SteadyOptions is an options trading forum where you can find solutions from top options traders. TRY IT FREE!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Can You Really Turn $12,415 Into $4M?


I came into excellent article by Peter Brandt on Drawdowns and Scammers. Peter explains why most long-term profitable traders spend the vast majority of their trading careers either in a drawdown or recovering from a drawdown. Any slick promoter who tells you different is not dealing from a full deck.  

Trading Drawdowns
 

Peter Brandt explains:

 

"There is a statistical concept known as the “underwater curve.” The underwater curve plots the time periods when new all-time high NAV levels are being registered (represented by “0” on an underwater curve) and the time periods in which drawdowns are either underway or in recovery back toward new all-time NAV levels.

Most successful long-term traders are underwater the majority of time. Welcome to trading!"

 

You are in a drawdown state 80% of the time and of that, you are in a severe drawdown state (greater than -20%) 67% of the time

 

Did you know that Warren Buffett has had multiple 30-50% drawdowns in his career? Yet he is considered one of the greatest investors of all times.

 

False claims by wolves in sheep’s clothing

 

Peter continues:

 

"Successful market speculation is one of the most challenging endeavors one can pursue. Yet, promoters of get-rich- quick-and-easy schemes run rampant in the email and internet worlds. If they are not registered with the SEC, FINRA or the CFTC/NFA or are not personally managing assets of investors they are free to make exaggerated claims. Their advertising is extremely appealing and enticing. Many of these training and trade signaling services claim to have REAL trading track records. But, as far as I am able to determine, none are willing to provide an attestation or audit letter from a national or regional auditing firm that has reconciled their IRS tax payments for trading profits, brokerage statements and bank deposits with their public claims."

 

This is so true. Here are some of the claims I have seen from those promoters:

  • I turned $12,415 Into $4,155,000 trading penny stocks.
  • 2,062% Weekly Option Gain.
  • Turn $3,000 Into $100,000 in 4 months.
  • I made 29,233% in 12 months trading high flying Internet stocks.
  • We averaged 127.16% Per Month trading credit spreads.
  • We guarantee that our options trading strategies will make you profitable every month.
  • 99% of my recent 326 stock picks have been winners.
  • Trading $150,000 into $650,000 in 8 months.
  • How Jack turned $250 into $16,000 in Just One Month.
  • +9,651.04% day trading return since Jan. 4 2016.

 

Of course none of them has ever provided any proof of those returns. As Bloomberg article correctly concluded, their self-promotional strategies have made them richer than trading ever did

 

Some of those guys claim they live in mansions worth tens of millions, trade tens of millions in their personal account, but at the same time sell trading advisories for $50-100/month. Does it make sense to you? Many times they specifically mention (in fine print) that their performance based on "HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS". Does it mean anything when they don't actually trade?

 

Red flags to Watch in Alert Services

 

Moneyshow listed 10 Red Flags to Watch in an Options Alert Service. Here are some of them:

  • The service doesn’t have any losing trades.
  • The service won’t show you their closed trades.
  • The trades have huge risk.
  • The service inflates their ROI numbers.
  • No detailed track record is posted.
  • The performance is not based on real trades.

Here is another HUGE red flag:

If the promoter keeps bragging that he lives in a multi million mansion, drives a  Lamborghini and has a private jet, run away. Really successful traders are modest and humble. They don't need all this BS.

 

There are also a lot of ways to inflate your track record numbers, as I described in my article Performance Reporting: The Myths And The Reality. Some of them include:

  • Basing performance on "Maximum profit potential".
  • Calculating gains based on cash and not on margin
  • Presenting "Cumulative return".
  • Holding losing positions indefinitely.
  • Resetting past returns after a large drawdown.

And more.

 

Those who want to find out more details about some of those scammers, I highly recommend reading real and objective reviews by Emmett Moore from tradingschools.org. Emmett also describes how some of them game the system and make their profits look real. Fascinating read, highly recommended. 


SteadyOptions lists all its trades on our performance page, winners and losers. The details of all trades are available on the forum with screenshots of our fills and can be verified with historical prices.
 

Van Tharp says successful trading/investing is 60% psychology...only 60%? Humans desperately want to believe there is a way to make money with no or little risk. That’s why Bernie Madoff existed, and it will never change.

 

Best luck with your investments.

 

Related articles:
Can you double your account every six months?
How to Calculate ROI in Options Trading
Performance Reporting: The Myths and The Reality
Why Retail Investors Lose Money In The Stock Market
Are You Ready For The Learning Curve?
Are You EMOTIONALLY Ready To Lose?

Trading Drawdowns by Peter Brandt

Winning Trades and Losing Trades by Peter Brandt

 

Want to learn how to trade successfully while reducing the risk? 

 

Start Your Free Trial

 

 

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Try It Free

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • The problem of Option Math

    Option traders may be divided into two categories. First are those relying on instinct or casual observation. This group tends to speculate on directional movement, future volatility, value, and on potential profitability of trades. The second group is involved deeply with math of trading and depends on what is perceived as certainty or near certainty.

    By Michael C. Thomsett,

    • 0 comments
    • 161 views
  • Put/Call Parity: Two Definitions

    Traders hear the term put/call parity a lot, but what does it mean? There are two definitions and they are vastly different from one another. The first definition involves the net credit/debit for any combination trade, with trading costs are considered. The second definition takes assumed interest rates and present value into mind.

    By Michael C. Thomsett,

    • 0 comments
    • 194 views
  • Do Options Affect Stock Prices?

    It is widely acknowledged that the price of the underlying directly impacts the premium of the option. Therefore, options are termed derivatives. Their current value is directly derived from movement of the underlying price. Is the opposite also true? Does movement of the option value affect the underlying price?

    By Michael C. Thomsett,

    • 0 comments
    • 393 views
  • Portfolio Withdrawal Strategies

    This article will discuss three ways to take systematic withdrawals from your investment portfolio that would be expected to last 30 years, which is a typical time period a 65-year couple might need to plan for in retirement.

    By Jesse,

    • 0 comments
    • 298 views
  • Pricing Models and Volatility Problems

    Most traders are aware of the volatility-related problem with the best-known option pricing model, Black-Scholes. The assumption under this model is that volatility remains constant over the entire remaining life of the option.

    By Michael C. Thomsett,

    • 0 comments
    • 479 views
  • Option Arbitrage Risks

    Options traders dealing in arbitrage might not appreciate the forms of risk they face. The typical arbitrage position is found in synthetic long or short stock. In these positions, the combined options act exactly like the underlying. This creates the arbitrage.  

    By Michael C. Thomsett,

    • 0 comments
    • 670 views
  • Why Haven't You Started Investing Yet?

    You are probably aware that investment opportunities are great for building wealth. Whether you opt for stocks and shares, precious metals, forex trading, or something else besides, you could afford yourself financial freedom. But if you haven't dipped your toes into the world of investing yet, we have to ask ourselves why.

    By Kim,

    • 0 comments
    • 487 views
  • Historical Drawdowns for Global Equity Portfolios

    Globally diversified equity portfolios typically hold thousands of stocks across dozens of countries. This degree of diversification minimizes the risk of a single company, country, or sector. Because of this diversification, investors should be cautious about confusing temporary declines with permanent loss of capital like with single stocks.

    By Jesse,

    • 0 comments
    • 475 views
  • Types of Volatility

    Are most options traders aware of five different types of volatility? Probably not. Most only deal with two types, historical and implied. All five types (historical, implied, future, forecast and seasonal), deserve some explanation and study.

    By Michael C. Thomsett,

    • 0 comments
    • 600 views
  • The Performance Gap Between Large Growth and Small Value Stocks

    Academic research suggests there are differences in expected returns among stocks over the long-term.  Small companies with low fundamental valuations (Small Cap Value) have higher expected returns than big companies with high valuations (Large Cap Growth).

    By Jesse,

    • 0 comments
    • 1,040 views

  Report Article

We want to hear from you!


There are no comments to display.



Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

Options Trading Blogs Expertido