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I don't agree that paper trading is "absolutely useless," but I completely agree that it won't help a trader develop the emotion-management skills necessary to be a good trader. As you say, it's not the same when you know the money isn't real. But this circles back to the basic problem under discussion. You've got members complaining to Kim and Yowster that they aren't replicating the official performance (or coming close to it). There can be only three possible reasons for that: the trader isn't sizing, entering, managing, and exiting the trade correctly from a strictly technical standpoint (completely excluding the emotional component); the trader isn't sizing, entering, managing, and exiting the trade correctly from a strictly emotional standpoint; and/or the trader is doing everything correctly both technically and emotionally, but it is literally impossible to match the entries and exits of the official trades. Paper trading absolutely helps with #1, especially with complex options strategies. Changes in IV are difficult to model, and you really need to see them to understand them. Paper trading is far and away the best tactic to help with this, since you can practice the technical side and observe the trade behavior with zero risk. Paper trading won't help with #2, as you correctly say. But if #2 is the trader's only problem, then I humbly suggest that the trader really isn't at the point in their development yet where they should be paying someone else money for trades to follow. Good picks can't overcome trader emotion. Things have a way of falling into place once the emotional side is in order. The theory being urged by a few folks is that #3 is the real problem--and apparently in some folks' minds, the only problem. On the one hand, I completely agree that no one will ever be able to consistently get the same entries and exits as the official on every trade. That's true of most advisory-type services, and it's definitely true of any service that trades in multi-legged option strategies. It is hardly an SO-specific issue. But on the other hand, it's demonstrably true that you can get better entries or better exits on many SO trades. The rub is, doing so requires the trader to be on point with items #1 and #2 above. So then we're back to the issue being either one that paper trading can solve (#1), or one that it can't solve but that suggests the trader should focus on the emotional side before paying for a service (#2). Just my two cents, as usual. Take all with a grain of salt, etc.

I agree with you. It's good to see different opinions and different perspectives, although it can be pretty upsetting to be accused of misleading marketing, when in fact we do zero marketing and zero advertising. All the necessary information is in the service description. It describe exactly what SO is what it isn't. All you need to do is reading the service description before subscribing to set the right expectations. But I guess people see what they want to see. Members who feel misled are free to look elsewhere and compare what other services offer. To add to @Yowster last post, at this point he is posting 70-75% of the trades, so for his trades, I'm in the same boat as the rest of the members. And I do exactly what I recommend other members to do: being patient, scaling in and out, setting my own profit targets, using slightly different strikes and expirations etc. Yes, I miss some trades here and there, and I also take some unofficial trades, there are plenty of them. My personal account performance is very close to the official performance, and I'm trading few times the official model portfolio size and keep higher percentage of the account in cash. So it's completely doable, even for larger accounts, and it's not just few members that learned to do it successfully, it's much more. But yes, you need a lot of effort and practice to do it. Show me how to make 100% a year with no effort, and I will close the service immediately..

Let me give some perspective from my own personal experience. When I first joined SO in 2013, I was just a regular member just like everyone else. I had experience with directional options trades but wanted to learn about the non-directional trading. When I entred official trades, I didn't always get at or below the entry price but I tried to enter near the official price and sometimes waiting a day or more to enter. I tried to not pay more than 1% or 2% more for straddles as they have lower gain targets, I'd pay a little more at times for calendars since they have higher gain targets. I'd set my own exit targets, not waiting for the official trade notifications. But, from the very beginning, I tried to adapt the trades to other stocks for my own trades. And back then, it was more difficult because we didn't have the RV charting tools to make the analysis quicker and easier. Once I'd mastered the in's and out's of the trade setups and how IV changes played such a huge role, I began to come up with tweaks to the trades - that's how the entire hedged straddle setup originated right around the timeframe when weeklies became available for some stocks (I knew that in the vast majority of trades we didn't get huge stock price moves so the shorts would add to smaller gains and make small losers break-evens or small gains). Even now, although Kim and I discuss some trade ideas, we react to each other's trade posts like everyone else when we try to enter. I apply my same logic for entering Kim's trades that I did back in 2013, and I'm sure Kim does similar when I post new trades. @yalgaar - regarding your suggestions around opening trades, I mean no disrespect but I feel these ideas come from your goal of trying to match official trade performance, where the SO goal is to educate as to why the trade setups look good when we enter them. I spend a ton of time explaining setups and answering member's questions - happily doing so knowing that they ask because they want to learn. I need to spend my time looking for new trades and answering the questions, so I don't want to add extra rules and restrictions as to when I enter a trade. Since I've been at SO, in general, the disgruntled members usually are the ones that only follow the official trades and the happier members are the ones who try to use the knowledge to create their own trades. I realize that a lot of people don't have as much time to devote to trading, so its more difficult for some people to adapt SO trades to their own stocks. If you can only play the official trades, then don't go in and expect the same returns, but if an official trade has a 10% gain and your same trade winds up a loser then it's probably you who missed an opportunity to exit. I always use the analogy of when a analyst issues a stock upgrade/downgrade - does everyone get to buy/sell the stock at the same price as when the recommendation came out? Of course not and I don't think any investor would think so, so it always perplexed me as to why there is so much discussion about entering SO trades at exacly the same prices as the official (I never had that assumption when I tried to folllow and enter an official trade). Based on the discussions and unofficial trades forums, many people are actively working on applying SO techniques to their own trades - and that is ideal and makes me happy that the time I devote to answering setup/strategy questions is helping people with their own trades. For the official trade strategies, I'd encourage people to learn the stratagies and research their own setups because there are 2 main reasons that a good setup doesn't turn into an official trade: For the higher priced stocks, the allocation size is simple too big. I know that when we were doing a lot of the NEHS trades, people were using stocks like AMZN and got good results but the allocation size was orders or magnitude higher than an official trade. Same thing applies to some earnings hedged straddles for some higher priced stocks. Also trades like call ratios on AAPL and TSLA over the last month or so. Some stocks don't have enough volume/OI to work as an official trade, but for an individual investor can work well. I do these kind of trades a lot in my own personal trades (I don't mention them in unofficial trades because I know if I do then they can turn into a psuedo offical trade). If you are unsure about something, post your setup and question in the unoffical trades forum (or send personal messages) and many members try to answer your questions.

Kim. For some of us newbies. This exchange is very thought provoking for a lot of us. Even though, I’m my case. I agree with you point of view. It allows me to understand the different points of view and therefore make the subsequent post that much more relevant, when you understand the poster point of view. Troy

A suggestion for you, that is re-inforced with members posts when closing recent trades (DG, LOW, TLT). Many members pick their own profit levels and close trades without waiting for the official trade closing notification. You see people closed their own trades with these stocks earlier than the official - some at lower gains% compared to the official, some the same and some higher. Since you indicate that many of the official winning trades have been losers for you, for a starting point it might make sense to pick a profit level you are comfortable with and set GTC limit order to close your trade at that profit level.

The point with paper trading is to understand the strategies, see how a trade evolves day by day, see how the adjustments impact the trades etc... Some people also do very small tracking trades for the same purpose (although some trades can't be setup to use a small allocations). IMO, focusing on paper trade fills vs live fills is missing the point of it.

I've read this whole thread . . . nice to see it kind of come full circle - back to more of a constructive tone. It is very hard to have good "context" when using remote "conversations" via the WEB - so we all need to have a flexible and empathetic attitude when discussing ideas, Pros/Cons, issues, etc.. Good to see that most of us really do want a positive and productive discussion (even if we have to circle around a few times). In addition to your two points above, I'd like to add a third one (with some background): One of the lessons I've learned (and the hard way - as always) is that it is VERY easy to actually get into trades . . . and it is a lot harder to get out of them. This is especially true when things aren't going your way. Most non-professional traders tend to put too much hope and blind optimism into their trades - they don't manage their risk well (getting into and especially getting out of trades). It is easy to be emotionally involved with a trade - and not let it go and move onto the next. Overall trade and risk management is KEY to making money in the equity markets - all of them. I've learned to manage my trades a LOT better due to what I've learned on SO --- and this applies to general stock picks as well as options plays. To me (outside of good entry strategies), it is the most important thing I do. When something isn't working, get out of it, stop doing it, re-group, review your trade logs, seek help, etc.. Don't keep riding a three-legged horse, hoping it turns into a four-legged horse. Also, we have to remind ourselves of the fundamentals --- did we have a good setup/strategy, has anything changed in the overall market or context that requires us to adapt/morph what we do? These last few months have caused me to constantly review/analyze what works FOR ME and what doesn't. In the end, we are all responsible for adapting what we learn on SO to our style of trading - given our time allotments, account size, technology we use, mindset, emotional makeup, etc.. I give @Kim, @Yowster and many others credit for showing their ugly babies, discussing what isn't working - in THIS market and being willing/able to adapt and change. This is key . . . Anyway, too much coffee on a Saturday morning . . . . hope you ALL have a fantastic weekend and a very successful next week in the markets!

@yalgaar If you haven’t already, and you believe the difference in paper trading and real life fills is a major problem, then perhaps try using a direct market access broker like the pros are using to get the best fills possible. Cutting the middlemen wholesalers out of the equation by using Interactive Brokers, for example, should make a significant improvement in your fills. As well, using Option Net and other resources available should be helpful too. To me, being a fellow newer member and using a broker that routes orders through wholesalers but then concluding profiting from following official trades is virtually impossible would be similar to me being an above average golfer with about 10 handicap that uses Wal-Mart clubs saying that breaking par is virtually impossible with the best pro as my caddy. The caddy may help drop a few strokes. A lot more practice and a lot more lessons will usually be needed for several months to a couple years to drop those several more strokes. Then upgrading to the best clubs fitted to your swing (customizing IB to your workflow) and using other game improving resources the club pro suggested for me to use should cut off a few more strokes on average to get me consistently breaking par. I can’t expect to break par consistently with my current skills and gear even if I hire the best pro golf trainers to be my caddy every weekend. Consistently breaking profit in options trading is a transformative journey similar to that of being able to consistently breaking par in golf.

@yalgaar I never believed that anyone can be successful by blindly following someone else. I still don't believe it. Learning and finding your own style is the only path to success. I'm glad that you are glad to find someone with similar experience, but if you really want to succeed, maybe it's better to listen to dozens of successful members who found a way to make very good money with SO, instead of former members who cancelled after just few weeks. Most of our successful members will tell you that they started with paper trading, and this is something that most industry experts agree on, but you find it completely useless and waste of time. You ask for advice, but when advice is provided, you dismiss it as useless and/or insulting. There are hundreds of services out there that will gladly take your money and will tell you how easy it is to make money with options. You are welcome to try them and see for yourself how easy or difficult it is.

I'll make a general statement regarding SO strategies and a new members level of experience coming in. Understanding IV ramafications are a huge part of these trades, and if you are new to options or have only used simple strategies then jumping into many of the SO style trades are like jumping into Calculus but bypassing Algebra along the way. I can appreciate the learning curve, but knowing how IV changes affect trades and how the typical earnings IV behavior plays out makes it much easier to setup your own trades. If you make directional trades, you can more easily set things up to minimize IV effects (I think TV shows like Options Action do this on purpose with the simple directional veritcal trades where IV effects are minimized, so they don't have to get into the details of IV effects), but using trades that start out non-directional you really need to get a good knowledge of IV effects and behavior.

I would like to share with you an email I got few days ago: "Kim, I am new to trading options. Matter of fact, I am going to try to make it my new career. I have been reading your strategies and understand some of it. Other parts are a bit confusing to me unless I actually see the steps one-at-a-time and can see what to look for and what the results will be. Can you recommend any books or internet sites where I can learn/practice your strategies? What do you look for in an option? Where do you find the information? I have set aside $10,000 to work with in the beginning in hopes of doubling it at least yearly." Don't you find it amazing? The guy admits he is new to options, but wants to double the account "at least yearly". My reply was: "There is a lot of hype surrounding options trading. Some writers on SA will make you think that doubling your account is an easy task. If it was, we all would be millionaires by now. My advice to you: if you just start options trading, preserving your capital during your first year of trading would be a great achievement" Here is the problem: Making money with options is easy. Doing it consistently is much more difficult. People see all the hype and think it is an easy task. To become an engineer you have to study 4 years, and probably another 4 years (at least) to become a good one. Why people expect it to be different in trading? I see sales pages all the time that show you 200%+ returns on some cheap options they bought. But what they don’t tell you is that those trades happen once in a while and are not consistent. Maybe they did make 200%+ on a trade, but that doesn’t happen all the time and to set your expectations that high would be very ignorant. Setting realistic expectations is very important. I'm a big fun of the "slow and steady" approach. Aim for many singles instead of few homeruns. Be patient. Be prepared to lose for a while - set your goal as capital preservation instead of doubling your account. Think about the risk first. If you take care of the risk, the profits will come. Here’s a quick list of some things to consider as you write down your expectations and goals. 1. More traders lose more money than they make. The figures are a little off depending on who you talk to, but it is 80% to 90% (maybe more) who end up losers and leave the business altogether. 2. Only a small percentage of retail traders are profitable. The numbers get even smaller if you look at a 3-5 year average which measures consistency. Don’t get discouraged, we all fell off the bike before we learned to ride it right? 3. Paper trade first with a small amount of money. I always recommend members to paper trade everything first. This way you learn how to enter orders, adjust trades, and more importantly learn you’re your mistakes without losing real money. Then when you are ready to invest real money, keep it small. Prove yourself that you can make money with 10k, then increase it to 20k and so on, but do it gradually. 4. You will have losing trades. Too many people quitting after a streak of 4-5 losing trades. Losing money is part of the game, the trick is to keep the losses as small as possible. 5. Don’t expect to become financially independent. Don’t you think it’s completely unrealistic to expect a small account, say under $5,000, to generate consistent income to replace your regular job? I aim for many singles instead of few home runs.

This is actually an excellent question. Lets take an example of 5 trades per month returning 10% each. Some services would report it as sum of all trades (50% return). This assumes that you had just one trade open at any given time and allocated 100% of your portfolio to each trade. But some services would report it this way even if they had more than one trade open which would make it simply impossible to allocate 100% to each trade. The next method is to report an average of all trades. This assumes you allocated 20% per trade, with no cash balance. Some services specifically recommend to keep at least 20% of the portfolio in cash, but report performance based on full allocation. This is simply not realistic and not reproducible. I report model portfolio performance based on my recommended allocation of 10%. So in the above example, I would report 5% since I allocated 10% per trade and had 10% return per trade. For my portfolio, I have maximum 6 position at any given time, so 40% of the portfolio is in cash, but I still report return on the whole portfolio, not on the maximum invested capital. This reporting is called cash adjusted because it takes the cash reserves into consideration. Reporting returns this way grossly underestimates the return compared to other services, but I want to be as realistic and transparent as possible. My model portfolio performance reports what was possible with fairly conservative allocation.

My preferred broker is thinkorswim ( TD- ameritrade)has the best price/order execution both to buy and sell, IB is the worse broker i have seen, you pay less but in execution of the orders you pay much more than your saving is.

To everyone else I meant to say in my OP I had 5 winners AND 5 losers for -6.2%. That was in May. Wish we could edit. I don't have a PC just using my Android. I don't feel it proper for me to advertise or even mention by name another service on this forum. Even though the proprietor can be abrasive and rude I still won't stand in his "store" and tell out about the competitors. Kim responds to any form of criticism no matter how diplomatic and polite it is in a way I find to be overkill and harsh. Certainly if someone is being a jerk and making stupid comments they deserve it. But...you tend attack in relentless fashion even to polite comments that aren't attacking SO as much s just expressing what they've experienced. That's why I decided to not be as diplomatic in this response.