Home > Main Forums > General Discussion > Long time lurker, first time poster..with a small account less that 12k, what to do?

Long time lurker, first time poster..with a small account less that 12k, what to do?

  1. I am asking here as this seems to be THE place to be to get REAL advice and REAL results..

    Realizing we all have to start somewhere and it takes money to make money (if you are past the bullsheeto filling the trading space)..I am looking for a methodology or service (want to learn to fish but OK with being fed (making some on followed trades) a little along the way to keep my spirits up..to start building my account with something that can grow as my account does..I am graduated past the .10 high probability credit spreads and iron condors with time bombs built in and would like to be able to "work" my account on a consistent basis with a little more profits available so that I at least can stay with it and see results..I know it is NOT about making money at first, but as John Locke says, it IS important to start seeing a little fruit from your labor to keep those fires burning..

    I would appreciate any advice and am ready to start learning and growing..thank you in advance!
  2. It seems like you have a good mindset about things. I think either the Road Trip Trade or the M3 are great trades to start with. The M3 is a bit more nuanced in its management from my experience, so you might want to go with the RTT. Both of those structures can be scaled down into structures that offer nearly identical risk profiles to the originals.
  3. thank you Ice.. that was what I was thinking but was told the M3 could not effectively be traded with less than 15k.. I was hoping to have no more than 5k in planned capital working at once so that I may have actually $800-2500 actually in but have 50% or more planned available and still have 2/3 reserve so worst case, i lose 1/3 and could build back..up
  4. Well, maybe not the M3 per published guidelines, but a PUT fly + long CALL can certainly be traded with less than 15k. Remember that SPY is 1/10th the SPX, so you can couple options from those chains to mimic the behavior of the risk profile of an M3. The upside is a reduction in capital requirements, while the downside is a reduction in contract granularity. That being said, a similar approach can be applied to the RTT as well.

    I wasn't going to mention capital-at-risk because I didn't want to imprint my risk tolerance on you, but 1/3 CAR is a prudent limit. It'll keep you on the path.
  5. Thank you both!

    I will be checking this thread over the weekend and hope more will chime in..like I had mentioned in the opening, I am far, far from a newbie to options or trading BUT..will be a newbie to CONSISTENTLY PROFITABLE trading if and when..lol

    I am hoping to find a program here I can trade and learn as I go into a full methodology and to my trading to a "real" business and gradual wealth building campaign...

    I am a firm believer in trading LIVE, albeit small but LIVE to have real "skin" in the game and marry that to back-testing as I go..I have ONE and use TOS as my broker (had them 18 years)...
  6. I am biased, of course, but I suggest, based on your information, jrob, that you get a trial subscription to the RTT. It's very cheap, and it affords you the opportunity to watch our videos, see our many posts, see our Trade Entry Tool, and review our beautiful (again, I'm biased) equity curve. Now, there are several strategies which can give you an equity curve which points northeast at 45 degrees, but doing the RTT using ES futures would fit your margin requirements I think. Then, if you like our trade, you can subscribe on a monthly, quarterly, or yearly basis in order to follow along and receive my trade alerts (not specific recommendations, but my exact trades in live accounts).
  7. I have an IRA with TOS ..So, with the parameters.. I was trying to figure if the RTT, Kevlar or Rhino..Locke suggested in an article his UB1 or 2 but there are quite a bit of moving options around and with smaller total lot sizes, seems much more difficult and capital/profit reducing..

    Maybe there isn't any system that can be used..Can also had his core income bfly, but haven't been able to reach him
  8. You can trade the M3 with one or more RUT butterflies and one IWM call for each butterfly but I think it would be much easier to follow the Road Trip service using ES futures. If you do, don't just be a robot but attempt to understand what is being done and why i.e. let Dan and Tom teach to fish. You will be hard pressed to find two better mentors and once you understand what is going on you can take that knowledge and expand on it to create trades that match your personal style. There is an active Road Trip forum here where you can ask questions and Tom often covers his trades in Trading Group 2 each week.
  9. With that kind of money you're probably gonna want to focus on broken wing butterflies. The road trip trade is one of them. You might look at my adaptation of several ideas here.
  10. Mark
    I saw your presentation with the NC group as I am in Charleston SC..It was quite interesting..

    ACS..I can't trade ES futures options in my TOS ... So any of these a 5k planned trade with rules or coursework to follow?
  11. I am actually starting to feel embarrassed and out of place, I am sorry.
    Guess I should go to option alpha and their $500-1k iron flies..
  12. Wow..Will take a look and thank you so much!
  13. Anytime, just trying to spread the good CD vibes.
  14. You might consider Option Pit as well, Mark and Andrew are quite good directing newer traders. If you do I can probably get you a discounted price, so just message me if interested. They have regular classes as well that are usually quite informative.
  15. actually
    I am not a new trader, just an underfunded one after blowing three 25k accounts over the last 20 years..lol

    I actually started to get back in the game and found both Falde and Locke before either got big and started their gigs with SMB..bit my mother fell ill and I had to leave again and now finally with all my cobwebs clear, want to get it right..

    To give you an idea Paul Forchione was my futures broker when you had to call in orders and commissions were $50 a side..:(

    He also was still in his infancy..lol
  16. Okay, thanks for clarifying, just to further elucidate as to my trading I became consistently profitable about 3 years ago, and this was when I started studying with the guys at Option Pit. That may just be a coincidence since it was also the time frame when I stopped working a full time pharmacist gig so I had to replace all that income and I just plain studied all day and night until I was able to do so. I also learned a lot hanging around this group as well as SMB, private mentoring with several folks so I just kind of went crazy studying everything I could get my hands on. A lot of text books as well as I like the written word also. What I like about Option Pit is their emphasis on always being hedged and they also are good at presenting the vol products and all of the material associated with those products. As Ray McHardy would say YMMV :cool:
  17. Awesome..And thank you for your input!
  18. I am possibly just a small step in front of you. After many years of trading with a small 10-30 k account a insanely large number of underlyings, instruments and strategies, and having spent a considerable amount of money on courses and "secret" trading tools, I ended up with an overall net profit of about 0%. And to be honest, I was very lucky to have survived all the stupid and risky things I did without having lost money. But to be able to wipe out trading benefits of months and years with a few big or too many recurring small losses was frustrating.

    I "discovered" the broken wing butterfly universe about a year ago and my trading results have become more consistent since then; smaller wins than what I was used to before, but no significant loss at all (with the exception of some weird experiments with 5-10 DTE options). I also traded the Road Trip Trade based on the basic setup and it worked out well. Then I joined the Road Trip Alerts and was surprised by the huge step forward I made in a few weeks. There are so many nuances beyond the basic setup that render this trade more resilient and profitable I was not even aware of. The advantage of the alert service and forum is that you have access to a kind of mentoring, learn in depth how to trade a specific setup and, dependent on your progress and personal preferences, you may decide whether to simply follow the class trades or introduce your own tweaks. I suppose that you can expect similar benefits from the other trading groups and mentoring services mentioned in this thread. This is just to confirm that I believe that the Road Trip alert service, which provides much more than the terms "alert" and "service" may suggest, are a very good way to get started and fit to your needs.
  19. PK,
    Thank you for this and it has all but confirmed my initial but that the RTT service is where I want to be.?My only reserve and I want to say this without sounding "newbie" or insulting is the limited returns of the strategy vs the time you are in the market with it.. I know it takes money to make money but was hoping (unrealistically more than likely) there was a strategy or methodology that could turn my capital over at a higher albeit faster rate.. as some tout strategies that are near as safe and consistent but return of 3-% per month ..

    Hope that doesn't sound arrogant or ignorant
  20. I started with FOREX and intraday futures trading to make a 100% per year. A nice dream but I never got to this point in a consistent way and, over time, ended up losing money. With broken wing butterflies and credit spreads, I succeeded in increasing my trading capital by about 40% in 1 year, which is in line with many option traders I know; most of this increase came from 5-10 DTE butterflies and calendars (SPX, VIX, CL etc.) when the market did not move at all during last summer. And once again, I lost almost half of these gains with short-term option trades and oversized downside hedges after the US elections.

    I have become tired of these ups and downs. So far, the RTT has been the only setup with which I have not lost money for more than 12 months. And more importantly, I do not spend more than 1-2 hours per day, in the evening after coming home from a full-time job (I live in Europe and this coincides with the closing of the CBOE session), to manage my positions in a relaxed way. You may have seen that the CAGR for the RTT over the last 12 months or so comes close to 20%. And this has happened in a period that has been quite nasty for the RTT, such as low volatility, long periods of up moves without pull back etc.

    I am happy with a 20% capital growth per year. If you aim for more, and this is possible of course, you need to increase your capital turnover (go shorter term) and take more risk (go closer to the money and/or steeper risk curves; adjust more aggressively etc.); and have a very solid knowledge of what you are doing (I though I had, but the markets showed me that this was not the case). Anyway, by doing so, be prepared for larger drawdowns, stress and the recurrent temptation to switch to another new strategy you hope to make perform you better. My personal choice is to consolidate a consistent return with the RTT, and stick to this strategy like I did when I married my wife 20 years ago. And, once I have proven to be able to do and have increased my capital to the 100k range, eventually start thinking in complementary strategies.
  21. I will add that, across 75 roadtrip trades I have completed, my average annualized return is 43% according to my trade log. This is an annualized return based on highest actual margin used at any time during the trade and actual days in trade. That averages out to 3.5% a month.
  22. You guys are getting me very excited! Thermostat exciting thing is I don't have to go it a!one!
  23. As Peter indicated (and, by the way, thanks for all your positive comments) the returns are somewhat dependent on the volatility environment. In periods of slightly higher vol it is not unusual to make 5% to 10% per cycle, with 7% to 8% as the average. Once (and only once, unfortunately) I "hit one" exactly right when SPX dropped into the sweet spot near the tent close to expiry, and I made nearly 22%. in any event, the strength of the strategy (and, believe me, in 23 years as an options trader I have tried them all) is the consistency and positive expectancy which, in turn, are related to the high win rate, low draw down, high profit ratio, and high Sortino ratio. Using ES and SPAN margins for the denominator, the returns are even higher.
  24. As Dan's apprentice, I would like to chime in my own experience. I traded my first option contracts way back in the 1970's -- obviously I am no spring chicken age-wise. I got my beginner's luck and made a bit of money, and I thought I really knew what I was doing (buy cheap and sell expensive options). However, after about a year, my streak of luck ran out and I began making money losing trades. Luckily, I remembered what my mother had taught me when I was a kid -- never gamble with money you cannot afford to lose. So I quit trading options all together for some years. Subsequently, I found out why I was losing money. All the professional options traders began to trade with computer models of some sort while I was still using my HP calculator to compute my half-ass binomial model. Then I switched to trading convertible bonds which were more slow paced and less volatile than most future options. Over many years, I had not lost any capital in convertible bonds. But I didn't make much profit either. Meanwhile, I "invested" in stocks using mainly the married put, covered call strategies which also did not yield much, but it helped me to survive the crash of 1987. I was very lucky in 2008-2009 when I was completely out of the market -- not so much out of foresight as being out of money at that time. I was very cash strapped because I had invested all my capital in an start-up business venture. To make the long story short, my investing/speculating career did not yield much even though on balance I had not lost any capital.
    Two years ago, I retired and began actively trading futures, stocks and options again. Since I had read a lot of books and research papers over the last 40 years, I am not exactly theoretically ignorant or naive about options trading. I have since tested many strategies with real money (in a small account). I tried selling high gamma expiration-day options. The returns were fantastic when things were going well during the extremely low volatility periods. I was profitable for many weeks on ends. Then a run of bad luck took back most of my profits in a matter of days. Then I tried the James Bittman strategy. Although it was less stressful than the expiration-day strategy, the ups and downs were still too much for my own good at my age. Eventually, I settled on trading butterflies and some statically hedged positions about a year ago. I have been consistently profitable since with an occasional trade of minor loss. But I felt that something was still missing.
    Six weeks ago, I signed up on the RTT service. What I have learned from Dan so far is not the basics of trading butterflies which are available from many other sources such as books and free material on the WWW. What I have learned from Dan are the mistakes which I would have made either due to my mis-interpretation of the market internals or my indadequate control over my emotional response to market changes. And needless to say, less experienced options traders can learn much more, such as trade adjustments and risk management, from Dan who is a master craftsman, modest gentleman and patient teacher.
  25. Thanks for the kind words, Myron. You have an interesting trading history. I don't know any successful traders who did not, at one time in their careers, suffer significant losses. In the mid-90's when I was learning to trade options with McMillan's book and the DOS version of OptionVue I once lost my wife's entire yearly salary in one day trading OEX options (before the 10:1 split). Needless to say, that was not well received. I recovered most of the loss that year, but the debacle left an indelible memory and made me a better risk manager.
  26. Hi Dan,
    My compliments are heart-felt and sincere.
  27. The old adage
    "Circumstances don't make the man, they only reveal him to himself."
    -- Epictetus
    can apply in a trading context.
    My trading record has revealed that my main obstacles to becoming a better trader are
    1. my strong aversion to bearing risks
    2. my predominant and strong preference for closure or my aversion to open ended situations
    Almost every trading strategy I have tried is hedged, sometimes over-hedged. For instance, all of my convertible bonds long positions were hedged with short stock positions. My obsession with closure often tricks me into over adjustments and over hedging.
    Or put another way, "Nothing ventured nothing gained".
    My observation is nothing new, such phenomenon is well studied in behavioral finance. But, IMHO, most traders suffer from one form of psychological barrier or another. Only those, who recognize their handicaps and overcome them, may eventually survive. The rest are doomed to fail. Trading is a proverbial Venus trap flower. While the sweet scent of its nectar is so alluring, few flies would have ever dreamed of their ultimate fate.
  28. What a great thread, with really interesting replies.

    Myron...I love your quote... I think it's a balance between another quote I stumbled upon:

    "A Ship in Harbor Is Safe, But that Is Not What Ships Are Built For" John A. Shedd (as you allude to with "nothing ventured, nothing gained"),

    and what John Locke is discussing here:

    (also Jim Riggio hits the nail on the head 3 minutes before the end of the Kevlar video ... at 1hr20min.. :

    For me personally, speculative activities with options form one end of the barbell, as advocated by Taleb, and expanded upon in his book "Antifragile"....with cash forming the other end of the barbell...or, for another perspective, to quote the great Peter Bernstein :)
    wise words.JPG
  29. In my short time here I have read some great people and it's nice to be made to feel just as relevant as those with 6 figure accounts..While I sometimes get embarassed and depressed there were other places I have been made to feel inadequate for lack of capital..It has been different here...Thanks for respecting that we all have to start somewhere...
  30. No worries jrob...

    I still hate the sound of a phone ringing to this day....!

    Reason: I used to swing trade Australian and NZ index futures back in the late 1980s/early 1990s, and back in those days, you had to pick up the phone and talk to your broker to execute everything, even to move a stop loss...no anonymity via online platforms like today....or they rang you if things were going badly.

    Australian and NZ stockbrokers were generally friendly, or at least civil, but the futures brokers had an "Attitude" with a capital "A"...really aloof and judgemental....it was so bad, a friend of mine once allocated one of the more condescending of them some capital to trade, to see if they really were as amazing as they claimed to be...! Long story short: they lost most of it over a relatively short period of time.

    Capital Discussions is a very special resource in my opinion....I wish it was around back then!

    PS...this is a great read on profit expectations...the opening cartoon alone is hilarious :) www.the-lazy-trader.com/2016/08/expectations.html
  31. Hi KiwiDon,
    Here are some interesting resources relevant to trading psychology.
  32. KiwiDon,
    I think Harwood's advice is very sound. I always subscribe to living well within my means, saving as much of my income as possible, and trading survivable positions.
    As I had mentioned in another post, I always try to hedge my positions. Unfortunately, hedging prohibits handsome gains After hedging against black swan events with SPX puts and VIX calls, my taxable portfolio return is not attractive. It boils down to a lot of work for very little reward. In my tax deferred accounts, I am restricted to trading mostly collars or diagonal collars which are also low return strategies.
    This https://drive.google.com/file/d/0B9fPLkdZBZT6UUU4SG5XZy1jUms/view seems to be an interesting strategy to reduce the cost of black swan hedging. But I wonder whether it still works under the current market conditions.
    To cut down living expenses, I am considering relocating to Thailand or central Taiwan. Many Americans and Canadians choose to retire in Thailand. The warmer climate is an additional bonus. I am also looking into the business potential of farming Spirulina algae. If I can't sell it, I can still eat it.
  33. They might have good classes but there response level is horrible even if you subscribe to the chat room..
    Overall a mixed experience with them and some money lost.
  34. The sad reality is that there is no one out here with all this education material and other bull Willing to absolutely put their money where their mouth is and take one through a mentoring of exactly how to manage and grow a small account they’re all selling concepts rewritten and we work with just a different name
  35. Hi jrob,
    Am I reading this correctly that you have not found the strategy you were looking for when you started this thread, roughly one year ago?
    I just joined and was looking for similar answers and discovered this thread. Have you tried the Road Trip Trade that some people recommended here? ? I couldn't find it and have no clue what it is.
    Many thanks to any member who can point me in the right direction.