Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about options trading golden rule number six which is no stop losses. This one's a little bit counterintuitive and it always seems to stir up a little bit of controversy, but the results are what the results are and the numbers speak for themselves. When we go back through and we back-test hundreds and thousands of option strategies using stop losses and not using stop losses, there's no doubt that overall, not using a stop loss on your trade ends up generating more money. Yes, I said it. Do not use stop losses as a general course of business. What you should be doing is you should be properly position-sizing like we talked about in some of the previous golden rules, making sure that you allocate a small amount to whatever ticker symbol or sector you're trading and then let the position on to work itself out, let the probabilities work themselves out. We know that we're going to be challenged, we know that stocks move as they go towards expiration and just because your position is being challenged now doesn't mean that the stock is going to stay challenged or that it could potentially turn around and become a profitable trade. We see this time and time again and I've posted live videos on all the trades that we've done, so you can see how we have positions that initially were challenged and then the stock made a move and it came back inside of our range.

Again, what we see over and over again is that using stop losses ends up generating more losing trades. They should be called loss generating trades because they end up generating more losses. And so, you can even go back and we did a really in-depth long case study on this on show number 67 of the regular weekly podcast where we back-tested 10 strategies using stop losses versus not using stop losses and in almost every single case, what we saw is that using a stop loss ends up generating more losses. Now, this all being said, does this mean that there are certain instances where you should have a stop loss? Of course, but it probably is when you have over-allocation in your portfolio. A stop loss might help if you're allocating 30% of your account towards a ticker symbol, but we don't suggest that. We suggest allocating less than 5% of your account towards each individual ticker symbol or sector. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about options trading golden rule number five which is that I believe you have to be a net option seller. There's no doubt that we have the most comprehensive research and database on option selling strategies and option buying strategies. In fact, when we released our profit matrix research which was arguably the most in-depth analysis of different option strategies, different variations and settings, tickers and industries, what we found is that most of the time when you are using an option selling strategy over an option buying strategy, you end up generating more money long-term.

Now, this isn't to say that option buying strategies can't work in a vacuum. They could work in a particular month or a particular market event and I see people all the time touting these 75%, 50%, 100% returns as the baseline scenario for what you should do, but I highly doubt that they're actually achieving those results on a compounded basis, meaning they might have a really good month or they might have a really quarter or year, but it's highly unlikely that they're actually going to hit those numbers year after year, month after month because at some point, compounding wise, you'd basically own the world. You would be as big as some countries or as big as some corporations just from these option buying strategies and they never work out long-term.

What we do see is that option selling premium and becoming more of an insurance type company in this business by selling premium and collecting the volatility edge that's embedded in option prices ends up being more successful long-term. Does this mean that you should only use option selling strategies? By no means, no. There are definitely times where you could use an option buying strategy to potentially take advantage of a market situation or a drop in implied volatility or a big move in an underlying stock, but what you should do is you should focus on net option selling as the core basis of your portfolio. This means that most of your capital, most of your cash should be allocated towards option selling strategies and option selling strategies where you are a net seller of options as part of your positions. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be going through options trading golden rule number four which is having a balanced portfolio. As we have done over the last couple of days, we're building on top of all these golden rules that we've started to develop. Number one, small positions, number two, trade count, number three, diverse tickers and now, number four is balanced portfolio. Again, this makes logical sense. If we started going through rules number one through three, the argument could've been made – "Okay. I can trade a bunch of small positions, I can do it a lot and I can do it in diverse tickers, but which direction do I choose? Do I always trade neutral? Do I always trade bearish? Do I always trade bullish?" And so, when you only trade in one direction or build a portfolio that is built in one direction, you dramatically increase the probability of success that a bad sequence of returns or a bad sequence of trades again, blows up or creates a huge drawdown in your account. My thought process on this has always been that we need to have a generally balanced portfolio around the market and this is an interesting concept because if you really think about it and listen to what I'm going to go through here in this podcast, it makes complete sense which direction you should be trading or which trades you should be adding in different market scenarios. Let's assume that we start and our portfolio is 100% balanced which means that wherever the market is right at this exact moment, we are generally going to make money within a range say up or down 5% of where the market is. And so, if the market rallies 5% or if it falls 5%, anywhere in that range, we should generally make money and that's how most portfolios for option sellers are built. They're built with a typical bell type curve or bell looking curve around the market which designates that it's pretty neutral or Delta neutral in its balance.

Now, when the market starts to go down and the market starts to trade lower, if you remember, our portfolio is centered right over top of where the market is before it starts to move lower. When market starts to move lower, where is our center of our portfolio now? Our center of our portfolio has never changed. Most people, they don't think about this when markets start to go down and they start trading neutral and they understand it, but then the markets go down and they don't know what to do. But remember, the center of our portfolio has never changed. It's still at the price at which the market was before it started moving lower. This means that our portfolio as the market is going down, is becoming more and more bullish and tilt and it's naturally happening. It's a natural event that happens. As the market goes down, we become by de facto of the fact that our portfolio is still centered at the higher prices, more and more bullish on the market. Now, why do I talk about this? Because what most people default to when the market starts to go down is they start to become buyers and they start to go long the market at these lower prices, but that's the wrong decision and it's the wrong decision because you don't need to become a new net buyer, a new bullish person when the market goes down. If your portfolio was balanced before the market started heading down, then your portfolio is already tilted, so that if the market goes back up, you make money because you need it to go back up to get back to center. What the problem is, is that with most people when they start trading, the market starts to go down, they become more and more bullish on the market because that's just what you do when markets go down, you become more bullish, you look for a rebound and they start trading for that rebound, but the problem is they start digging themselves into a deeper and deeper hole, so that if the market say doesn't rebound or it doesn't rebound as quickly or as violently in the same percentage move as they expected, they end up digging themselves into a deeper and deeper hole that ends up creating more and more losses.

What should you do instead? Well, think about this. If the market starts to go down and you were neutral before the market movement and your portfolio is naturally becoming more and more bullish as the market goes down, you actually need to add more bearish positions to counteract to the fact that your portfolio is becoming more and more bullish as the market goes down. As markets go down and starts to move away from the center of your portfolio, you need to add more and more bearish positions and this is again, counterintuitive because most people would assume – "Well, how would I be adding bearish positions in the middle of a down move? The markets maybe are overextended. It looks like they could rebound, they could bounce, so why would I basically be trading right in front of this possible freight train?" And the reason is because you need to adjust and move the center of your portfolio lower with the markets and the only way to move the center of your portfolio lower is to add more bearish positions, more directionally bearish positions to your account. The case could be made then in a crash that where the markets just continue to move lower and lower and lower, you actually should be getting more and more bearish during the market crash. In fact, there's probably a case where you don't add any bullish positions and so, you only trade what the market is giving you. You trade the direction of the market in my case. That's the way I think about it. I think about trade the direction of the market move, so if the market's going lower and I'm neutral at the beginning of the move, I need to make directionally bearish trades that trade the direction of the market. To flip this on its head and use the other example just so that we cover our bases here, if we are balanced and the market starts moving higher, then our portfolio is naturally becoming more and more bearish. We need the market to move back down to get back to the center of our portfolio. When the market moves higher, most people assume you sell and you go short the market at these higher price points, but I would argue that to move the center of your portfolio higher with the market, you need to actually start adding more bullish trades to your portfolio, trades that move the center of the portfolio higher because the core of it is already becoming more and more bearish as the market moves higher. You're naturally becoming bearish, so you need to counteract that by adding more bullish positions slowly over time.

Again, golden rule number four today is just to keep a balanced portfolio, to keep your eye on your portfolio balance. It doesn't mean that you always have to trade everything neutral. It doesn't mean that you always have to trade directionally bearish at sometimes or directionally bullish. I don't care what the make-up of your trades are, but you should know where the center of your portfolio is at any given time. When you go in to review your portfolio on a weekly basis or biweekly basis, having an idea of just knowing where the center of your portfolio is clears the field, so that you can more accurately see what positions you need to add because there's probably going to be a lot of trading opportunities that look really good, but the question comes down to – "Does my portfolio need it? Do I need this position or will it create me to be even more unbalanced than maybe I am at this exact moment?" There's a lot of opportunities in 2018 to add a lot of positions, a lot of which I passed on because adding that position would've been great for that individual trade, but would've been bad for the portfolio. And so, that's one thing that I always harp on, is getting back to what is good for the portfolio, what creates more balance in my portfolio and if sometimes that means passing on a trade or sometimes that means doing something that feels a little bit uncomfortable at the time because I'm trading bearish and the market's moving down or I'm trading bullish and the market's already had such a huge move higher, that's okay because what we're doing is we're protecting the whole core portfolio and making sure that everything is balanced. That's really the golden rule today. Again, making sure that you understand and you're aware of your portfolio balance. As always, we have so much training on this inside of Option Alpha particularly in track number two and number three on the website when you guys get a chance to take a look at it. If you have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be going through options trading golden rule number three which is diverse tickers. Again, just building right on top of rule number one and rule number two from the last two days, our third rule here is you have to be trading a diverse set of tickers. Now, this again, is investing basics 101 in my opinion, but this idea that we should be super highly focused on a few set of tickers is absolutely nonsense. We should have a diverse set of tickers in our portfolio at all times.

And I think where people maybe have missed the mark here over the last couple of years is that there's been a lot of talk about high implied volatility trading, only trading ticker symbols with high implied volatility. And while I definitely like doing that and subscribe to that methodology, what I've also said over the last couple of years is that we have found through our research that by adding in and by filtering for also diversity in our portfolio, we ended up seeing some better returns for portfolios that have a diverse set of ticker symbols than we did for portfolios that were highly focused in one or two sectors or industries. The problem that I see is that a lot of people think to themselves – "Well, if I can just trade high implied volatility, I'll only wait for those high implied volatility scenarios and I'll only trade those stickers that have high implied volatility because that generally ends up being more profitable long-term." Well, that's true in a vacuum. In a vacuum, when we just kind of figure out the numbers in which strategies end up working out the best, in which setups work the best, high implied volatility setups work the best, no doubt, but the problem is that it happens in probably the same sector across the same industry all at the same time. A classic example of this has recently been the oil and energy markets which at the end of 2018, experienced a pretty hard financial crash and during that time period, we saw a lot of tickers, all oil and gas and energy-related that had high implied volatility. When you use the rules that we had talked about in number one and two which is just small positions and high trade count, the argument could've been made that we traded a lot of these different ticker symbols, we kept our position size under 5% per symbol, we had a high frequency of trade count, but the problem now is that we were over-allocated into one sector or one industry. You could've traded five or 10 different oil and gas-related ticker symbols. Yes, they would've all been different tickers. Yes, you would've kept your position size in check, but it would've been basically trading the same underlying or fundamental product which is oil or natural gas in many cases. And so, when you do that, you actually pigeonhole yourself without even knowing it.

What do I mean by diverse tickers? I mean generally having a set of tickers and it doesn't have to be the same in every single month. You can mix it up. You can choose whatever set you want, but a set of tickers that has as much un-correlation as possible. We know that when markets are volatile, things tend to be more correlated. I'm just talking about having as much un-correlation as we can possibly have. Now, it doesn't mean that we're going to be perfectly uncorrelated, that we're going to have this diverse portfolio that is 100% non-correlated to each other. It doesn't exist. It's not out there. But we want to be as uncorrelated as we can possibly be. This means trading things like emerging markets, maybe currencies, maybe hard metals like gold and silver. Commodities could definitely be thrown into the mix. You could do retail, homebuilder. The other major one that we always do is bonds, so things like TLT or HYG. You want to try to have some of these industries and sectors that you can use in your portfolio to help create some diversity and this means that sometimes you're going to be trading things that don't have insanely high implied volatility and that's okay because what that ticker symbol is used for is to add balance and add diversity to the portfolio. Last year and actually, well, we're doing this in 2019, so 2017, our best-performing ticker symbol was TLT which for almost all of 2017 had insanely low implied volatility, but it was our best-performing ticker symbol and we traded it every single month and we still trade it every single month because we want exposure to bonds in our portfolio. Now, is this going to be perfect exposure, so that when the markets go down, bonds always go up? Of course not. Bonds are typically actually more correlated with the markets than they're not, but we want something that trades not in lockstep with the S&P. We want something that has a little bit more of an un-correlation to the markets to add some diversity to our portfolio.

Again, golden rule number three today is to have diverse tickers and this could again, be anywhere between eight to 12 different industries and sectors for every single month that you're trading. Again, this can rotate. It doesn't always have to be the same, but just try not to trade the same underlying products in the same sector. Again, to go back and use that oil and gas analogy, you could've easily at the end of 2018, traded OIH, XOP, USO, XLE, etcetera. Those would've been all fine trades, but the problem is that all four of those ticker symbols were in the exact same industry and sector and so, they probably behaved very much the same which means you needed to add other things to combat those, so that they didn't drag down your portfolio during the bear market that oil and gas had. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're getting into options trading golden rule number two which is high trade count. Today's rule builds on top of yesterday's rule which is small positions. Now, we know that small positions are critically important to our success and once we understand that small positions are important, what we also have to understand is that a high trade count or high-frequency of trading is also critical to our success.

Again, let's use a very simple example and use it on the broad ends of the spectrum, really high trade count possibility and a really low trade count possibility and walk through these different scenarios. Let's assume that we have small position sizes and we're trading under 5% risk per ticker symbol, but on one end of the spectrum, we only make two trades per year. Let's say we just for whatever reason, don't have an opportunity, don't feel like we make the time to increase the trade frequency of our strategy and we only make two trades per year. It could be at any time period. It could be at the beginning of the year, the middle of the year or the end of the year, but these two trades still have a 70% chance of success or let's say you're targeting a 70% chance of success for these trades. Well, if you only make two trades during the year, frankly, anything can happen. In fact, I don't even know what the probability of either of those events actually happening are. It statistically would be 70% win rate, but if you're only making two trades, you could have one really nice winner and one really big loser and you end up losing on the year. You could have two small winners, in which case, you probably did okay, but you didn't trade enough to actually generate significant profit, so you still maybe underperformed the market or underperformed your expectations or in the worst-case scenario, you have two really big losing trades and then you realize that options trading doesn't work and it's a scam and it's totally bogus and you stop trading altogether. But the reality is that with two trades, you become very dependent on those two independent events working out in your favor and that means you have to do things like market timing, you have to be very predictive, you have to basically be insanely lucky to win when you do a low trade count type strategy, when you do not increase the trade count of your strategy and this makes people more dependent on the market, more dependent on predictions and getting the right direction. And we see this all the time just in regular stock-picking and regular investing with people who invest at different points during the year and this passive type investor who generally gets burned a lot because they invest one time during the year and that one time that they invest becomes insanely important to their long-term success. Did they invest at the top of the market or did they invest at the bottom? If they're only choosing one or two dates during the year by which to invest their money, then those one or two dates become very important to their success long-term.

Now, let's now shift to the opposite end of the spectrum which is a very high trade count and this is something that I subscribe to, that I know works because we've tested this in our research. We can look at the profit matrix research where we tested different types of option strategies and different types of entry frequencies, whether it was sequential which is one by one, so you trade one time, then you trade only after that trade is closed. We also tested in our massive options trading research report that we released, the idea of trading weekly, so at least entering a trade every week and also daily, so entering a trade every single day. Generally, what we saw in the research is that daily entries ended up beating out weekly which ended up beating out sequential trading. And so, what we now can confirm through research and we've done this a couple of years ago now, we now can confirm that when we have a high trade count in an active frequency of trading, it makes market direction become more or less irrelevant over time. What do I mean by this? Well, let's say that you trade every single day. Now, for you, it could be every other day, every third day, but let's just assume that you trade every day or at least more frequently than two times a year. And when you do that and you also have small positions, you're averaging around the market every single time you trade. If the market is let's say middle-of-the-road and we make a neutral trade, we're making a small neutral trade today. And let's say the market tomorrow rallies up 2%. Well, we make another small neutral trade tomorrow, but now, because the markets rallied up 2%, our new trade is now adjusted higher to re-center the market in between our new strategy. We're averaging our position a little bit higher to kind of follow the market. And now, let's say the market again, rallies another 2%. Great. Well, our third position the following day is again, adjusted a little bit higher to re-center the position over where the new market price is. As we start to extrapolate this out over time, what we notice is that when you increase your trade count, you give yourself an opportunity to average and follow the market without having to be overly-predictive or lucky. And this high trade count really plays into the law of large numbers with most high probability systems in that anything can really happen in the first 100 or so trading opportunities, any sequence of returns. But once you start getting into really high trade counts over the course of the next one or two or three years as you start trading options, what you start to see is that your number start to solidify. You start to really hone in on that 70% probability of success. You start to really hone in on maximizing your expected outcome of your trading strategy.

And so, again, the key lesson today is you have to have a high trade count over time if you want to see success. Now, I don't want people to misconstrue what we're talking about in that you have to be very, very active in the same day. You don't. I think you have to be active over time and so, that could be different for everybody. If you have a lot of money to start with, it could be a lot easier to allocate that money and to reach higher trade counts over the course of the next couple of years. If you're starting out with a lower account balance, maybe a couple of thousand dollars, it's going to be a little bit harder to get that high trade count and that high frequency because your account balance is a little bit lower, but does that mean that you should stop trading, that you should just throw your money into the market and cross your fingers behind your back and hope everything ends up well? No. I think you should still do options trading just with the understanding that it might take you a little bit longer to reach those high trade counts because you don't have as much to allocate right now. And so, that's okay. That's okay if you can only get into a couple of trades a month and you just continuously start working on a couple of trades a month and then snowballing that into a couple of more trades the next month, then a couple of more trades the next month. But wherever you are, you have to start and you have to start increasing your trade count and your trade numbers over time because this is a critical element to your ability to become successful. The longer that you stay alive in this business, the higher your probability of success and the higher your probability of profit. And so, how do you stay alive? You make small trades which is what we talked about in rule number one and you make a lot of those small trades, so that the expected or probable outcome works out in your favor. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be starting the first of our little mini-series here at Option Alpha, getting back to basics and talking about some options trading golden rules and we're starting off today with options trading golden rule number one which is small positions.

Now, honestly, I've been harping on small positions for over 10 years. Before many people out there and many companies out there were talking about the importance of small positions, I knew that this was something that was critical to everyone's success as an options trader when I first started and I've got blog posts and archives that show that we've been talking about this for over 10 years now. But the idea behind small positions is nothing groundbreaking. It's actually a very simple concept and the concept is that we don't know when our distribution of profits and losses are going to come. And so, when we don't know what the sequence of returns we're going to experience are, the only way that we can combat and protect ourselves is to make each and every individual or independent trading event as small as possible. And so, what we say here at Option Alpha is that you should never have any one ticker symbol represent more than 5% of risk in your account. Now, that could be made up of one trade and one ticker symbol. It could be made up of 52 trades in that underlying ticker symbol. But no one ticker symbol like Apple or Google, SPY, IWM or TLT can represent more than 5% of risk in your account. And the reason this is so important is because if we get into a situation where we have just a bad sequence of trades, a sequence of trades that leads to say five or six consecutive losses in a row, we don't want to put ourselves in a position that we could blow up our account just on a fluke event and that's really all it comes down to.

If you think about it on its largest, most extreme spectrum, let's say that we're trading and we're only trading two different stocks or two ticker symbols and we allocate 50% of our account to each ticker symbol. Now, again, as options traders, we're trading highly-leveraged products which means that we have the ability to not only make money quickly, but also lose money quickly and as option sellers, we typically have an opportunity to lose more than we potentially make because we have a high probability of success. If we're trading two ticker symbols with a 50% allocation in each, then there is the possibility and I would argue the strong possibility that you blow up your account in the next month or two months during that trading time period. Now, that doesn't mean that that's always going to happen, but you just need literally two stocks to go the wrong direction at the same time and you're done. And this is what we saw actually with optionsellers.com. For those of you who remember that they blew up at the end of last year, they were trading basically two underlying securities. They were trading natural gas and crude oil and both natural gas and crude oil made large moves in the wrong direction for them and it blew up their entire firm and caused massive losses. Now, it's just a simple error in position-sizing for them. They were too allocated, over-allocated into a very select group of ticker symbols.

Now, you take the other opposite end of this spectrum which is where I believe most people should live and let's say you are trading anywhere between 15 and 20 underlying positions, maybe 1% to 2% for each of those positions, still keeping cash on hand. If you get yourself into a situation where even five or six of your underlying positions move really strong against you and you have a bad sequence of returns, it still is not going to knock you out. It's not going to take you completely out of commission and out of business. Is it going to hurt? Potentially. No doubt about it. There's going to be some drawdown type scenarios, but it's not going to knock you out and it's going to leave you alive enough and with enough capital to keep playing the game and to keep working the numbers and working the system until you hit that probability or expected outcome. And so, again, today's most important rule and definitely the rule that everyone breaks when I do coaching and when I see people's accounts and they send them over, the most important rule here is small position size. Keep your position size small. It doesn't matter if you have a large account, if you have a small account, if you're trading with $3,000 or $3 million. You have to keep your position size small, under 5% risk per ticker symbol. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about developing unwavering confidence with your options trading strategy. What do I mean by this? Well, unwavering confidence to me is confidence that no matter what market situation you get dealt, no matter what stock move you're currently experiencing, you've got enough confidence to stick with it, to stick with the program and to see it out to the end because you know that the numbers are going to work out in your favor. This is something that I've learned over the last 10 plus years of trading, but I think over the last four or five months as the markets have become much more volatile especially towards the end of 2018, a lot of people's confidence has been shaken and they don't know if the strategies that they're using are going to work anymore. They haven't seen market moves that take the Dow or the S&P up 5% and down 5% in the same day. And so, that can be difficult. That can be tough if you haven't traded through those scenarios.

What I wanted to do at the beginning of the year is start off with getting back to some of the basics and talking about kind of the broad strokes of our plan and we're going to be starting that tomorrow as we start this new mini-series here on the podcast which I encourage you to listen to. Now, when I talk about unwavering confidence though, there's a couple of key things that you should remember as you start off the New Year and start thinking about your options trading strategy and the first thing is just flat-out to know your numbers. And I talk about this a lot in coaching and through our courses at Option Alpha, but the idea here is that you should know without a shadow of a doubt what the probability or expected outcome of a trade that you're making is. And there's a lot of subjectivity that still is in there with adjustments and making rolls and pricing, etcetera, but the broad strokes of whether an option strategy is going to work or not is something that you can figure out. Now, we built options back-testing software for this. We have a research on this. Other people have research on this as well. There's option strategies out there that have a positive expected return which means that over time, all of the small profits add up and beat all of the potential small losers or small frequency of losers that end up being large drawdowns in your account. But you should know this. You should know what your positive expected outcome on a trading strategy is and that to me is the biggest help when going through markets like the ones that we just went through and this idea that if we have a bad trade or a bad string of trades that it's still going to be okay, that the numbers will work out in our favor over time.

Another thing that can help out with developing your confidence and increasing your confidence is to write out the broad strokes of your plan. Now, you don't have to get really granular here, but we're talking about the most important big rock type philosophies that you should have in place for your options trading strategy, things like 5% position size that you won't change, that you won't break these rules. That one is a hard rule for me. I will not go over 5% position size for any one ticker. I won't roll unless I get a credit on a trade. Now, some people might roll for a small debit, but again, one of my kind of broad stroke plans and rules is that I won't roll unless I get a credit. I believe that I should get paid for extending the timeline of the trade. Determine some of these rules. Put them in paper. Put them on paper and write them out, so that you know what the guidelines are, what the rails are for your road, your barriers, if you will that you have to travel down as you work through the next couple of years. And then finally, you just have to work the plan. And this is again, a very simple concept. It's not mind-blowing by any stretch. But you have to do exactly what you're supposed to do. Oftentimes, we get into these volatile markets, in these crazy situations and people just break every single rule. They over-allocate, they completely forget about balance, they don't diversify, they start trading things they'd never traded before because they're exotic and volatility-based and they break all the rules, but you just need to flat-out work your plan. You need to write out a set of guidelines that you're going to work with, you're going to trade this strategy, you're going to trade this many tickers every month, this allocation, 5% position size. If you get challenged, you're going to do this. If you don't get challenged, you're going to generally close at this price point. Lay out those foundational elements and then from there, just do what you said you're going to do and as long as you know your positive expected outcome of your trading strategy, everything should work in place and it should work out over time. It may take you three months, it may take you 12 months to see profits kind of come in, but you know that they'll be there as long as you keep working the numbers. Hopefully this helps out. Again, if you have any questions, as always, please let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about stock market predictions for 2019 and why it might resemble the 1929 crash. I want to go through a chart here on today's podcast as we start off the New Year and just potentially lay the groundwork for a possible scenario of where the markets could be going in 2019. Now, as many of you guys know and if you've traded through the end of 2018, the markets had quite a wild ride to the end of 2018 and we saw a lot of volatility in both directions as we closed out the last year. As we start to look towards 2019, the question becomes – Where does the market go from here? And this is just my opinion on it. Obviously, we have no idea where the market goes. But my opinion on it is that I think that we are at the top of a cyclical bear market and this is interesting because we don't have one major catalyst yet that is turning over the markets. In fact, it seems to be a lot of different things. There's news from Apple and news from Tesla and the oil markets are depressed and emerging markets are depressed. And so, there's a lot of things that are kind of happening and revealing themselves in the middle of what I think is the next cyclical bear market down. And so, this is important because as investors and traders, we have to understand when these cyclical bear markets come, these massive bear market moves, how might they develop, how might they unfold over time. And I don't think that this particular move that we're in right now was going to be a major crash straight down and then straight back up like we saw in 2008, 2009. 2008, 2009 I think was a little bit different in the sense that we crashed pretty hard and then we rebounded just as hard and I don't think we're going to be going through that. I think what we're going to see this time around is something that might resemble the 1929 crash and the ensuing decline in the markets that happened over the next two and a half years.

What most people don't know and I'll go through this kind of chart here. You can search this chart online and just kind of look at the Dow Jones industrial average during the depression in the crash of 29 and basically 32. But what most people don't know is that the crash in 1929 was just really the tip of the iceberg. In fact, when the Dow went from about 375-ish points down to around 200 points which is by no means a small move by any chance, that was just the tip and in fact, the most of the move that the Dow had over the next two and a half years actually led it to decline the rest of the percentage down to about a 90% decline from peak to trough basically. And what's interesting is if you go back and you look at the percentage moves during this big 90% massive bear market, you have a lot of very strong, very aggressive bull markets in between or kind of bullish moves in between. The initial drop in the Dow that happened in 1929 was followed by a 48% rally in stocks in just about four and a half months and that's a pretty big move. And again, what I think is interesting about the 1929 crash and why I'm just kind of keeping this in the back of my mind as we go through the next couple of years is that there's a lot of opportunities and a lot of news coming out that could've led investors to be uber-bullish on the markets. And so, you follow a big market decline and then you have a 48% rally off the bottom, that probably sucked in a lot of people that had a false sense of security and became very much a classic bullish trap because after that, then the Dow declined and took on its lows and then as we started to get into the early to middle part of 1930, we saw another rally of 16% followed by another massive decline that took out the lows, another rally at the end of 1930 of 21%, again, followed by another massive decline that took out the lows, another rally in the middle part of 1931 of 27% and then again, another rally after taking out the lows of 35% in the middle of 1931. And then as we get to the end of 1931, this train still doesn't stop. We still see massive rallies followed by pretty significant selloffs that take out the lows. And so, as we get to the end of 1931, we saw again, another rally of 35% followed by more selling that took out the lows, another rally at the end of 1931 of 20%, again, followed by the final blow, the final down move in the markets that took out the lows and it wasn't until the middle of 1932. Basically about three and a half years that we finally saw a significant rally enough to make a bottom in the markets during this time period.

Again, the reason I go through this and I talk about all these different numbers and percentages is just to let you know that within one massive bear market, we can find many bull markets and this is interesting for two reasons. One, so that we know that there's generally going to be a two-sided market and we don't know to what extent markets are going to move, but we know that markets are going to be two-sided even in the face of a massive cyclical bear market and two, to understand that maybe we shouldn't get sucked into either direction, that we should play things pretty close to our chest, that we should reduce our duration, meaning trade shorter term securities generally. We don't want to go out 90 days. We want to stay around the 30 to 45-day window, so that we have time to quickly adjust and move with the market as the market moves whatever direction it goes. And so, again, I thought this was interesting as we started off the year. Again, I have no idea where the market's going to go. I'm not making this major bold prediction, but if we are in the middle of a cyclical bear market which is what I believe, then I think that we could find many bullish market moves here and I think we just have to be careful and cautious not to get sucked into any one direction and still maintain our overall neutral bias. Hopefully this helps out. As always, if you have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about the New Year and our new goals for Option Alpha. As I look forward to 2019, we've got a couple of pretty big goals that we want to try to hit this year and a lot of it surrounds our new auto-trading platform that we're going to be rolling out in stages here in the next coming months. But that being said, we have these six categories really of goals that we've kind of put together and I think that it works best when we talk about them in kind of broad categories because I think about our goals as these categories and kind of touching on each of these and a lot of this is what you're going to see in everything that we do here at Option Alpha in 2019. The first category of goals that we have is all around experience and basically just improving the overall experience that you have interacting with Option Alpha and this is on all fronts. This is through support, through social media, through the website itself, through the trading application, through the courses and the research reports that we do. Everything about Option Alpha is going to have a much better experience. Now, I think we've done a pretty good job at least up to this point in putting together what we needed to put together, but now that we're going to be going to a completely new level, we want to really polish up everything and this is little things like improving the speed of the website for better user experience. This is everything from making the website more navigable, so that you can find the resources quickly and you can get to the right sections quickly without having to go through a lot of steps or pages or processing. Everything about experience is going to be improved this year. Number two in this kind of broad category is content. We've done a really good job over the last 10 years or so of putting up a lot of content and now, the goal is going to be to summarize a lot of that stuff, pull it together into more complete guides and again, organize the content, so it's much easier for you to find. We have a lot of content on pretty much every single topic and discipline and little trick or hack that you can think of in options trading, but a lot of it is kind of scattered between different sections and areas. And so, again, our goal is to bring a lot of this stuff together through the website, through the trading application, through the learning, LMS system that we put together and make it a lot easier for you guys to consume the right content for where you need to be right now or based on your experience level, your account size, what strategy you're trading, have everything kind of pulled together in one place. Number three is obviously technology. Everything that we've even talked about now with just the experience and content is all going to be built on this bedrock foundation of great technology. What we've been doing over the last couple of months and really, what's been kind of causing a little bit of the delay in how much we've wanted to launch the new auto-trading platform is just making sure that we have all the right technology pieces in place, so that everything is not only very secure, but is also insanely scalable, very fast, very efficient and so, we're taking the time to do it right and really, there's no other way to say this than – We want to make sure that this is something that can last for decades, that we're building a business and we're building a platform here that not only is great today, but also can be built on top of and can scale and expand for many, many years to come. Number four is community. We know that the current forum is not the best forum in the world, so we're aware of that and so, a big thing in launching the new platform is going to be completely rebuilding the forum community and basically putting a lot more emphasis on the community for pro and elite members than we have before and this is taking a lot of the feedback that we've gotten from members and feature enhancements and improvements and making things again, a lot more easy to use, a lot more navigable, making sure that you have the ability to use the forum on your mobile or your tablet, not just on the desktop. A lot of these little things that we know that we should be improving on, we're going to be rolling out in 2019. And in the community side of things too, we also want to start doing some sort of live event or some sort of live workshops, mini workshops, whatever we end up calling them probably later in the half of 2019. We want to start getting people together and that's really where I think it's going to be a totally different shift than many other platforms or communities that you've been part of before. Just having the ability to have some face-to-face interaction I think is really going to be critical for us moving forward. Number five is just the overall platform. What we want to do in this new overall platform as we've kind of alluded to before is basically focus on three broad categories and the broad categories of the new platform or kind of main tabs, if you will in the new site when it rolls out are going to be "learn, trade and follow" and that's really what we're going to be all about as we keep moving forward and it's really building a platform on these three disciplines, if you will, helping you learn everything you need to learn, helping you to actually make the trades using our technology and our automation or just making regular trades through Option Alpha and then eventually, having a community where you can follow other traders, copy trades, clone portfolios, copy entire trading systems if you want to in the future. And so, that's again, what we're going to be building this entire platform on. And number six is reach and I leave this one for the last one because although we want to expand our reach, I think it comes last compared to all of the other things that are kind of forefront on our goals. Now, many of you guys know that we don't spend practically any money on advertising for Option Alpha. We don't buy Google ads right now. We don't buy Facebook ads right now. We don't buy Pinterest or Twitter or any of these other things. We don't spend money on affiliates or sponsorships. We don't do any of that stuff and that's a testament to you guys in helping us grow this and your word-of-mouth, your referrals help grow Option Alpha, but it's only going to be at the end of the year that we're really going to start kind of maybe investing in a little bit more reach and a little bit more of the paid advertising and kind of trying to really expand things once we've gotten everything in place. And so, I want you guys to know again, what we are doing here and try to be as open and transparent as we can because a lot of these things, number one through five for us for goals this year are all about improving what we have before we start going out and actively trying to grow the business. What's great about Option Alpha and what I'm very blessed to say has been a very cool part of running this is that it's been growing at a very fast pace and that's all been very much organic, through word-of-mouth, people finding us because we're solving problems and we're helping everyone out, but at some point, we're going to have to really kick that into high gear if we want to become the options trading platform for everybody which I know we can be in the next five to 10 years. And so, again, one of our big goals this year is going to be to increase our reach and expand the number of people and the communities that we start to reach into, but that will only come after we've accomplished some of our other goals first. Hopefully this helps out. Again, if you don't do goals, you really should. This is a great time of year to step back and take a look at what you've done the previous year, maybe what you didn't accomplish, goals you did or didn't hit and start to make new goals moving forward and maybe you can even use this kind of category of framework that we use at Option Alpha and talk about different categories. They don't have to be uber-specific at this point, but if you want to start talking about goals for family or work or net worth or pay or all these other different disciplines, I think it really helps out. As always, if you guys have any questions, let me know and until next time, happy trading.

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be discussing Option Alpha's core values. I think this is really important as we wrap up 2018 and start moving forward into 2019 and beyond because Option Alpha in one shape or form has been around now for almost 10 years and that's pretty crazy to believe. And so, what I wanted to do is kind of revisit some of the core values that we've had and that we continue to have moving forward as a team and as a community for you guys and give you guys a little bit of transparency and insight into who we are and who we want to stay or become in the future.

There's a couple of these core key values that I think will really help out and again, give you guys a little bit of clarity for our side. Number one is pure motives. This is one that's been really big for me, is that I've always wanted to have pure motives and pure transparency in what we're trying to do. We've often talked about how Option Alpha makes money and how we generate revenue, but everything should be above board. We should have no underlying motives, no sneaking suspicions or sneaking pricing strategies to get people to give us money and to be part of our community. I want people to love being here at Option Alpha. They get value out of it much more so than anything we could ever charge you. And so, for us, everything that we do is driven around pure motives, about helping out people that are just like us because we're all traders together and so, our community is built up with traders. The people that are now on our team are all options traders as well or people who like to trade or have experience trading and so, we want to help each other out in doing this.

The second core value that we really have is help first and this is basically done through everything that we do on the education side which was groundbreaking initially when we started doing this almost a decade ago and giving out membership for free and education for free, courses for free, all of the insight that we give out for free and training and downloads and PDFs and all this stuff that we kind of give you guys for free because we want to help first. I think helping first is the easiest way to get paid back tenfold in the future for the value that you give. If you help people out and you give enough value, the universe will pay you back and that's kind of our thought process. As we start to look towards 2019 and the rollout of our auto-trading platform, one of the things that we're going to be doing in the auto-trading platform is giving everyone the ability to trade some bots for free. And so, that's going to be a really cool way to give value again and to kind of fulfill this core value of helping first.

Number three of our core values is take ownership and take ownership is on all fronts and this is for our community members and our traders and people who are part of our programs to take ownership, to do the training, to go through the courses, to take ownership in their own trades and what they're doing. Everything that we do is of course, never a suggestion to buy or sell any security. And so, people have to take ownership for the trades that they actually made and if they make a trade that's bad, then you got to take ownership in making a trade that's bad and you got to take ownership for your education and your trajectory and where you want to be in life and how you want to use Option Alpha to help you get there. And it also means for us that we got to take ownership. If we make a mistake or if we do something wrong, we'll let you know or correct it or make the appropriate change to your account. We want to take ownership on our end. We want to be the ones that are in control of our own destiny, if you will.

And the fourth core value that we really have is growth mindset and this is again, across all spectrums. We want to grow as people, as people who are running this. I want to grow as a trader, but also as a business owner. I want to grow as somebody who is teaching and educating in this space. I want to become better and I want to become better at being a manager and a team leader and a fellow employee for everyone who's here and also just a fellow community member for everyone at Option Alpha. And I think if we adapt that mindset which we already have and I think it's pretty evident through everything that we do here at Option Alpha, then other people will have that same mindset of wanting to grow, wanting to expand their knowledge, to grow on every capacity, in every front that they have not only as a trader and as an investor, but also as just a person and a human being.

Hopefully this helps out, again, just to kind of give you guys a little bit of clarity into what we think about here. I think about these all the time. They're right on the top of my list. It's right inside my MacBook and inside my desktop where I can see these core values all the time because it's really something that I truly hold dear and I want to be part of what we have at Option Alpha that is kind of projected through the education and the training and the software and the technology that we deliver to you guys. As always, if you guys have any questions, let me know and until next time, happy trading.