lol, no it’s not me

I used to think so, especially that time I turned $1000 into a couple hundred btc, and I suddenly had actual wealth and financial security over night. That created some over confidence for sure and that was an expensive mistake.

Ultimately it was just beginners luck, due in my part to my tolerance for taking risks, my ability to spot trends early, and to figure out complex systems.

The thing that makes a trader great isn’t the ability to take risk, or the ability to spot a trend early. You don’t even have to spot the trend at the beginning, you can figure it out after everyone else has, if the trend is big enough.

What makes a trader great is risk management. Great traders manage the downside risk, temper their greed, look at the long-term plan, leave upside on the trade in favor of exiting with guaranteed profit, know how to generate cashflow from their positions, and understand financing.

It’s so easy to generate returns in the market when everything is going up, but keeping it – that is an entirely different set of skills. M

y portfolio today is up 55% ytd and over 100% YoY, and I’ve had a lot of years where I’ve had returns like this, but eventually the market corrects and as you can see from my chart, a dramatic reversal is always close behind.

I Know Little, But I Have Learned A Lot

Once you get into markets for a couple of decades you start to learn little strategies. For me, understanding when the market has switched gears is key. Right now everything is going up, you really can’t miss if you know anything about what’s going on in the world. I think of this as the time to play options. If I see one of my symbols pop, I’ll buy a call option with 60-90 days of time. If it moves, I’ll either roll the option up and out or I’ll capture the profit. I will often buy shares as well, hold the shares and close the option.

Understanding how different options strategies work in up or down markets is a key skill set, but you don’t need to understand Black-Sholes calculations. Just the basics of the Greeks, called puts, debit and credit spreads.

The other key skill is learning about stop losses, my favorite being the trailing stop.

Finally – having an end game in mind. Maybe for some it’s a dollar amount, but for me it’s just accumulating shares of VOO. To my mind, VOO is the ultimate asset to own? You can own it and never sell it, borrow against it, collect dividends, and as long as you never sell you are taxed on the gains.

When I make a profitable trade, I roll the profits into VOO, when the market corrects, I pile into VOO. When I need cash… I borrow at low rates against my VOO.

Well that it, a high level view of what I’ve learned over the last 15 years, hopefully I continue to get better at this and learn how to manage risk even more adeptly… but I’m sure I have many more ups and downs to go.