A colleague introduced me to options trading using different strategies and recommended the Tastytrade website to learn about that type of investing. That sounds exciting because I'm nerdy and love numbers. But I don't really trust the guy because he looks like he has a gambling problem. I love learning strategies and don't mind looking into trading options if it is legit. My brother actually used to make money playing poker using the same strategy: no emotions, risk management and small stakes.
So the question is: does anyone have any experience with strategic option trading using the Tastytrade knowledge? Or is it just another way to promote Thinkorswim, make you place many trades and collect fees?
I realise that this kind of investing required lots of homework and research. I don't mind that, but before I begin I'd like to find out what others think.
Tastytrade
Re: Tastytrade
I'm not going to be of much help here, but a couple of years ago I watched several of their videos. I did mind them very entertaining. The Tom Sosnoff guy was teaching his daughter how to trade. I think you can learn a fair deal from the videos, but like any other kid of investing, I would just be careful and create your own strategy. What works for them may not work for you.
Re: Tastytrade
I also watched all the basic "Where do I start" videos and they were entertaining and easy to follow. Also I played with Dough a little bit (although we can't use Dough in Canada). But here's what I can't understand. If the guys and gals on Tastytrade claim to be making 20-60% ROC, why no one is hunting them to work for the finance sector multiplying their capital? I understand that the volume and liquidity of options trading is not great to have an insurance company to be interested, but there are smaller companies.
Re: Tastytrade
You need a lot of leverage to achieve 20-60% ROC`s. That leverage will kill your portfolio one day (and take all that money you made away). Without leverage you can only achieve single digit returns and with higher short term taxrates its a shot in the foot.CECTPA wrote:I also watched all the basic "Where do I start" videos and they were entertaining and easy to follow. Also I played with Dough a little bit (although we can't use Dough in Canada). But here's what I can't understand. If the guys and gals on Tastytrade claim to be making 20-60% ROC, why no one is hunting them to work for the finance sector multiplying their capital? I understand that the volume and liquidity of options trading is not great to have an insurance company to be interested, but there are smaller companies.
There is only one way i know to capture and keep money from option selling (and get returns >20%) and that is to buy XIV and periodically rebalance out of it. But of course its very volatile, boring and takes away all the fun. Its discussed in the permanent portfolio forums.
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MarginVariation
- Posts: 25
- Joined: Fri Sep 05, 2014 6:19 pm
Re: Tastytrade
I watched their show religiously for about a year and no longer do so. Treat them as pure entertainment and nothing more.
There is a giant thread on Elite Trader bashing that recently got taken down. However, I still do trade options rather actively and will be doing so on most of my net worth as I believe buy & hold is fundamentally flawed.
Rather than try to post my own thoughts, I found a review from Lazy Trader that sums it up quite nicely below.
The Bad:
- No single trading strategy in the world is perfect and superior.
If everybody in the universe traded the same perfect profitable strategy and nothing else, guess what? The strategy would stop being perfect and profitable because somebody has to lose. Someone makes money, someone has to lose it. We're talking about active trading and not investing here. Because the trading Holy Grail doesn't exist, it is not a very intelligent exercise from the hosts to criticize other strategies that are not based on selling Options using Implied Volatility Rank as a guideline. Negating the profitability and viability of other trading styles is ignoring history. It's ignoring the huge academic evidence documented by serious experienced traders/authors (I'm not talking about sensationalist CNBC or MarketWatch). This happens almost every single day. To illustrate my point, a few days ago they were saying something like "there is no such thing as a trend", questioning the existence of one of the tenets of the markets. On another occasion they talked about the Turtle Trading system and how it had been negative for the industry in that it created a legend, a hype on something that just randomly happened to work in the past but has never been applicable while we have seen on this humble blog that is far from being the case. These are just two recent examples but it is applicable to everything else: Chart analysis, patterns recognition, suspicious options trading activity, break out trading styles, trend followers, long term investing. You name it, they will discredit it. The only thing that works is selling options based on implied volatility rank above 50%. A newbie trader will tend to adhere to this advice as the Bible, especially when heard from two market veterans of 2-3 decades and this is what I have a problem with. It discourages research, it discourages self-discovery and study on the individual rookie trader limiting their growth and potential and tying them to one system which in the end is no holy grail, just another vision for trading the markets. Where does this leave the thousands of very successful investors that have made fortunes over the years not selling Credit Spreads? Where does this leave the countless CTAs that have been able to ride monster futures' trends in the past whose returns have been properly audited and documented? Where does this leave the insider traders that have made huge suspicious bets right before an "Excellent" press release comes out and end up making millions or going to jail? (Almost always making the millions). The markets are not random and IVR based options selling is not the only way to make money in the markets.
- Trading small and often. This advice, although wise in larger accounts and for very experienced traders can be very harmful for rookies and for traders with not so large accounts. If you trade too often, in general this means there are many suboptimal entries where you don't have a mathematical edge in your favor. Very active trading is in many cases the result of an addictive behavior, the inability to restrain yourself and not the result of a well studied concise edge. Very active trading is also not suitable for most people with a day job. It is also very stressful which many individuals simply can't handle, inevitably resulting in making harm to their accounts. In terms of costs, if you trade 5,000 positions per year and each one costs you one dollar, only one dollar which is a ridiculously low price, you are spending $10,000 in commissions (entry + exit). Assuming that you have a $25,000 account, this means you need to make 40% return per year on your portfolio just to break even. On a $100,000 portfolio you would need a 10% return just to break even. Needless to say, if the S&P500 returns 7% per year on average, and 90-95% of traders fail to beat that performance, including professionals, then a 10% drag on the performance of your portfolio just due to commissions is extremely damaging and in most cases doomed to failure. There are many instances of profitable mechanical trading systems and CTAs that trade based on riding long term trends which may end up making 20 or 30 trades per year only. You can also implement powerful and well diversified momentum based ETF Rotation systems making less than 50 trades per year with a great likelihood of beating the markets. You can simply invest passively in indexes or dividend growth stocks. All these basic approaches offer viable long term alternatives and do not require you to trade small and often.
- Some of their practices are questionable and in large part responsible for the hosts' under-performance.
For example if volatility is your edge then why try to outsmart the markets scalping futures? a product with no volatility component? Where is the study suggesting this could be a profitable venture? As I said, I am not as experienced as the hosts, far from it, but I have digested hundreds of trading related materials and I have never heard of anyone becoming wealthy scalping futures. Notice that I'm not saying that trading futures profitably is impossible. Of course not. I'm talking about scalping. More specifically discretionary scalping (without any risk management methodology).
- If the markets are random (which they believe it is), why make directional futures bets against the trend with no other edge than market direction? Scalping futures does not offer a time decay component or a volatility collapse edge, so they are trying to make money entirely based on guessing market direction in an environment that they believe is perfectly efficient. There is obviously a conflict here where their doing (betting on direction) contradicts their believes (markets are random). If markets are truly random, then this practice will lead you to 50-50 in the long run, which is a bad proposition because net net you will end up losing money to commissions and slowly killing your account.
- If trading small is a necessity then why let small positions become giant losers? If you go long Oil at 80 and it goes down to 50, your loss eventually gets bigger regardless of how small you traded. You can trade the spot Forex EURUSD as small as you want, that if you go long Euro at 1.28 and it falls to 1.07 your loss will be significant at one point. You can short the Nasdaq at 3500 with as small a position as you want, if it goes to 4500 and you haven't closed your trade it will eventually become painful and may take years to recover if at all. I know I'm not being exact to the penny with these numbers as I am not subscribed to the "Bob the Trader" app, but this is the general perception and roughly some of the neighborhoods I remember. This is perhaps one of the most damaging practices for new traders and really for anybody with a less than 7 figure portfolio which takes me to the next point: cutting losses.
- Why are stop losses the devil? It is true that, in general, stop losses degrade the performance of most trading systems. However, this generally happens for tight or not well placed stop losses that inevitably lead you to get stopped out and locking losses more frequently than necessary. I believe at least a last faraway safe guard must be placed to protect capital. The practice of letting losers run indefinitely is really unhealthy as evidenced by the number of callers suffering every day because of it.
- Ignoring their own studies
On many occasions they ignore their own studies. I don't have time to enumerate them all but for example related to cutting losses being a good practice. It is not only my believe after programing and refining dozens of automated trading systems, it is also what their own studies like this one demonstrate. Why they bash the cutting losers practice while their own studies suggest that it is beneficial is beyond me. That same study shows that adjusting by rolling the tested side is more profitable yet they still insist to this day that the best approach is rolling the untested one as if this study never happened. This is one single study with two important takeaways: cut losses, roll tested side, both ignored. All based on percentage of winners, which in the end is an irrelevant statistic. There are many more, but you get my point.
- Duration over direction.
If you claim that the edge is in the duration of your trades giving you enough time to eventually be right, then why trade one day binary events such as earnings where you are collecting many winners and one single loser is devastating? Where you have zero chance of defending yourself when things go wrong. Trading earnings can be a profitable venture, but I believe it is a combination of both buying and selling premium as evidenced by two very serious sources I have followed for years which consistently make money. Anyways, a point should be made that these events should be traded with much smaller position sizes than the other "standard" trades as that practice can have very negative connotations.
- Constantly calling other people stupid, even people that are making money while you don't. Although this may be fun for some at the beginning, the viewer just gets tired of it after a few repetitions and seriously it doesn't bring any value to the show. There are many serious professional traders in the business and not all of them are a-holes. Certainly many of them have way smaller egos and perhaps wouldn't call them stupid in return. Also, not trading that particular style should not automatically qualify anybody as an idiot. Otherwise almost everybody is an idiot then. I know I am.
The Good:
In spite of all the criticisms the tastytrade network has many positive undeniable points in their favor:
- One network of real traders making real bets with real money, providing actionable ideas and not the general useless bla bla bla of the traditional financial media where gurus always look cool and genius. This provides an immense value because even if their trades go bad you always learn something, at least you learn what not to do.
- They open the eyes to the uninformed public about the sometimes abusive fees charged by under-performing institutions for managing your money.
- They provide a friendly introduction to the trading world for many people interested in the markets who in the past only got lost and discouraged with the immense sea of information (misinformation?) and mess that exists on the Internet. More people truly concerned about their finances can only be good for society.
- One more network -> one more show -> more content available -> more competition -> more value. The small guy ends up winning.
- Free education for introducing obscure and sometimes complex concepts for which in the past you were unmercifully charged $2,000. I'm not saying trading coaches are not worth what they charge. Some of them truly are. But there are way too many charlatans out there.
- They have introduced us to Karen the Super Trader who has been kind enough to explain her strategies to the last detail. This has formed and influenced the styles of many traders around the world (myself included) and it has also been very encouraging and motivating. There are doubters out there who believe she's a myth. My goal is not to reveal people's identities on this site. Karen is a real trader, with a real fund and real returns managing millions. With some basic Google search skills you can find out all about her, her funds, assets under management, etc.
- There is great value in showcasing a variety of styles and the hosts recognize that. This is why they have left the likes of Tim Knight, Slim, the Shadow Traders as part of the core of the show in spite of trading other styles that they don't agree with. You may not like this segment or the other but nobody's forcing you to watch them all! Do you enjoy chart analysis? Do you love cyclical analysis? Do you prefer momentum or break out trading styles? There's always something you can focus your attention on and discard the rest if you want.
- Commission reductions for Canadians and perhaps for other countries in the future. This is a tangible benefit and I don't care if they receive compensation for my trades. The point is, I'm paying much less in commissions thanks to their business with TD Canada and for that I can only say Thank you.
- They provide company and entertainment to lonely full time traders from home.
- It has made trading way more sociable, allowing us to meet other great people and like-minded traders on the social networks. This is wonderful and wouldn't have been possible without the existence of tastytrade.
As you see, I'm of the opinion that their trading practices have some flaws that can be very dangerous to the not so experienced or not well capitalized traders (the majority) but there are also many good points. There is room for improvement but that can only be good! Otherwise life would be too boring. Perfection is boring.
So, there you have it. My own personal opinion formed from watching the show for more than two years now. Hating doesn't lead the world to anything folks. Of course it may be frustrating for someone who lost significant amounts of money following their strategies, which in the end shows that trading is one of the most challenging endeavors anyone can undertake in their life. That's why my advice is, watch the show and recognize its values as much as its flaws. Take it all with a grain of salt. Be wise. Study. Find what works for you. Do not drink the kool aid. Always paper trade the validity of your ideas for months before you jump in. Make the show good for yourself by being positive and watching the segments that you like. If you absolutely hate it all without remedy, at least you have one more topic of conversation in this life which makes you a more interesting individual.
There is a giant thread on Elite Trader bashing that recently got taken down. However, I still do trade options rather actively and will be doing so on most of my net worth as I believe buy & hold is fundamentally flawed.
Rather than try to post my own thoughts, I found a review from Lazy Trader that sums it up quite nicely below.
The Bad:
- No single trading strategy in the world is perfect and superior.
If everybody in the universe traded the same perfect profitable strategy and nothing else, guess what? The strategy would stop being perfect and profitable because somebody has to lose. Someone makes money, someone has to lose it. We're talking about active trading and not investing here. Because the trading Holy Grail doesn't exist, it is not a very intelligent exercise from the hosts to criticize other strategies that are not based on selling Options using Implied Volatility Rank as a guideline. Negating the profitability and viability of other trading styles is ignoring history. It's ignoring the huge academic evidence documented by serious experienced traders/authors (I'm not talking about sensationalist CNBC or MarketWatch). This happens almost every single day. To illustrate my point, a few days ago they were saying something like "there is no such thing as a trend", questioning the existence of one of the tenets of the markets. On another occasion they talked about the Turtle Trading system and how it had been negative for the industry in that it created a legend, a hype on something that just randomly happened to work in the past but has never been applicable while we have seen on this humble blog that is far from being the case. These are just two recent examples but it is applicable to everything else: Chart analysis, patterns recognition, suspicious options trading activity, break out trading styles, trend followers, long term investing. You name it, they will discredit it. The only thing that works is selling options based on implied volatility rank above 50%. A newbie trader will tend to adhere to this advice as the Bible, especially when heard from two market veterans of 2-3 decades and this is what I have a problem with. It discourages research, it discourages self-discovery and study on the individual rookie trader limiting their growth and potential and tying them to one system which in the end is no holy grail, just another vision for trading the markets. Where does this leave the thousands of very successful investors that have made fortunes over the years not selling Credit Spreads? Where does this leave the countless CTAs that have been able to ride monster futures' trends in the past whose returns have been properly audited and documented? Where does this leave the insider traders that have made huge suspicious bets right before an "Excellent" press release comes out and end up making millions or going to jail? (Almost always making the millions). The markets are not random and IVR based options selling is not the only way to make money in the markets.
- Trading small and often. This advice, although wise in larger accounts and for very experienced traders can be very harmful for rookies and for traders with not so large accounts. If you trade too often, in general this means there are many suboptimal entries where you don't have a mathematical edge in your favor. Very active trading is in many cases the result of an addictive behavior, the inability to restrain yourself and not the result of a well studied concise edge. Very active trading is also not suitable for most people with a day job. It is also very stressful which many individuals simply can't handle, inevitably resulting in making harm to their accounts. In terms of costs, if you trade 5,000 positions per year and each one costs you one dollar, only one dollar which is a ridiculously low price, you are spending $10,000 in commissions (entry + exit). Assuming that you have a $25,000 account, this means you need to make 40% return per year on your portfolio just to break even. On a $100,000 portfolio you would need a 10% return just to break even. Needless to say, if the S&P500 returns 7% per year on average, and 90-95% of traders fail to beat that performance, including professionals, then a 10% drag on the performance of your portfolio just due to commissions is extremely damaging and in most cases doomed to failure. There are many instances of profitable mechanical trading systems and CTAs that trade based on riding long term trends which may end up making 20 or 30 trades per year only. You can also implement powerful and well diversified momentum based ETF Rotation systems making less than 50 trades per year with a great likelihood of beating the markets. You can simply invest passively in indexes or dividend growth stocks. All these basic approaches offer viable long term alternatives and do not require you to trade small and often.
- Some of their practices are questionable and in large part responsible for the hosts' under-performance.
For example if volatility is your edge then why try to outsmart the markets scalping futures? a product with no volatility component? Where is the study suggesting this could be a profitable venture? As I said, I am not as experienced as the hosts, far from it, but I have digested hundreds of trading related materials and I have never heard of anyone becoming wealthy scalping futures. Notice that I'm not saying that trading futures profitably is impossible. Of course not. I'm talking about scalping. More specifically discretionary scalping (without any risk management methodology).
- If the markets are random (which they believe it is), why make directional futures bets against the trend with no other edge than market direction? Scalping futures does not offer a time decay component or a volatility collapse edge, so they are trying to make money entirely based on guessing market direction in an environment that they believe is perfectly efficient. There is obviously a conflict here where their doing (betting on direction) contradicts their believes (markets are random). If markets are truly random, then this practice will lead you to 50-50 in the long run, which is a bad proposition because net net you will end up losing money to commissions and slowly killing your account.
- If trading small is a necessity then why let small positions become giant losers? If you go long Oil at 80 and it goes down to 50, your loss eventually gets bigger regardless of how small you traded. You can trade the spot Forex EURUSD as small as you want, that if you go long Euro at 1.28 and it falls to 1.07 your loss will be significant at one point. You can short the Nasdaq at 3500 with as small a position as you want, if it goes to 4500 and you haven't closed your trade it will eventually become painful and may take years to recover if at all. I know I'm not being exact to the penny with these numbers as I am not subscribed to the "Bob the Trader" app, but this is the general perception and roughly some of the neighborhoods I remember. This is perhaps one of the most damaging practices for new traders and really for anybody with a less than 7 figure portfolio which takes me to the next point: cutting losses.
- Why are stop losses the devil? It is true that, in general, stop losses degrade the performance of most trading systems. However, this generally happens for tight or not well placed stop losses that inevitably lead you to get stopped out and locking losses more frequently than necessary. I believe at least a last faraway safe guard must be placed to protect capital. The practice of letting losers run indefinitely is really unhealthy as evidenced by the number of callers suffering every day because of it.
- Ignoring their own studies
On many occasions they ignore their own studies. I don't have time to enumerate them all but for example related to cutting losses being a good practice. It is not only my believe after programing and refining dozens of automated trading systems, it is also what their own studies like this one demonstrate. Why they bash the cutting losers practice while their own studies suggest that it is beneficial is beyond me. That same study shows that adjusting by rolling the tested side is more profitable yet they still insist to this day that the best approach is rolling the untested one as if this study never happened. This is one single study with two important takeaways: cut losses, roll tested side, both ignored. All based on percentage of winners, which in the end is an irrelevant statistic. There are many more, but you get my point.
- Duration over direction.
If you claim that the edge is in the duration of your trades giving you enough time to eventually be right, then why trade one day binary events such as earnings where you are collecting many winners and one single loser is devastating? Where you have zero chance of defending yourself when things go wrong. Trading earnings can be a profitable venture, but I believe it is a combination of both buying and selling premium as evidenced by two very serious sources I have followed for years which consistently make money. Anyways, a point should be made that these events should be traded with much smaller position sizes than the other "standard" trades as that practice can have very negative connotations.
- Constantly calling other people stupid, even people that are making money while you don't. Although this may be fun for some at the beginning, the viewer just gets tired of it after a few repetitions and seriously it doesn't bring any value to the show. There are many serious professional traders in the business and not all of them are a-holes. Certainly many of them have way smaller egos and perhaps wouldn't call them stupid in return. Also, not trading that particular style should not automatically qualify anybody as an idiot. Otherwise almost everybody is an idiot then. I know I am.
The Good:
In spite of all the criticisms the tastytrade network has many positive undeniable points in their favor:
- One network of real traders making real bets with real money, providing actionable ideas and not the general useless bla bla bla of the traditional financial media where gurus always look cool and genius. This provides an immense value because even if their trades go bad you always learn something, at least you learn what not to do.
- They open the eyes to the uninformed public about the sometimes abusive fees charged by under-performing institutions for managing your money.
- They provide a friendly introduction to the trading world for many people interested in the markets who in the past only got lost and discouraged with the immense sea of information (misinformation?) and mess that exists on the Internet. More people truly concerned about their finances can only be good for society.
- One more network -> one more show -> more content available -> more competition -> more value. The small guy ends up winning.
- Free education for introducing obscure and sometimes complex concepts for which in the past you were unmercifully charged $2,000. I'm not saying trading coaches are not worth what they charge. Some of them truly are. But there are way too many charlatans out there.
- They have introduced us to Karen the Super Trader who has been kind enough to explain her strategies to the last detail. This has formed and influenced the styles of many traders around the world (myself included) and it has also been very encouraging and motivating. There are doubters out there who believe she's a myth. My goal is not to reveal people's identities on this site. Karen is a real trader, with a real fund and real returns managing millions. With some basic Google search skills you can find out all about her, her funds, assets under management, etc.
- There is great value in showcasing a variety of styles and the hosts recognize that. This is why they have left the likes of Tim Knight, Slim, the Shadow Traders as part of the core of the show in spite of trading other styles that they don't agree with. You may not like this segment or the other but nobody's forcing you to watch them all! Do you enjoy chart analysis? Do you love cyclical analysis? Do you prefer momentum or break out trading styles? There's always something you can focus your attention on and discard the rest if you want.
- Commission reductions for Canadians and perhaps for other countries in the future. This is a tangible benefit and I don't care if they receive compensation for my trades. The point is, I'm paying much less in commissions thanks to their business with TD Canada and for that I can only say Thank you.
- They provide company and entertainment to lonely full time traders from home.
- It has made trading way more sociable, allowing us to meet other great people and like-minded traders on the social networks. This is wonderful and wouldn't have been possible without the existence of tastytrade.
As you see, I'm of the opinion that their trading practices have some flaws that can be very dangerous to the not so experienced or not well capitalized traders (the majority) but there are also many good points. There is room for improvement but that can only be good! Otherwise life would be too boring. Perfection is boring.
So, there you have it. My own personal opinion formed from watching the show for more than two years now. Hating doesn't lead the world to anything folks. Of course it may be frustrating for someone who lost significant amounts of money following their strategies, which in the end shows that trading is one of the most challenging endeavors anyone can undertake in their life. That's why my advice is, watch the show and recognize its values as much as its flaws. Take it all with a grain of salt. Be wise. Study. Find what works for you. Do not drink the kool aid. Always paper trade the validity of your ideas for months before you jump in. Make the show good for yourself by being positive and watching the segments that you like. If you absolutely hate it all without remedy, at least you have one more topic of conversation in this life which makes you a more interesting individual.
Re: Tastytrade
MarginVariation, thanks!
How close to reality is the Paper Money? Is is just a sandbox for rookies where supply/demand is skewed by the fact that people are not serious about their trades? Or is it a good way to try strategies?
How close to reality is the Paper Money? Is is just a sandbox for rookies where supply/demand is skewed by the fact that people are not serious about their trades? Or is it a good way to try strategies?
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MarginVariation
- Posts: 25
- Joined: Fri Sep 05, 2014 6:19 pm
Re: Tastytrade
If you are BRAND new to options trading, paper money is fantastic to learn the various expiration payoff strategies, how the greeks interact to price movement and structuring trades. Beyond that, there is no better tool than risking your own capital because it's simply not the same. I make 50-60% y/y returns on paper money with trades I can never stomach in real life.
I see your location is Canada...our brokerage business is terrible. I would recommend downloading TOS Paper Money platform, their analyze tab is fantastic for option analysis.
Tom had an affiliate deal for Canadians to trade on TOS I believe and it's $1.5/trade...I think it was only for a limited time. I trade with Interactive Brokers for the past 4 years, $1/trade no issues, would definitely recommend them over the Scam "Big 5 Banks".
I guess to answer your overall question, yes it works. I made very modest returns with goals of a smooth equity curve and minimal draw downs. I also play small stakes poker profitably since 2009 and if you have an analytical mind, option trading is right up your alley. I would recommend Option Volatility & Pricing (Natenberg..this one is quite technical) and an introduction: https://www.amazon.ca/Options-Strategic ... 0735201978
I see your location is Canada...our brokerage business is terrible. I would recommend downloading TOS Paper Money platform, their analyze tab is fantastic for option analysis.
Tom had an affiliate deal for Canadians to trade on TOS I believe and it's $1.5/trade...I think it was only for a limited time. I trade with Interactive Brokers for the past 4 years, $1/trade no issues, would definitely recommend them over the Scam "Big 5 Banks".
I guess to answer your overall question, yes it works. I made very modest returns with goals of a smooth equity curve and minimal draw downs. I also play small stakes poker profitably since 2009 and if you have an analytical mind, option trading is right up your alley. I would recommend Option Volatility & Pricing (Natenberg..this one is quite technical) and an introduction: https://www.amazon.ca/Options-Strategic ... 0735201978
Re: Tastytrade
Hey tastrytrade ! i'm on one of their main guys site all the time(slope of hope and tim knight).CECTPA wrote:I also watched all the basic "Where do I start" videos and they were entertaining and easy to follow. Also I played with Dough a little bit (although we can't use Dough in Canada). But here's what I can't understand. If the guys and gals on Tastytrade claim to be making 20-60% ROC, why no one is hunting them to work for the finance sector multiplying their capital? I understand that the volume and liquidity of options trading is not great to have an insurance company to be interested, but there are smaller companies.
I would second some of this sentiment. If the guys that did tastytrade were so good, why do they need to sell it ? they should be doing their stuff from some beachside villa in france and when the markets close, head out to have fun instead of having to market their stuff.
i'm a little leary of traders, as historically 95% of them lose money because you cannot predict the market conssitently for some term traders. this tim knight guy i mentioned is a bear, so he's always looking to make money shorting but he missed the china meltdown last winter and got in late and missed most of the brexit sell off. in both those cases, the market was overbought; you would think as someone who only looks to short and has been doing it for years; would see a setup on both. i have no idea how he's stayed in business given the market recovery since 2009.
i enjoy his site, the regular posters there are fun(i'm skicougar over there); but a majority of what he posts there and others post; is consistently wrong and misses big moves which is wehre shorts make money routinely. his siite will give you positioning advice for $40 a month. i would say you can read books and figure it out for yourself for a lot less, that's what i did. i dont trade or have options, but have a moving average strategy that keeps me out of the big drops like china last winter.
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Dream of Freedom
- Posts: 753
- Joined: Wed Aug 29, 2012 5:58 pm
- Location: Nebraska, US
Re: Tastytrade
Oh, awesome! Another aspiring option trader. This is the first I've heard of tastytrade, but I am totally getting into option trading. I just did my first calendar trade. 
Options bootcamp* has been good for me. They recommended the book "option volatility and pricing" **, to which I'm only about a 120 pages into so far because its a challenging read at least for me. Though so far I am very impressed.
http://www.theoptionsinsider.com/optionsbootcamp/
https://www.amazon.com/Option-Volatilit ... nd+Pricing
Options bootcamp* has been good for me. They recommended the book "option volatility and pricing" **, to which I'm only about a 120 pages into so far because its a challenging read at least for me. Though so far I am very impressed.http://www.theoptionsinsider.com/optionsbootcamp/
https://www.amazon.com/Option-Volatilit ... nd+Pricing
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eudaimonia
- Posts: 45
- Joined: Thu Apr 24, 2014 3:51 pm
Re: Tastytrade
I would echo most of the sentiments from MarginVariation. If you are brand new to options TastyTrade is useful to introducing the concepts.
That being said I'm always skeptical of anyone who 1) has no proven track record, 2) has a direct conflict. Other than the lack of an audited track record, I'm very leary of the fact that Tom still benefits from ThinkorSwim's commission structure and therefore him telling me to trade small and trade often is a direct conflict of interest. Also, it's well documented that several of their research team's studies are flawed (see EliteTrader) and if nothing else they are poorly documented.
If you are serious about learning trading as a craft you must have an edge. Selling IV at a relative high is not a quantifiable edge. Trading a lot isn't a quantifiable edge (unless you profit from brokerage firm kickbacks). Having fun while trading may be cool but again is not an edge.
If I were starting out again I would follow this process for learning options:
1) Read various books/YouTube videos to understand the different options flavors (bull call spread, butterfly, etc.)
2) Obtain or program a backtesting software that works for options. Commercial examples are OptionNetExplorer, OptionVue
3) *Key step* Spend about 1,000 hours testing various strategies to determine multiple edges (at least 5)
4) Verify these strategies work in live markets with small money
5) Go back to steps 1-3 for continue learning
6) Success
That being said I'm always skeptical of anyone who 1) has no proven track record, 2) has a direct conflict. Other than the lack of an audited track record, I'm very leary of the fact that Tom still benefits from ThinkorSwim's commission structure and therefore him telling me to trade small and trade often is a direct conflict of interest. Also, it's well documented that several of their research team's studies are flawed (see EliteTrader) and if nothing else they are poorly documented.
If you are serious about learning trading as a craft you must have an edge. Selling IV at a relative high is not a quantifiable edge. Trading a lot isn't a quantifiable edge (unless you profit from brokerage firm kickbacks). Having fun while trading may be cool but again is not an edge.
If I were starting out again I would follow this process for learning options:
1) Read various books/YouTube videos to understand the different options flavors (bull call spread, butterfly, etc.)
2) Obtain or program a backtesting software that works for options. Commercial examples are OptionNetExplorer, OptionVue
3) *Key step* Spend about 1,000 hours testing various strategies to determine multiple edges (at least 5)
4) Verify these strategies work in live markets with small money
5) Go back to steps 1-3 for continue learning
6) Success
Re: Tastytrade
some facts:
- the option market is very efficient
- there is no excess money flowing into options (unlike the stock or bond market), its a zero sum game
- trading costs to overcome are high with bid/ask spreads and commissions
So the "edge" you need to make money needs to come from the underlying, why not trade the underlying directly without the big costs?
Tom made all his money by creating and selling the trading platform, how can anybody seriously think that this man knows how to make money trading? The whole Tastytrade thing ist just a big advertising machine to suck you into a casino where the only one with an edge is the broker. The guys that made the money in this business were the market makers in the pit, but they sit on the opposite site of your trade. Nowadays this part is computerized.
- the option market is very efficient
- there is no excess money flowing into options (unlike the stock or bond market), its a zero sum game
- trading costs to overcome are high with bid/ask spreads and commissions
So the "edge" you need to make money needs to come from the underlying, why not trade the underlying directly without the big costs?
Tom made all his money by creating and selling the trading platform, how can anybody seriously think that this man knows how to make money trading? The whole Tastytrade thing ist just a big advertising machine to suck you into a casino where the only one with an edge is the broker. The guys that made the money in this business were the market makers in the pit, but they sit on the opposite site of your trade. Nowadays this part is computerized.
Re: Tastytrade
That's what i figured, but i didn't know.frommi wrote:some facts:
Tom made all his money by creating and selling the trading platform, how can anybody seriously think that this man knows how to make money trading? The whole Tastytrade thing ist just a big advertising machine to suck you into a casino where the only one with an edge is the broker. The guys that made the money in this business were the market makers in the pit, but they sit on the opposite site of your trade. Nowadays this part is computerized.
I bet he's paying all his bills with all the suckers paying $40 bucks a month for his advice, he only needs about 200 to make 6 figures. hmmm, maybe i should start a site; i got a index strategy that can be applied to stocks; definitely have one for $40 a month.