades, you do just that occasional gap and there's like a 10x loss or an 8x loss. And that's just, I just make that into numbers, right? That's all to be expected. But really your risk in theory, and people say with the naked put, you could go to zero. Now I don't think go to zero is gonna happen, especially if we're trading an index. So let's call your risk in theory, like 20 or 30% jump risk, right? The market dropped 20 or 30%. What would that mean to your position? And so the reason I get into that is the way I approach the strategy and the mechanics, I treat it as naked. So I'll sell it put and my risk reward will basically be tied to like, if that naked put was a dollar credit, right? I see the dollar as a max gain and $2 as my loss. And my stop loss, if I wanna have 2x, right? It's 2x relative to that dollar. So the structure itself, the approach, the mentality is of a naked trade. But because I know there is a larger risk in theory of that black swan, right? Some people would just accept it, like, okay, I understand with a very low probability, I don't know, once a decade, I might have a really large loss, but they trade small enough that it's acceptable and maybe I'll give back the years of gains, but I survived, right? And then life goes on and keep trading. But if I wanna address that risk in theory, the black swan risk, right? I'll structure it with some kind of, and you can do like a back ratio, I'll buy a couple. So if I say data engine, my strategy that I teach, I'll sell a 90 DTE put, right, around 15 Delta. And I have something called the bomb shelter, which is just a structure designed to hedge that naked put, which is I buy two puts, I take a 10th of my overall credit. So if I collect the $5, I'll take 50 cents and I'll buy two longs at 60 DTE. And I've looked at post risk analyzer and yes, they're very far out of the money. And most of the time they won't do anything, but if there's a really big drop, then you get kind of the implied volatility of, because it's a ratio, even though those two are far out of the money, there's two of them. So it's kind of a Vega hedge, right? And so I'll have something like that. And so to bring it back to answer your question is, I kind of treat my, and I design and approach my strategies and manage them as a naked strategy, but because I have that tail hedge, in reality, you could call it a, is it a back ratio? I don't remember the terms, but it's technically a ratio spread. Yep, but the way I think about it is as a naked trade, but I just know I have that kind of airbag or that hedge in the background. What's funny about that is you call it a bomb shelter. I have a back ratio, hedge strategy, kind of tail risk protection like that, and I call it a bunker. Yeah, no, you know what? If you look at my content, I'm always coming up with like goofy names and stuff. And it's just a way to kind of be, have a little fund and it helps people kind of remember the concepts. And like, if I think of like what it's used for and how I think of it, then I'll stop a name on something. Yeah, same here. We have names for all different kind of strategies. I mean, it's easier than every time you want to explain it, saying, well, you got to sell two here and buy one here and it's a bomb shelter. And then people just know what it is, right? Yeah. Very cool. So that's awesome. And so you're primarily utilizing naked options or buying far out wings or using a tail risk hedge and just managing risk around those positions. Yeah, it's almost, you can think of it as my structures are not naked, but I managed kind of them separately. I managed a short as I would manage a naked position. And then I managed a hedge as I would manage a hedge. So it's just sort of the separation of the way I'm managing them. Got it. So you talk about a concept that I want you to kind of share with the listeners and you call it return on time and the four quadrant mental model. Talk about that. So, you know, oftentimes people want to, people get into trading for various reasons. And yes, at the end of the day, we want to make money, right? But it could be because I just have an interest in markets or I want some supplemental income or I want to quit my day job. And so when you're evaluating, you know, something, this endeavor you want to go on, I think people often in the beginning don't have a clarity of like the expectations. And so the mental model is this, if you have a thing about like a horizontal and a vertical line, right? It's like a grid, right? You have four quadrants. Now the left, the horizontal axis from left to right is basically time spent, right? Effort. The very left extreme would be passive investing, right? No effort at all. You just buy and hold. Whereas on the extreme right-hand side is going to be, you know, staring at the screen eight hours a day, full-on day job, right? You just screen-watching, looking for setups and the whole thing, yeah. Okay. And the vertical axis is return, right? So down on the bottom is losing money. And down up on top is making money. So I think what people maybe think they aspire to is the upper right-hand quadrant, which is spend a lot of time, make a lot of money. And what they don't realize is, you know, time is money. Time is value. Time is, you know, lifestyle, right? You may not necessarily actually want to spend all that time, right? There's a certain kind of personality and there's a certain kind of motivation that's required. So there's that to keep in mind. And another thing is people often aim for the upper right quadrant, but where do you think they actually land? They land in the lower right quadrant, right? Spend a lot of time, lose a lot of money, right? So obviously you don't want to end up there. Now, some people are okay with the lower left-hand side, spend little time or spend no time. And don't make a lot, you don't have to lose money, but you're not making a lot, right? It's basically passive investing, right? If you buy and hold, there's a certain expected return of the market and there's a certain volatility as well, but they're okay with that. Now, return on time, I mean, if you think about it, just people understand return on capital, right? Return on time is, this is what this whole quadrant and this model is like, how much are you getting for the time you spend? And so what I want to put people in, and I think, in the beginning, it's kind of almost too good to be true, is upper left-hand quadrant, right? Time spent, not a lot, but you make decent amount of money. It doesn't mean you have to double your money and get rich quick, but it's more about the fact that you make more than the time you spend might suggest. And again, that kind of maybe sounds so good to be true, but how I do it is I focus on what I call low-touch strategies and strategies that, again, take my data engine strategy, for instance, it's selling one put a day and there's a bracket, right? There's a profit take, there's a stop-loss and literally that's it. I mean, there's stuff that goes into sizing and monitoring how much positions you're having all that, but the actual mechanic is enter a 90 DTE or closest to it 15 delta put once a day, put on a bracket order, the rest is done, right? That bracket order is your exit, right? You will either hit a profit target, get stopped out. And that strategy, yes, it's correlated, you're selling puts, right? And you're selling puts regardless of mix and market up, market down. So there's the beta, there's correlation, but then I'm showing multiple back tests as well as live trading that for the equal amount, you get better risk adjusted returns than buy and hold, right? So for equal amounts, you can size the strategy to target a certain level of return, right? That's just leverage, that's just scaling, but for the same level of return, your drawdowns will be less. And that's an example of return on time. How much less is the drawdown? Do you have any of those numbers, Andy or off the top of your head? Yeah, let me actually give me about 10 seconds. I'm gonna pull up my, I have something called a longitudinal study, which kind of actually, another example of these tools I built. It takes the test data, in fact, it's live data, but it scales it for you depending on the level of return. And I always say, okay, let's say you're targeting 15% keger. Now that doesn't mean you're gonna make 15% every year. Long term, it should kind of even out because there's up years and it's down years. And so in the timeframe of this study, and the study continues to go on because I add more data. It's from November, 2020 to present, right? And in fact, we had a profit take yesterday, January 11th. So at a 15% return target, your keger realized is right around 14.8. In that same period of time, the market's keger is 10. The strategies max realized drawdown is 14.7% and the SPX max drawdown was 25%. All right, so there's just, and there's some nuances you have to do because this is closed trades versus marked market. Marked market's always a little bit more volatile, but you get the idea. And these, this is all on this spreadsheet. People can go in there and play with it and ask questions. But again, just to give an example, and this is something that takes marginal effort, right? So it's not about this, there's this false dichotomy of, if I'm not a day trader, right? I'm a passive buy and hold, right? It's more than the other. And there's nothing in between. And I'm trying to show there's a lot of gray area. And depending on how you focus your effort, you can kind of land in these different quadrants. And that's kind of, yeah, that's what I call the four quadrant mental model on how to kind of approach and the return on time is more about an emphasis on, it's not always about trying to make the most money, right? RLC return on capital, but return on time leveraging your time. And I talk about like, you don't have to get into trading or learning about investing with the goal of quitting your day job. I really think you can do your day job, unless you're hated, I'm sure, but do what you like to do. And this kind of trading can be something on the side that you can meaningfully add value without having to suck up a lot of your time. Yeah, and it's interesting because if you look at, and you've seen and heard all these statistics that very, very few actively managed funds to outperform the S&P 500. Of course, from a hedge fund perspective, there's all different kinds of hedge funds that focus on different types of strategies and allocate capital for institutions based on what they're trying to accomplish to offset what they're doing in another strategy and all those kinds of things. But based on that, and I've looked at those, not exactly what you're talking about, but similar, just simply selling put strategies in the way that you can reduce your overall, standard deviation of risk compared to the S&P, but yet easily outperform it. And it's just amazing that more either funds or people don't do that if they consider themselves a buy and hold type investor. There is so many things that work against the individual retail trader from being successful. And a lot of that is just psychology and having the conviction to follow through because the moment things don't go your way, it's really easy to question yourself, which again brings back the importance of tracking and looking at the numbers and continuously comparing that. And in fact, every trade, regardless of the outcome in terms of P&L, as long as they match the expectation and like, again, live matches the back test, every iteration that goes that way and execution is clean should be one more brick to your kind of conviction, right? Building up that conviction. And so I think not having some of these tools and having the right mindset, it's hard to kind of do this day in and day out and not fall off the wagon. Well, and not only do from what you're saying from a mental standpoint of just you suffer a big loss and then you start questioning yourself, you start questioning the strategy, but on the other side of that, you have all these financial advisors and all this whole financial industry basically telling you that you can't do it because you're not a professional, right? And so that feeds into it and then people say, oh, I'm just gonna give my money to an advisor and pay him 1%, right? So it's just, it's such a racket that's created this scenario to start with and what's awesome to see is, and obviously why I created navigation trading, why you do what you do is because it's really amazing to see when people empower themselves and start to, the light bulb comes on and they start to realize that, wait, I've been told my whole life that I can't outperform the market. Even the best professionals barely can outperform the market, yet I'm doing it consistently every single year. There's a disconnect there that a lot of people knew can't grasp, but once they do, it's just so empowering knowing that you have total control. Yeah, you know, the funny thing is like, beating the market, like the threshold is not that high in terms of like 9%, 10% and then, oh, like if you're talking about risk adjusted, right? If it, you know, in that, that's another thing for another conversation but people talk about like, you know, beating the market in absolute terms, okay, maybe lower it harder because you have to consistently, you know, 10, 11, 12, whatever percent, but risk adjusted, if I can do half the return with a quarter of the volatility, that's in a way, beating the market, right? And you can take that, if I have half the return and quarter of the volatility, then you can just scale that up and then you can then match the return with half the volatility, right? So there's all these different things and that's another reason why it's just so much kind of disinformation and misunderstanding about like what it is to beat the market, what exactly are you trying to do and what exactly is the goal? Because it's all about like different ways to, again, like think about risk, think about performance and different approaches. So you have to have like a really clear agenda and know what exactly your goal is before you can even design the approach, right? What is the best strategy, best portfolio or whatever? Right, right. Great stuff. Yeah, David, that was awesome. You know, the other concept that you talk about, which I think you kind of tied into your four quadrant mental model is, you know, the trading versus actively passive investing, which is kind of what you talked about. Anything else you wanna add on that topic? Yeah, so this is related and something I've been thinking about because sometimes when I put out, you know, my content or stuff and concepts on Twitter, I'll get kind of pushed back almost like, oh, like this is like too simple or like, you know, I'll get kind of no offense to them, but I'll get lumped in with kind of the theta gang crowd for instance, right? Oh, data engine, sell, put every day and make money and there's a balance between like, I have to kind of over simple, like try to simplify it, but if you oversimplify it sounds like just another one of those scans, right? It's like, oh, easy money. But I realized I don't really think what I'm doing I would consider kind of trading. Now, what is trading? Now, yes, I make trades, right? There's transactions, you're selling and buying whatever, but I think the typical image of a trader is somebody who, you know, is watching the market and you might have a scanner or a watch list or you're looking for a setup and it's almost like hunting and right, you eat what you kill, you're looking for setups and when there's opportunities, you jump, right? And then those are the trades and then you have to manage those, but more again, that mindset of looking for opportunities, looking for trades. Whereas for me, a systematic approach is there's role-based and you're just doing the same thing day in and day out and even the risk management, those kind of, you know, the mechanics are exactly the same day in and day out. And what that comes back to is there's a phrase, you know, someone in my Discord coined which is like strategies as assets, right? If you think about buy and hold, right? The simplest is buy and index, buy and hold. That's one form of investing. Now kind of one step above that, there's stuff called like permanent portfolios. You might have heard of the Harry Brown portfolio or the Golden Butterfly or like Ray Dalio's All-Weather. It's like you allocate to different assets, but you're basically buy and holding and you rebalance, but because you have different assets at a certain proportion, you know, you're relying the natural kind of lower correlation of those assets to provide a smoother equity curve, right? That's the idea. So if I think of my strategy as something that I'm gonna do day in and day out and the rules don't change, well, how can you say that's different than like a buy and hold, right? The strategy itself has a certain pay off profile, equity curve, return profile that you're expecting. And if I am blending three, four, five strategies at a certain ratio, how is that different than a permanent portfolio though? And so that's what I mean by, you know, actively passive investing. Like, yes, there's some activeness to manage and place the trades and put in the orders, but I find my mentality more of a passive investor than what traditionally is thought of as an active trader. And that's kind of like the thought that's been percolating in my mind and why I think there's sometimes a disconnect of the kind of stuff I put out and some of these other online, Twitter personalities who maybe have that more kind of, that active trader looking for opportunity approach. So actually I'm kind of curious to see to get your thoughts on that and I don't know if where you kind of fall in that camp and the way you guys in your community and the types of strategies. Because at the end of the day, everyone, you should be systematic. I'm sure you're kind of teaching like being systematic and consistent, but that mindset of like, hey, am I like sitting here looking for opportunities or am I really just sitting back and letting the system run? That's kind of what that term is about. Got it, I like it, I like it. I think, you know, from our perspective in my community, you know, we get people coming in and I think, you know, we've been doing this. We've had navigation trading going now since the end of 2015 beginning of 2016. And we've built up just a massive library of content and different strategies. And I, you know, I trade all the time. I trade zero DTE, I trade mid duration, I trade longer duration stuff. So I think a lot of people come in and they think they have to mimic what I'm doing. And so I really try to pound the topic of, the topic of, don't come in here trying to be like me or don't come in here trying to be like one of our other professional trader members. You know, don't try to be anybody else. You have to build the type of strategies and trading around what works best for you. You know, and that part of that has to do with your lifestyle. You know, how much do you want to be in front of your trading screen all day? You know, going back to your quadrant. You know, how much time do you want to spend on it? Cause that's a big deal. You know, we have some people who only want to trade for an hour a day. We have some people who are very active like myself and trade a lot of different strategies. But one way is not right for everybody. There's no, this is the way I do it. And so this is the way you should do it. I really try to relay that information to folks, especially as they're trying to figure out who they want to be as a trader or what they want to be. And there's just no right or wrong answer, right? I mean, there's so many different ways to be profitable in the markets. And there's no reason to bang your head against the wall if you're trading a strategy. And it just doesn't work for you because of your personality, because of your time constraints, because of your account size or whatever else it might be. And so I just think it's, trading comes down to, it's just one big game of self-awareness. Yeah, and trying to figure out, what is the best fit for you? What's gonna make you happy? Because there are situations, there are days that come to an end and I feel exhausted. Like I'm mentally and physically exhausted. And I'm like, I don't want to do that every day. I don't feel good about myself at the end of the day when I do that. And so I've gotten rid of some strategies that are still profitable, but is it worth it when you feel like crap at the end of the day to continue to do that? And in my mind, the answer is absolutely not. Yeah, definitely. I agree with everything you just said. And I think what you said about, there's no right way to do it and there's no one size fits all. And it's always about learning about yourself and then from that, figuring out what works for you. And I think the main kind of MO for my content and my message is again, with the four quadrants, I think people are either gonna wanna be in the upper right or the lower left, right? Spend a lot of time, make a lot of money or spend little time, don't make so much. And most people don't realize the upper left. The don't spend too much time, but you can actually make reasonable returns. And so for me, it's all about showing the possibility of leaning towards that kind of upper left quadrant. I think some, when people realize that that's like a different mindset, a different way to approach, sometimes it kind of opens up more possibilities for them. I love it. I'm gonna start using that. I'm gonna call it the David Sun Mental Quadrant Model. Sure. Good stuff. Well, David, I really appreciate your time. I know you're busy, so I don't wanna hold you too much longer, but anything else that you wanna share with the audience that you think would bring value? Yeah, I would just say just remember that this is a process and be patient. And just as we mentioned about the importance of risk in terms of compounding. Compounding, that's everywhere in life, not just trading, right? If you take it slow as long as you don't blow up, all of your experiences will compound, right? As long as you're learning and can take away from the mistakes and things you did wrong in the past, as long as you can survive and stay in the game and keep learning, things will grow, right? It will just get better, things should get better and use that approach so that you don't have to rush. And again, going back to the return on time, right? If you don't have to stress out and like, hey, I got to go crazy and make crazy returns and try to, and again, I know some people are motivated about different things, like, hey, I gotta get out of this job and they think of this as an opportunity to go quit their job and trade on the beach or something. But for me, it's really just about taking it slow, letting everything compound and kinda grow and letting that progress sorta sell over time. Excellent, very well said. Well, I really appreciate your time. I love just kind of interacting and meeting good people in the trading industry. As you know, there's a lot of garbage out there as well. So, kudos to you, man, for just kinda doing what you do and giving back like you do to the community. I think that's just amazing. So again, appreciate your time and I'm gonna put the link to the Option Omega Spreadsheeting for Traders course and the show notes. I'll put your Twitter feed. Is there any other place online that people wanna reach out to you that they can find you? I would say the trading page, which is the name of my podcast, so www.thetradebusterswithins.com and don't be surprised when it redirects you to a Google Sheets lecture page because it's not a real web page. I just got the domain. But that would bring you there. That would have links to the Spreadsheeting tools, my podcast, all that good stuff and then yeah, if you put the Academy course link that will, I think that should cover it all. Awesome. Great, thanks for coming, David. Good to have you and look forward to connecting with you again sometime soon. All right, thank you, Steve, for having me. Have a good day. Cheers.