20 min
A Thing About Scaling The Option Genius Podcast: Options Trading For Income and Growth
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- Investing
I'm going to call this episode, a thing about scaling. And when I'm talking about scaling, I'm talking about scaling up your trading in terms of trading larger amounts and larger quantities of contracts. So this comes into play, because we have several students who are going through one of our, I guess, our credit spread mastery program. And we teach them the fundamentals, we teach them how to do the trades, we work with them, we show them how to do it. And then at the end, after they've had really great success, and they're ready for it, we talk about scaling, how to go from, you know, one to two to three contracts to 510 50 100 or more, depending on the size of the account. And so, we've been having these discussions, and that's why it's in the top of my head, and I noticed something recently, that I wanted to share with you. Now, I tell everybody, and I've said this many times on that podcast as well. trading is 80% Mental 20% Physical, right?
So whatever you do, the thing, the analyzing, the research, the clicking, the monitoring, the trading itself, the stuff that you do with your hands on their broker, and moving money around all that stuff, that's 20% of trading. 80% is what goes on in your mind, and how you process how you handle things, your emotions. And when it gets to, when it comes to scaling, that really, really starts to play a bigger role, the emotions, how to handle those things, that is really important to have a handle on before you start scaling. Because otherwise, you're going to have issues. And those issues are going to be very expensive. So one of the things that I noticed recently, is I was doing a I had a $15,000 trade on. And it was a normal spread that I had put on, and it had hit my goal, which was 10% for the month. So it's like a great, you know, $1500.. not bad for a trade. I'll take it very nice. And so according to my plan, I'm supposed to take the trade off, I'm supposed to finish it exited, take my money and relax, right? Or move it to another trader or do whatever.
But as I'm looking at this trade, it was not in my regular brokerage account, it was in a different brokerage account. And so the way that trade looks is different. Maybe that's why I felt or felt differently. But normally, you know, most of my trading is done in thinkorswim. This one was done in a different account. And so it looked like I said it looked different. It felt different. And so maybe that's what what threw me. But when I looked at the trade, it showed me that oh, I had made 15 $100, which was great. But there was plenty of time left. There was still another maybe another week, week and a half left in the trade. And I could have made another I think $600. I said "huh this is interesting. I made 1500, I got my goal, but I can make another 600. Now 600. That's a lot of money, right? I mean, I just have to sit in it for maybe like another 10 days, the stock is really far away from from my short strike. What are the chances of this trade going bad, pretty little probabilities on my side time is on my side, you know, data is gonna pick up and every day I stay in the trade, I could probably make another 100 bucks. Do I want to do that? Or do I want to stick to the rules? Now normally, I've gotten to the point where it's not even a question. I just take the trade off. But something caused me to pause. Something caused me to think about it like $600 that's a lot of money that give me for some people that's maybe not a house payment, but that's definitely a car payment. Right. Hmm, interesting. So I paused and I thought about it. I'm like maybe I can stay in it. Maybe I can stay in it. Now here I am. violating my rules. My rules is you get your gain, you get your 100% your your 10% profit and you get out. That's it. There's no ifs, ands or buts. You get your money get up. But here I am thinking about it. Eventually, I did get up. I took my money and I got out. But it really bothered me that I was sitting there thinking a
I'm going to call this episode, a thing about scaling. And when I'm talking about scaling, I'm talking about scaling up your trading in terms of trading larger amounts and larger quantities of contracts. So this comes into play, because we have several students who are going through one of our, I guess, our credit spread mastery program. And we teach them the fundamentals, we teach them how to do the trades, we work with them, we show them how to do it. And then at the end, after they've had really great success, and they're ready for it, we talk about scaling, how to go from, you know, one to two to three contracts to 510 50 100 or more, depending on the size of the account. And so, we've been having these discussions, and that's why it's in the top of my head, and I noticed something recently, that I wanted to share with you. Now, I tell everybody, and I've said this many times on that podcast as well. trading is 80% Mental 20% Physical, right?
So whatever you do, the thing, the analyzing, the research, the clicking, the monitoring, the trading itself, the stuff that you do with your hands on their broker, and moving money around all that stuff, that's 20% of trading. 80% is what goes on in your mind, and how you process how you handle things, your emotions. And when it gets to, when it comes to scaling, that really, really starts to play a bigger role, the emotions, how to handle those things, that is really important to have a handle on before you start scaling. Because otherwise, you're going to have issues. And those issues are going to be very expensive. So one of the things that I noticed recently, is I was doing a I had a $15,000 trade on. And it was a normal spread that I had put on, and it had hit my goal, which was 10% for the month. So it's like a great, you know, $1500.. not bad for a trade. I'll take it very nice. And so according to my plan, I'm supposed to take the trade off, I'm supposed to finish it exited, take my money and relax, right? Or move it to another trader or do whatever.
But as I'm looking at this trade, it was not in my regular brokerage account, it was in a different brokerage account. And so the way that trade looks is different. Maybe that's why I felt or felt differently. But normally, you know, most of my trading is done in thinkorswim. This one was done in a different account. And so it looked like I said it looked different. It felt different. And so maybe that's what what threw me. But when I looked at the trade, it showed me that oh, I had made 15 $100, which was great. But there was plenty of time left. There was still another maybe another week, week and a half left in the trade. And I could have made another I think $600. I said "huh this is interesting. I made 1500, I got my goal, but I can make another 600. Now 600. That's a lot of money, right? I mean, I just have to sit in it for maybe like another 10 days, the stock is really far away from from my short strike. What are the chances of this trade going bad, pretty little probabilities on my side time is on my side, you know, data is gonna pick up and every day I stay in the trade, I could probably make another 100 bucks. Do I want to do that? Or do I want to stick to the rules? Now normally, I've gotten to the point where it's not even a question. I just take the trade off. But something caused me to pause. Something caused me to think about it like $600 that's a lot of money that give me for some people that's maybe not a house payment, but that's definitely a car payment. Right. Hmm, interesting. So I paused and I thought about it. I'm like maybe I can stay in it. Maybe I can stay in it. Now here I am. violating my rules. My rules is you get your gain, you get your 100% your your 10% profit and you get out. That's it. There's no ifs, ands or buts. You get your money get up. But here I am thinking about it. Eventually, I did get up. I took my money and I got out. But it really bothered me that I was sitting there thinking a
20 min