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Short Term Options Trading My short term trading account is dedicated almost exclusively to SteadyOptions strategies, such as Straddles, Iron Condors, Calendar Spreads, Butterflies, etc. This is mostly non directional short term options trading. We recommend allocating no more than $100,000 for SteadyOptions strategies. We always have been very upfront about the fact that those strategies are not scalable to large accounts, and I follow those guidelines in my personal account. No position is larger than $10,000 (10% of the trading account), and once the account value significantly exceeds the $100k threshold, I withdraw money to get it back below $100k. I personally trade most of the trades we share with our members. I'm using Interactive Brokers for my trading account, and also for my long term accounts and TFSAs. On average, this account value is typically around $60-100k, which is less than 10% of my investable funds. I keep at least 20-30% of the account in cash. My target for this trading account is triple digit yearly return. Long Term Investing My long term funds are invested in the following way: About 80% are invested in index funds. The index investing strategy is based on Canadian Couch Potato principles, and is divided equally between Canadian, U.S. and international stocks and Canadian bonds.The Couch Potato strategy is a way of building a diversified, low cost and low-maintenance portfolio designed to deliver the returns of the overall stock and bond markets at minimal cost. While most investing strategies are based on picking individual stocks, making economic forecasts, and timing the markets, Couch Potato investors recognize most of these activities are counterproductive. They understand that investors give themselves a greater chance of success by simply accepting the returns of the broad stock and bond markets. To boost the returns and provide protection against market crashes, I implement variations of Steady Momentum and Anchor Trades strategies (put writing and hedging). In addition, I apply a very moderate leverage (around 120-130%) by selling ATM SPX options every month (Steady Momentum investing style), but also maintain a constant hedging by buying far OTM SPX puts, using up to 2% of the account. About 10% of the long term funds are invested in growth companies with strong fundamentals, using various options strategies. My target for the long term investing is 15-20% per year. Real Estate I was fortunate enough to purchase few rental units in good areas of Toronto and Ottawa before prices took off. All those units are cash flow positive and provide me with nice stream of income every month. I intend keeping those units for the long term and use them as part of my retirement income. Conclusion As Jesse mentioned: "Diversification is your best friend. There are many ways I diversify my portfolio including asset classes (stocks, bonds, cash, alternatives), geography (global stocks and bonds), and factors (market, term, size, value, momentum, trend, volatility) just to name a few." Diversifying my investments provides me with different sources of income and also reduces the volatility of my investments. As you can see, I'm putting my money where my mouth is and trading the same strategies we offer to our members.

So, let’s have a deeper look into those options trading experience levels and what they really are. Level 1- The Beginner This stage starts when you realize there is a way to make money while staying at home. At this stage you are probably neither aware of the dangers of trading nor of where to start looking to understand trading. In this stage you are full of enthusiasm and want to conquer the world. In this stage, you are starting to realise that more money can be made through leverage and you underestimate all of the dangers that trading on margin carries. This is the stage that probably 20-30% of “traders” are quitting. Level 2- The Student The second level of trading is the learning period. In this period, you are trying to lay your hands on literally everything that is trading related. This is anything from trading articles, free e-books, hard-copy books to paid courses. You are starting to realize what an immense field trading is and how difficult to grasp it is. In this level of trading you realize that you need to choose the right trading strategy. This should be a strategy that preferably fits your personality. You start asking yourself questions like: Should I be a day trader? Maybe, I will be better off as a long-term position trader or swing-trader. What would be the best strategy to fit in my daily agenda. This is the level where you are also asking yourself- can I do this part time, or I should quite my job to start trading full-time. This is also the level of trading in which you are jumping from one trading strategy to another. You are too eager to realise that one of your trading buddies has just mastered a different trading approach and you are too excited to try it out. The trader inside of you is not really paying attention to money management or risk management. You just want to make “big bucks” and preferably quick. This is also the stage that probably 30-40% of the “traders” are dropping out. Level 3- Tenbagger Trader “Tenbagger” is a term introduced by the famous investor Peter Lynch. It is usually used to describe an investment that grows ten-fold. This is the level of trading, in which a trader has finally mastered how to hold a position longer. He/she are not making the same silly mistakes that they used to before. Now is the time to really shine and start bragging in front of your colleagues and friends. Maybe time has come for you to consider quitting your boring job and working full-time as a trader. Or maybe you can send your track record to one of the prop trading houses and ask to join them. The world is your oyster and you are asking yourself how come you did not start trading earlier in your life. You are tapping yourself on the shoulder and start thinking if time has come to consider other types of investments. Maybe you can re-invest; or possibly you can find another hobby. This is the level of trading in which you are asking yourself the question if you should start your own trading blog and share your strategy. It is all great until you wake up one morning and you realize that you were exposed too heavily and received a margin call. You feel like it is the worst day in your life. You want to cry (and you probably do) and start blaming yourself how stupid you were. This is the level of trading, in which you are releasing how important risk/money management is and how underestimated in your trading strategy it was. This is also a stage in which another 20-30% will call it a day. Level 4- The Five Percenters (a.k.a. 5%ers) 15 years ago I read somewhere that only 5% of traders really make it. I am not sure whether this percentage is right or is more like 0.5%. What is really true is that only a fraction of traders do really make it to this level of trading experience. Reaching this level does not mean that you will never fall back. There is no guarantee that you will be a 5%er forever. It means though that you have learnt the ropes of trading and know how to manoeuvre in the deep waters of this ocean. Being a 5%er means that you have showed stronger character than the majority of other players and you can finally tap yourself on the shoulder. But you don’t do it. You don’t do it, because you have learnt the hard way that the more you brag about it or the more excited you become can bode only one thing- losing your 5%er status. Being a great trader is not a natural talent. It is a skill that traders develop over the years. Being a 5%er means that you not only know where to take profit; more important than that- you know where to cut a losing trade. This level of trading teaches you that to know how to live in the unknown. Trading on this level means that you can watch the screen and still be objective. Being a 5%er means that you can hold a bit longer until price finally reaches your target. On this level of trading you are not thinking about trading systems anymore. You have turned into a risk:reward calculator and a pattern-recognition machine. You are never again afraid of not taking this or that trade. At the same time, you are never too afraid to enter in a trade slightly later. You are just a master trader. CONCLUSION What is your level of trading? Are you sure trading is for you? Trading is a field that makes you or breaks you. Every day is different and you need to be flexible enough to understand that. In this article I shared some of my thoughts about trading in 4 levels. Sometimes being a beginner is closer to the 5%er than you think. Feel free to share your comments in the section below. About the author: Colibri Trader is a price action trader that is constantly looking for the apha. In the meantime, he does not forget to enjoy life, travel and even mentor other traders. This article was originally published here.