A Trader Who is Ready to Quit His Job

A prospective client named Paul told me he’s ready to quit his job and potentially take $100,000 and turn it into $500,000 by following us in the $10,000 Challenge. I am referring to the $2 to $10,000 Challenge over the course of three months. It is now in its third round after two successful series. Paul is asking if it’s doable.

My response was that technically, yes, most definitely. Realistically, being somewhat new to options, there will be other implications to deal with, in particular, the mental aspects of trading.

This business involves much discipline and patience — two things that need to be honed over time and through experience. I had been doing this for years before I realized some very important aspects of trading, much of it not having anything to do with the stock market at all. I had to learn more about myself and how to maintain total self-control in the face of adversity.

For example, markets dropped like a rock recently when Fed Chair Powell spoke of how they were in no hurry to lower interest rates quite yet. The SPDR S&P 500 ETF Trust  (SPY) tanked eight points as a result. The corresponding call option’s value vanished a whopping 75% in one day. Imagine had Paul invested just $40,000 in that trade and suddenly it was worth only $10,000. How would he feel?

That’s exactly what happened with people in our trading room recently. Some were devastated. The day after the Fed announcement, SPY started to climb back up. Some folks wanted to cut losses and sell, but I encouraged them to hold on. It was about to poke through resistance.

I explained how and why I thought this rally could well continue back into the upper range, which I identified. Then, Ahren Stephens and I demonstrated how to repair their positions, should they want to truly exploit this drawdown. By the end of the day, SPY had reached all-time record highs. Those who followed my direction “made out like bandits”, as they say.

The following morning was more of the same…  SPY retraced to support but picked up strength and topped out at yet another record high over $496. The naysayers were shocked in disbelief.

The burning question is, with such huge sums in a single trade, will you have the stamina to weather market vacillations? This all happens very quickly, if I may add. I suspect Paul would have been quickly shaken out.

For those reasons, it is wise to ramp up your account slowly and methodically, taking care to preserve your capital. The enemy is not so much the market; in fact, the market gives you opportunities all day long. The “enemy” is the person in the mirror.

The answer to Paul’s question is that it is possible if he pays attention, follows the rules and retains complete emotional self-control… but it may not be easy, especially as a newbie. Those who are successful have years of experience. Those who are successful exhibit total emotional control. Those who are successful have been in our Trading Room for a long time and have been exposed to many scenarios.

If you want to be successful at trading, the time to start is now. Join the Trading Room and know that, within a short period of time, you will understand the jargon and can follow along. After that, you will learn our techniques, tricks and traps. Stay longer and master it all so that you can be exposed to whatever the market can throw at you. Then, you will be skilled in the art of day trading SPY options — confidently, consistently and profitably.

Ahren and I have many years of first-hand experience behind us. When his friends were out playing sports and chasing girls in high school, Ahren spent his time in the library studying charts. He opened his first trading account at the age of 17. As for me, I’m a late-comer, having learned this as an adult. In fact, an elementary school teacher, Miss Hickey, told my parents I would not amount to anything related to numbers and that I should follow the arts. Maybe that’s why my parents made me take piano lessons. I will never forgive them for that.

Look, if you already know what calls and puts are, subscribe to our famous Trading Room. If you have no clue about options, please join us on Sunday night at 8 p.m., ET for our exciting “Intro to Trading” webinar.

Incidentally, I got pretty good at playing Grandfather’s Clock for our annual piano recital, so all was not lost.