My Trading Licks
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Honesty
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Quality
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Cost
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Support
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Verified Trades
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User Experience
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Summary
Mike DiBari of My Trading Licks is the real deal, and an inspiration to young and old traders alike.
Through the crucible of fire and torment, this guy has traveled the path from failure to success.
He is an unconventional renaissance man that has created something totally unique. And as far as I can tell, totally unique to the trading community.
The track record of trades are in fact, the real deal. And fully verified.
Even if you do not subscribe our purchase his advisory service, the story of his success is worth a thousand trading books. A testament to will power, focus, and overcoming the fear of being unique.
Thanks for reading today’s review of My Trading Licks
What is My Trading Licks? In a nutshell, My Trading Licks is an SP500 signal service.
Before I jump into the ‘nuts and bolts’ of this review, I want to inform the audience that I have an affiliate relationship with My Trading Licks. If you purchase a subscription, TradingSchools.Org will be receiving an affiliate commission of 25% of your purchase.
All of the screamers and haters can now climb up your soap boxes and commence the verbal thrashing. But as always, this stupid blog is a massive time suck with plenty of expenses. The only way to keep these reviews (mostly negative) moving through the proverbial sewer pipe, is to form the occasional alliance which keeps the lights on.
For newer readers, you should know that I take a positive review with complete seriousness. In the past 3 years of writing reviews, there has only been a handful of positive reviews. In fact, maybe two positive reviews per year. I understand that in many instances, the life savings of many readers are ‘on the line.’ I get it. So with that being said, and being fully transparent, let’s jump into this.
Who is My Trading Licks?
My Trading Licks is a one-man operation. The owner is Mike DiBari, currently living in the New England area of the United States.
My Trading Licks is currently occupying the following web and social media profiles:
To really understand Mike DiBari, you have to first understand his back story. For nearly all of his adult life, he has been a professional musician and guitar player. He has played in numerous bands, worked in various music stores, produced lots music, teaches professionally, and is absolutely obsessed with the electric guitar.
I spent an entire afternoon watching all of his YouTube videos. The following YouTube video is a sample of Mike playing…
Why did I include this video? Is Mike DiBari being an excellent musician relevant to trading? In my opinion, it does. Being a professional guitar player takes a lifetime of practice and dedication. By watching Mike play, you get the sense that this guy is focused on mastering a particular subject.
Watch this riff of Pinball Wizard..who in the hell can play the guitar like this?
As I watched these videos, I thought to myself…what if he put this same focus into trading?
My Trading Licks Track Record of Trades
Mike DiBari posts his track record on the following linked page.
As you can see, it is quite impressive. Let’s go over a few details that I find important, and very revealing. The following is based upon a starting balance of $10k.
- 2014 had a return of 54.97%, maximum drawdown of -1.41%, profit factor of 32.06.
- 2015 had a return of 32.29%, maximum drawdown of -21.02%, profit factor of 1.76.
- 2016 had a return of 30.56%, maximum drawdown of -24.27%, profit factor of 2.03.
- As of July 14, 2017, a return of 21.3%, maximum drawdown of -1.57%, profit factor of 2.32.
What is very revealing is that Mike DiBari takes only an average of 1.8 trades per month. With extreme focus, he applies all of his energy to only a single market: SP500.
Are you starting to see the parallel between his singular focus on mastering the guitar vs. his singular focus on the SP500?
But are these trades real? My next step was to contact Mike DiBari. And I wanted to see these trades with actual brokerage statements? As you are probably already aware, plenty of people on the internet make wild exaggerations about trading performance.
During the month of June 2017, TradingSchools.Org began a series of emails and phone conversations with Mike DiBari. First things first, we notified Mike that a review would be written. So he better be able to prove these fantastical returns. To our surprise…he was completely open and honest. He simply opened the book and we were able to verify the authenticity of the performance summary. He really eats his own cooking.
As I interviewed Mike, I began to realize that he is definitely not the typical trader that I interview. He is definitely an ‘out of the box’ thinker.
Mike DiBari Trading Method
Most people enter the trading game by learning to draw charts and spot chart patterns. They will then begin applying trading indicators. At which point, they begin trading and usually lose their money. Mike is no different.
He started off just like you and I. He read all the books on technical analysis, learned to draw chart patterns, tried day trading, swing trading, the whole enchilada. And nothing worked. He knew he had to dramatically alter his course. And so everything he had purchased and learned was tossed into the trash can. He realized the hard way that the vast majority of trading products are pure nonsense. Produced by charlatans and fakes that could not profitably trade themselves. Always willing to sell the next indicator or software package to the desperate and the naive.
Mike tuned it all out. Threw it all out. And took a radical path.
In our interview, Mike described that the first thing he needed to do was completely focused on only a singular market. Become a master at one market, like playing the guitar.
And so, did he go out and purchase a backtesting program? Nope. He fired up Microsoft Excel. No charts! No fancy indicators! Just a good old fashioned spreadsheet.
And what data did he use? Here is the crazy part… volume. He created an oscillator that measures the ebbs and flow of stock market volume. That’s it.
Is there anything subjective to his method? Nope. Everything he does is backtested. From scratch, he programmed and built several trading models that specifically look for anomalies in trading volume.
Try and imagine this for a moment. Here is this professional guitar player, with no experience using Microsoft Excel, creating these trading models using only volume. Honestly, I wouldn’t even know where to start! But this goes to show the level of focus and dedication that this guy applies to something he chooses to master. He is a real renaissance man. An out of the box thinker that is comfortable moving away from the herd mentality.
Say what you will, the actual results speak for themselves.
Mike DiBari does not do ‘Educational Products’
With most vendors, they usually have an educational product. Some sort of $3,000 package to “teach you the secrets” of trading. But Mike wants nothing to do with selling that sort of stuff.
His focus is on mastering his trading by continuously programming and expanding his knowledge and expertise at only a single subject. Mastering the direction of the stock market.
Does Mike have a problem with chart patterns or trading indicators? Not at all. In our interview, he describes only having a problem with things that don’t actually work. He tested and programmed everything that he could get his hands upon. Nothing worked with consistency.
The only thing he could find that actually tested well, and stood the test of time…was raw volume.
I asked Mike to expound upon this concept, he replied “Volume cannot be gamed. It is the truest expression of crowd psychology. And the only way to beat the stock market is to do exactly the opposite of what the crowd is doing.”
Sounds so damn easy. But so hard to actually pull off. We have all been there. Piling into a trade when the chart looks so inviting. Only to quickly discover that the chart pattern was just a mirage, a figment of our imagination. A byproduct of a flaw within the human mind…its something called Apophenia or Patternicity.
These flaws work great for a caveman or a homeless person. But are absolutely terrible when applied to financial markets.
That’s what Mike focuses upon. Building models that define ‘group think’ in financial markets, and then exploiting the tendency for crowds to be wrong.
Wrapping Things Up
In an earlier part of this article, I included a link to Mike DiBari playing the guitar. Specifically, the riff of The Who’s Pinball Wizard.
I included that riff specifically, not to highlight Mike DiBari’s guitar mastery. Instead, I want the reader to understand the underlying meaning and how this relates to trading.
If you remember, the Pinball Wizard was a character from the rock opera movie, Tommy.
The story of Tommy is about a young boy that witnesses his mother being murdered by his abusive stepfather. Young Tommy goes into complete shock. He becomes “deaf, dumb, and blind” to the world around him. Eventually, Tommy stumbles onto a pinball machine and discovers that he is a natural prodigy. Fame and fortune follow as Tommy becomes a world champion pinball player.
Nobody could understand how this “deaf, dumb, and blind kid” could become a master at something that required such intense skill. But the secret to Tommy’s ability was not in his ability to master ‘what worked’ for everyone else. The secret was his ability to drown out the noise of the crowd. The ability to see the world through his own personal, and unique lens. A perspective born from pain and disappointment.
This is what makes Mike DiBari a special trader. He has discovered that by throwing out everything he learned from ‘the crowd’ and then ultimately creating something truly unique…the market has rewarded him.
This is the true lesson. You must be an original thinker. Thanks for reading. I will leave you with the original The Who: Pinball Wizard…time to turn up the speakers.
He’s getting hammered since the beginning of February. 4 wins, 21 losses, including 19 losses in a row. I know every system goes through ups and downs but I have a difficult time weathering 19 losses in a row. He may need to tweak things a little.
Tony, Thanks for the comment, but if you look at our Trade History (http://mytradinglicks.com/trade_history/) you’ll see that is simply not true. Since February, we’ve only had 5 losses in a row (which in fact is the longest losing streak we have ever had since 2014). We just recently closed a trade that was the 11th straight win for the TVO System since July (11 for 11). That’s 2 solid months of nothing but winners. And if you think that’s just a one time lucky streak, please read how luck compares to skill in this post at my website: http://mytradinglicks.com/2018/09/13/tvo-market-barometer-9-12-calculated-skill-or-a-stroke-of-luck/ -MD
In a bull market every long is a genius. He has only been buying SPY calls, and that was fine until this February. So he has obviously made money in the last 3 years, and now down -7% YTD when the bear market hit. That is from the +10% of the high mark at the end of January.
If you want to repeat his strategy for free, just buy the SPY calls at every pullback. You might be as lucky as him. No spreadsheet or math needed…
Offbeat subject. What happened to the Sean Kozak Goldenzonetrading review? It’s not here anymore. I can not find it. Or is someone being paid off?
Sean’s getting a new review. Big improvement.
I have no experience in options. Does this system useful for simple forex users (sell/buy)?
With so few trades it won’t be hard to plot each one on a SPY chart and get a sense of his strategy and whether or not any of the critiques lobbed at him are fair. Just a cursory look and it is clear he’s buying lots of time on his options, and exiting well before they expire. This takes care of a lot of the decay problem.
I also noticed one trade where he exited one Call option trade that had more than 3 weeks left to expiration, and the next day bought a new Call option with 3 months to go before expiration. This is hardly the sort of gambling implied by some of the comments I’ve seen. The beauty of a service like this is you can see years of history of how the trades worked, and if it is likely to match your needs or temperament. Personally I don’t think I could have lived through that early 2015 string of losing trades. My other only concern is if you miss any one of his trades it’s a huge percentage. So you’d better be prepared to trade while on vacation, and not let things get lost in spam, or get overlooked. But again, you have to love the ability to put each of these trades on your own charts and study them – whether to reverse engineer what he’s doing, or to see if you think you could improve upon profit and loss exits, or anything else.
Holy cow this guy barely trades. I mean there are months where he placed 1 trade or no trade at all.
Isn’t paying him $90/month is going to be like a bigger spread/commission?
Yes, the service is definitely expensive. This was the reason why I dropped him a few pegs on the price.
Truly what is most interesting about this review is that the revelation that the market tends to reward originality. And DiBari is very much an original thinker. A great lesson for anyone attempting to master financial markets…you must be willing to be “uncomfortable.”
Another great lesson is the power of persistence. I still cannot wrap my head around the fact that he is using only a spreadsheet, and building functions to analyse and back-test theories. Ultimately settling on volume, and not charting.
This reminds me of another trader, that REFUSED to allow me to publish an interview. He was close, but ultimately decided he wanted to remain anonymous. He trades gold. And without revealing too much…he designed his own supply/demand indicators based upon the monthly sales of retail gold coins.
He built a tracking algorithm that measured how much gold was being bought and sold on Ebay. And, he build custom indicators that measured the ‘premium’ of numismatic coins. What is premium of numismatic coins? This is the difference between the spot price of gold and the historical value. Like a baseball card…its just a piece of paper, which has a value, and a historical value which would be printed image. In the end, he had two unique pieces of information: 1. day to day sales volume of retail gold on Ebay, and 2. the demand for premium and historical value.
Its about being unique and viewing the market through a different prism. The markets reward original thinkers.
How much money has he made trading gold? In the millions. Started very small. With little prior experience.
Very interesting. Wish we could know about the “gold trader”.
I will dig deep. Surely I will find something in his ( MTL) trading that will teach me a thing or two.
What vehicle(s) does the mystery gold trader use (Gold miner ETFs, GLD? GLD options?) Just curious. Love your service and like My Trading Licks service as well.
Darn, I buy junk silver coins on Ebay and never thought about tracking its price in relationship to futures. Hmmm, I might have to look at that.
When I read this my first though is a person that can beat the S&P by trading the SPY I am interested. Then of course my 2nd thought is why would GS not hire him and pay him a fortune.
Then I go to his site and look at his trade history and I get the answer. You did not think it might be important to mention he is trading OPTIONS. Mostly call options in a what has been a bull market with very few pullbacks.
Let me ask you if you take all your savings and buy an option and you get a quick large drop in the market what just happened to your savings. GONE!
Even though I am sure someone will say something to the contrary, but trading only options are high risk and a service like this has to be completed evaluated; such as what percentage of the portfolio is invested in a single option trade; to determine can it be useful as a part of someone’s investment strategy.
Anyway my 2 cents worth and take it for the price paid is realize this person has made his money trading call options during a bull market, be forewarned. I would like to see someone with a long track record that beats the S&P by taking less risk personally.
@Rob B…how do you arrive at the conclusion trading options are “high risk”? Anytime I can enter a trade with a fixed amount lose, there’s no risk involved. Based on the size of my portfolio, I make the decision how much I’m comfortable loosing on any given trade. Then the trade either works or it doesn’t. It would only become “high risk” if you risked more of your portfolio than you should have. But that has nothing to do with the overall evaluation of this company and trading options in general.
Tom & Cyn – nice to see someone besides me complain about and question the self anointed Deputy Sheriff (a wannabe Emmett). The fact is he will never be satisfied with any review here – especially on a trading room where he has no financial interest. So his modus operandi is to bash everything — which reflects his own losing experience.
DTchump,
I respectively responded to poster that made thoughtful comments. As unusual you add no value or make no valuable points. Your only purpose in life is to attack other poster. I doubt you even know what an option is or ever traded one.
BTW what a stupid comment, “The fact is he will never be satisfied with any review here” Gee have you ever even read my comments on most of the reviews. You are beyond idiot! Again just complete Fake News. Do you work for CNN??
Once in your life try and post something useful. Gee post a recipe if that is all you got.
Rob
I do respect your opinions and have enjoyed many of your past post’s
but I don’t think CNN and fake news has anything to do with this.
Your unrelentful admiration of Trump though is kinda disappointing as I always thought of you as an intelligent person unlike Trump and his uneducated base of white trash, southern redneck racists who are still pissed off that slavery has been abolished. Hopefully your’e not part of that.
When has Rob ever slanted his trading views with political views? No one likes to hear the truth but options create a whole new risk factor , time where your investment can go to zero. This depends on option type and strategy. His trepidation is just an honest question of what is the exposure. He is asking for more details, just smart imho.
Chuck R
If you disagree, then certainly make an argument about which specific point you disagree with. It is great to have more than one opinion on this topic. Maybe you have experience with trading options that might want to share. I think taking X dollars in investing in a options, a derivative product, is inherently more risky that investing the same X dollars in the underlying stock.
“Your unrelentful admiration of Trump ” I am not aware I have ever stated my opinion on Trump. This is not about politics. That response was a reply to a specific poster who historically sole poster is to attack other posters using terms that are commonly in the news. But as I have stated I am a Libertarian.
Chuck R,
I also cannot help but notice your writing style is very similar to DTchump’s, who has a history of making up alias to make it look like others are agreeing with him and voting down those poster’s post. You take words complete out of context and then make wild accusation as if they are fact and you never posted a single fact about options, the article, or made a single counter point to my comments about options, which is exactly what Dtchump does.
This is the problem with a non membership site, where anyone can just make up alias and post like they are 10 different people.
I never read a post where Rob got political. I am not sure which reference you are referring to. Unless I missed something, I haven’t seen it. Also, I happen to agree with Rob. IMO, options can be riskier. The time decay alone can be a problem especially for a beginner. Now of course if you are in and out that wouldn’t be a problem, but if I’m not mistaken this trader doesn’t trade that way, more power to him. For a beginner especially there is much more to contemplate when trading options. I believe one must really have a grasp on what trading an option entails.
dtchum, AKA dtchump, if you read Tom and Cyn’s reply to Rob B’s comment the tone contained no animosity they were able to challenge his opinion and state their own in a measured and mature way. By doing this, their comments added to the discussion about the service that has been reviewed. Your motives for your post are transparent to anyone who reads the comments here regularly. You lack the intellectual capacity to spar with Rob B in the comments so you lash out. By doing this you are only reinforcing the opinion that many regular contributors to this blog have of you. Your only purpose is to derail the discussion. Find something more useful to do with your time.
I find myself agreeing with Tom and Cyn. Despite the complexity of time decay and expiration dates, the defined risk of options makes them no greater risk than owning the shares especially as stops for stocks are executed at market price and that price can be lower than the stop price you set.
Do you see how easy that was dtchump?
Why can I do not just be able to have intelligent argument with posters like you.
I have to comment on something you post as I tell people this all the time:
“as stops for stocks are executed at market price and that price can be lower than the stop price you set”
I have people tell me how the stop order will protect them and I say that is on paper only and if you get a flash crash that stop is worthless. That statement you made is the worth the price of admission and I hope others realize how important it is.
“there’s no risk involved” I wish I could find such a trade. As I stated above option trading can be part of an overall investment strategy. I do it all the time. But if you are only trading options with all your savings then that is high risk by an definition as you have 100% of your saving in options that expire.
My only point is go into this eyes wide open and realize both upside and downside risk of trading options.
You say, “Let me ask you if you take all your savings and buy an option and you get a quick large drop in the market what just happened to your savings. GONE!”
Well, that would happen if you bought stock too with all your savings. No different. Risky behaviour is risky behaviour, and putting your entire account into one position is risky, no matter what your instrument. Whatever one trades, one must manage their money with proper risk controls.
Options have many uses, including speculation. Just like stocks have many uses, and do not always need to be an investment. For they that know what they do, options are easier to use for speculation than stock, because, despite the more complex nature of options pricing, and time effects, it is still much easier to have a defined, fixed risk using options that it is using stock.
It is understandable that as you have the mindset of an investor, you may denigrate options. However, as an engineer, I would suggest to you that maybe you might want to look at options in a more neutral light. After all, I do know that you have been selling call options against your stock holdings. That being said, however, as I said in an earlier post, if one is holding the stock primarily as an investment (as you are), it makes absolute sense to write calls against the stock for either of the oft-stated reasons. Afer all, in that case, the stock being used as an investment, to be a part-owner of the company, and not just as a speculative vehicle.
For example, covered calls are often presented as absolutely safe, and a means to either “collect income” or to “reduce cost basis”. There are even some misguided gurus who insist that covered calls are the ONLY safe way to use options, no doubt because they are unaware that the risk profile of a covered call is the same as that of selling a naked put. That means that buying stock, for the express and sole purpose of writing calls against it, turns out to be not “the only safe way to use options”, but one of the more risky methods to use options for speculation. Sometimes, taking a deeper look is worth the trouble and the effort. 🙂
Cyn,
There are lots of uses for options. No argument there and even Buffett uses them as all great investors do, but they did not make their wealth via option trading. Can anyone name a great investor that got his wealth trading option. There have been numerous studies about option trading and the results.
Here is the difference IMHO and take it for want it is worth on a straight up owning stocks vs owning call options and you get a large market correction.
You have all your saving in stock own stocks and get a 30% market drop. This happens to all the great traders. Yes Buffet has suffered through these to. And lets say it take 2 years to recover. So you net worth drops 30% and you continue to collect your dividends. And in 2 years, actually less with dividend, you are back to even.
You own options and get a 30% drop and you are wiped out as they expire worthless.
Maybe the statement got lost in the verbiage. The point is that anyone having all of one’s savings in stocks, or options, or anything that has an element of speculation involved, is itself the risky behaviour. “Risk” is what has to be managed, no matter the investment or speculation vehicle. Stocks, bonds, options, commodities, real estate, it does not matter. One can invest in a safe or risky manner. Being all in with one’s savings is not what needs to be examined. ANYTHING used in a risky manner is asking to get creamed.
Take any real stock or ETF, specify the size of the account that is to be all in. I will demonstrate how a properly sized long ATM options position would be better off in a 30% selloff.
To wit, the options are leveraged, so the options position that matches the stock position is not the money outlay, but the shares controlled. THEY are what must be equivalent, and so, properly sized, the options trader would actually still be mostly in cash if his position is controlling the same number of shares as the stock trader bought.
If instead, the options trader were to, in money terms, outlay money equivalent to the stock trader’s position, the options trader’s massively larger leverage comes into play. Any trader who bought options in that manner is the one using options in a risky manner. It is not the options that are the risky instrument. It is the trader who is using the instrument in a risky manner.
A somewhat poor analogy is what would happen if a novice driver who has only ever driven a Yugo, were to step down on the accelerator of a Ferrari in the same manner that he drove the Yugo. The Ferrari is not the risky car. The driver is the one who is driving it in a risky manner.
Cyn,
This blog would be so much better off if we could have honest discussion about topics, without certain poster just attacking with no arguments to be made. I think that makes some poster even reluctant to post.
Really , Emmett if you want this blog to be taken seriously you have to step up to the plate and delete or bump down post that have nothing to do with the topic, but sole’s purpose is to bait another person. No one wants to read Dtchump’s post, his alias’s post or me replying to his nonsense.
First I want to state all great investors use options as part of their investments at some points in time.
To your point CYN. ROI by itself means little. You have to look at ROI in relationship to risk. In other words a 100% increase in ROI means little IMHO if you took 500% more risk to achieve it.
In reality one hopefully will be have a diversified investments, but in order to compare risk and return then you have to make equal comparison. In order to make a direct comparison, if you have $10K to invest you could invest all in options, the derivative product or all in the underlying stock. You are stating, and correct me if I am wrong, that options are more risky so you will invest only a small part of the $10K. But then your return dramatically decreases as the majority of the money is invested in cash.
So you have to calculate ROI based on that strategy, which goes back to the point I was trying to make about the analysis of this investment services. It is not like he is mostly invested in stock and occasional investing in options. Or from what I can tell he is 90% in cash and only 10% invested in options and still making 50%. Heck maybe I am wrong on that and that is the part that is not clear. If he is only a small portion of his account size invested at any given time and making a 50% ROI just by investing that small portion then absolutely yes this is a different ballgame.
But I read it as full or close to full investment in options trade is how he achieved the 50% returns and that is a different ballgame all together. This is why it would be nice on articles like this to have a complete analysis looking at overall risk .vs return, which will evaluate how much is he risking at any given point in time.
“You are stating, and correct me if I am wrong, that options are more risky so you will invest only a small part of the $10K.”, you say.
Not quite. Agreed that higher leverage almost always means higher risk, even if it also means higher potential reward. But what I was saying is not because options are riskier, but because being overleveraged is in itself risky, and money parity would mean that the options trader would be in control of more shares than the stock trader. We should be comparing like situations as to the number of shares under control by the purchase.
In fact, that is the first mistake that many traders make when they try to trade options. Using your figures, he has a 10k account and wants to buy a $50 stock with all of it. that comes to 200 shares (sans the vig, for simplicity). Then he looks the options and sees that he can buy some options for 2.50, (which is $250 for one lot). His next calculation is then, “Oh, for the same 10k, I can buy 40 options!”, and he promptly does. I believe that is the situation that you are comparing. Well, here is the real problem. That gunslinger options trader is NOT in the same potential position as the stock trader. The options trader is on the hook for 4000 shares, while the stock trader is on the hook for only 200 shares. NOT at all the same risk situation (nor reward either, but we are looking at what happens if the stock tanks, so reward is not the issue here). Do you see the completely different situations into which our traders have placed themselves?
The correct size for the options trade was 2 options, costing $500, and controlling the same 200 shares as the stock trader. Now, what happens if the stock tanks 30%? The stock trader loses $3k, and the options trader loses $500. Of course, as you say, the stock trader still has his stock, and hopefully, it comes back. (Of course, it might not come back, but that is a different issue). Remember though, the properly sized options trader still has $9.5k to continue trading, while the stock trader is collecting his meagre dividends, and waiting for the 2 years to get back to even.
You say, “So you have to calculate ROI based on that strategy, which goes back to the point I was trying to make about the analysis of this investment services. It is not like he is mostly invested in stock and occasional investing in options. Or from what I can tell he is 90% in cash and only 10% invested in options and still making 50%. Heck maybe I am wrong on that and that is the part that is not clear. If he is only a small portion of his account size invested at any given time and making a 50% ROI just by investing that small portion then absolutely yes this is a different ballgame.”
I think that I understand what you are saying, but you may need to make clear the terms. You may be talking here about ROE (Return On Equity), rather than ROI (Return On Investment). ROI will be calculated only on the amount invested, and has nothing to do with the total equity per se. ROE on the other hand, does support what you are saying, and is the correct comparison metric. Making 50% ROI on only 10% of your equity, translates to a 5% ROE, and should be properly identified as such. Stating 50% borders on deception.
Cyn,
I agree with everything you said and I still agree with everything I said, which makes me think I did a bad job in explaining my position. The point I was basically trying to make is you cannot evaluate a service like this in a small fluff article. It takes an in depth analysis in order to determine the true risk .vs Return on Equity, which I think we both agree with.
I felt this article gave the impression you can get 50% returns without showing the leverage and additional risk associated with that leverage. Also I think to properly evaluate a service you have to look at their performance through both bull and bear market, not just when they are buying calls during a bull market, which is much easier. And with all that is going on in the world of politics and the turmoil with North Korea; I am not sure that low volatility markets will continue to be the case.
I felt someone would read this article and just think I can take my saving and join this 4.7 star Emmett approved site and make 40% a year. Look at all the stories at this blog of folks doing just that with vendors. And when you give a vendor a high review you also take on the additional responsibility to give a thorough analysis of that vendor.
Now one could say, well I will just use this vendor as a small part of my overall portfolio being I know he is leveraged. That is reasonable and if one has a large enough account they can surely do that. But let’s say one has $10K and they say well I will just invest 10% of my account using this method. Well if everything goes perfect and he stays on track you will make a 40% return, around his average for 3 years. So you made $400. Yet his newsletter cost over $700 a year.
So my point is go into this wide open and realize this article is no way a proper analysis of evaluating a vendors performance IMO. And I will add one more thing when Emmett wrote how this guy can play guitar and somehow that is linked to his trading ability you know what that reminded of. And I hate to even mention this vendor. But I remember dumb dumb Kool-Aid drinking day traders saying the exact same thing about AL Brooks. It was his surgery skills and how he was able to noticing all the fine details that made him a great trader. Complete nonsense!
Now what might help one be a great trader are things like proper money management, risk evaluation and so forth, but not guitar playing ability IMHO. Take it for the price paid.
There is nothing in this post with which I can disagree. You have made the points very well, and they pretty much are a fuller explanation of what we have been saying from different viewpoints.
I was simply trying to clarify that the blanket statement that options are inherently a more risky investment vehicle may be overstated, and then tried to show that options must be used properly, and when so used, are not the scary instruments that they are made out to be. All investments carry risk. Like all investment vehicles, they can be used in a manner so risky that it becomes simply gambling.
My mentor, and now friend, Osikani, used to post here, but says that he left in disgust when he was massively voted down on a post where he talked about risk. I may suffer the same fate, but for what it is worth, many years ago, he wrote some guest posts to a now (defunct?) blog, to which he pointed me in the early days of our relationship. These posts discussed position sizing and options pricing relating to stocks/ETFs, and illustrate some of what I am saying here. Rather than just copy and paste, I will post the links, especially as that blog seems to no longer be active, so this is not me redirecting people to some other active blog, and away from Emmett.
http://www.trading-to-win.com/2010/04/efficiently-trading-options.html
http://www.trading-to-win.com/2010/05/so-what-is-real-risk-in-that-position_14.html
http://www.trading-to-win.com/2010/05/how-many-should-i-buy_03.html
Vote me down all you want. I am not leaving. So there!
If you are too stupid to understand risk, the market will blow you up, and good riddance to your stupidity.
Upvotes for Cyn!
Yip. Very good point about the trend of the mkt and only using SPY calls. I can’t see this not blowing up when the market does finally sell off or break the trend and trade sideways or down.
Perhaps you being challenged and called out by 3 unique people besides me in the past few hours will make you realize that being a sanctimonious arrogant know it all jerk is not a good way to go. Face it you are just another failed losing trader like the rest of us, or else you would not be spending so much time on this site — vainly trying to be regarded as a trading expert. Check your ego, lose the strut and maybe people will come around to you.
To be, or not to be–that is the question:
Whether ’tis nobler in the mind to be a
sanctimonious arrogant know it all jerk
with a stellar reputation for thoughtful comments
Or to be a whiney little bitch who contributes
nothing to the discussion, refuses to take
responsibility for his own actions and blames
others for his failures, ay, there’s the rub.
Dtchump,
I really do not know why I waste my time responding to you and your willfully stupid post.
If I agree with Emmett you post I am a Yes man and if I do not you post equally ridiculous comments.
As for being “called out”, what are you talking about? Did you even go to school? Are you aware of the concept of intelligent debating and making arguments for your case. I outlined my position and my reasons for it. I love to hear from other sides that disagree with me by making an intelligent argument. And I think it is good for other readers so they can make an informed decision. That is what this site should be about; discussing the topic in an intelligent manner.
But you and your alias are not interested in intelligent arguments or about making any point or counterpoint about options or the risk of trading options. Historically you have never posted anything related to the topic. To me people who’s post are for the sole purpose of attacking and not advancing the article have no purpose.
I actually wish Emmett did control the post to some extent or at least bump up the post that are relevant to the topic. As your post and me respond to your nonsense should be at the bottom and not clog up this blog.
<> Look again…go to DiBari’s option sizer. https://www.mytradinglicks.com/position-sizing-with-options/
it is typically < 5% of your principal
Thanks for the review, Emmett. Does this also work for bear markets?
He is definitely slanted towards a bull market. However, he does have a few bear trades as well.
Do you know if he uses a trend filter–something like a 200-day MA to determine whether to go long or short? I never thought much of volume as an indicator, but apparently he found a way to make it work. I’m not sure if you can determine direction (long/short) solely based on volume, though.
You can actually follow his results on 3rd party sites like Collective2 as well. That’s another plus. You won’t find the Price Headleys of the trading world giving verifiable performance like that.
What would stop him from using puts instead of calls in a bear market?
the problem lying in identifying if its one or other.