How realistic would the returns be for a new options trader?

[Wushi 1]

Hey everyone,

How realistic would the performance of the SteadyOptions model be for a new trader? I would imagine fills would be a bit later, some trades wouldn't come through/close in time...all part of the learning process of course. But how much of the performance could one expect when following the trades as closely as possible? While further educating oneself on the side, understanding why the trades were made etc..

 

Kind regards!

[Kim 7,421]

@Wushi

I would like to refer you to the following reading:
 

Why Retail Investors Lose Money In The Stock Market
Are You Ready For The Learning Curve?
Can you double your account every six months?
Are You EMOTIONALLY Ready To Lose?
10,000 Hours Of Trading
How Much Can I Earn With Options?

As Mark Wolfinger writes:
 

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I understand the thought process behind today's question, but it always disturbs me.  It's just the wrong question. It would be better to ask any of these:

• How much time should I expect to devote to my options education before expecting to earn money?
• How much cash do I need before opening an options trading account?
• Do most new option traders find success?  Or do most give up?
• I've never traded stocks or anything else. Will that make it difficult to learn to trade options?
• Should I learn to trade options or pay someone else to trade for me?

These questions  demonstrate that the person who wants to become an options trader recognizes that this is not a gimmie, and that some time and effort must be expended before rewards can be expected.  The commonly asked question: 'How much can I earn?' suggests to me that the person asking 'knows' success is easy, and that the only thing holding him/her back from joining the game is wondering whether it's worthwhile. 

I seldom, if ever, receive a question along these lines: 'What does it take to succeed?'   It's always similar to: 'I'm going to succeed.  How much can I make?'

 

So to answer your question, it will depend on your skills, your learning curve, your commissions structure and your commitment and dedication. Can you make 80%/year as a new trader? The answer is: most probably no. The conventional wisdom is that your goal as a new trader has to be not to lose money during your first year in trading. I know this is not what people want to hear, but that's the truth.

Can you make those returns after you learned the basics, learned the strategies and practiced them for few years? The answer is yes. We have many members who replicate and even exceed our performance numbers. But it took them years, not weeks or months to get there. Again, not what other services will tell you - but it's the truth.

[Wushi 1]

Thank you very much, I'm looking forward to the service opening up again, and now know about the work that's required, with the longterm focus in mind!

[Kim 7,421]

You are welcome.

I always like to use the analogy of other professions. It takes 4 years to become an engineer and 7 years to become a doctor. No medical student would expect to do live operations during his first years in medical school, and no civil engineering student would expect to build bridges after 1-2 years in school. Yet many people expect it to be different in trading.

I get many messages from potential members, some of them tell me that they are new to trading but expect to make 10%/month. I tell them upfront that SO would not be a good fit for them. Over the years I probably have lost hundreds potential members because I like to set realistic expectations. I won't lie to people and tell them what they want to hear. 

[Kim 7,421]

Those who believe that trading is different that other areas in life - please read 10,000 Hours Of Trading by my good friend and college @Colibri Traderwho is our guest contributor.
 

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After Simon and Chase there have been numerous psychologists and authors testing this hypothesis and proving and disproving the rule of “The 10, 000 Hours“. For example, John Hayes researched the works of over 70 of the most famous classical composers and found that almost none of them did create a masterpiece before they have been composing for a minimum of 10, 000 hours. There were just a few exceptions and they were Shostakovich and Paganini, who took them only 9, 000 hours.
 

In trading, it seems to be the same or at least really similar. I don’t know a lot of other traders, whom after an honest conversation have not shared with me that have spent years of losing money consistently before becoming profitable. In my trading career I remember just one trader who told me that was successful straight from the very beginning. He was sharing with me that it only took him 3 months on a simulator and with the help of his trading mentor, he became successful. He is an exception because in his case- he managed to save a lot of costly mistakes by following his mentor’s trading approach. But most traders are doing it alone and that is why it takes them such a long time. Trading, as any other highly competitive sport discipline, takes a lot of hours in front of the screens and practice.

 

Of course on the other side of the spectrum there are claims like "Screw the 10,000 hour rule, all you need are a few minutes a day to master the art of Forex trading". If you read a Forex 101 book such as the Forex Profits Pocket Guide, you can learn everything you need to know about the Forex market in just one hour.

I can assume those charlatans attract more subscribers than we do, but at least I can sleep well at night. Can they?

 

 

[Matt S 0]

Good post Kim, we all need to sleep well and it is ok to make less money, but not loose a lot, I am new to the forum, hope i will stick to this , but 10 days trial might not give me an opportunity to understand and realize what is going on here ?

[Kim 7,421]

As mentioned on the subscription page:

The purpose of the 10 day free trial is to see if you like the service, the community and our trading style.

[new@options 1]

Hi Kim,

Had a trial on SO, and would like to take a look at Creating alpha--does the 10 day trial apply since I have never

trialed that service.

[Kim 7,421]

yes. One trial per service.