If you’re a long time listener, then you know the topic of ‘risk’ has come up on…well… more than one occasion. This is once again the case, but with a little bit different of a twist that does an excellent job of illustrating and explain just how risk in and of itself is subjective. Chezz and I interview Carl (same name if trading room) about his journey which has been quite the journey. So much so, this is a two-part episode… there is lots to cover! From being a business owner to getting interested and then involved in the markets, there are many experiences we can all learn from so let’s get to it!
Today we interview one of our newer members, Carl. He has always been hands-on and has launched several businesses but didn’t like the randomness of the stock market so he stayed away from it.
Initially, Carl had no interest in the stock market but after investigating ways to have a 3rd income, he came around to it. He initially started using Robinhood but got annoyed with the pattern day trade rules so he left and went to Interactive Brokers and funded an account well over the 25k amount.
After doing some research into UVXY and other volatility products, he strictly traded those products for quite a long time and became familiar with its daily moves and how it reacts to various market cycles.
Carl took a massive drawdown both unrealized and realized but this was part of his strategy from the onset. He’s done his backtesting and knows what his account can stomach in terms of volatility. Regardless of him using stop losses or not, if his entire account was to blow up in catastrophic fashion, it would not impact his livelihood. That trading account could go to 0 and his family and himself would be completely fine since he has multiple streams of income.
As Carl continued to expand his trading knowledge, he kept stumbling across people who would sell options against volatility tickers he traded. After purchasing a book about options he realized he wanted a more interactive approach to learn them and joined Claytrader University.
We started our first company when I was 12 and you have to have taxable income to fund an IRA so that’s what we did.
I didn’t even have a clue of what I didn’t know. Granted, I do a lot of reading. I did the shotgun approach until it stopped working.
Every position I took a loss on turned into a winner. I ended up being right. I realized that’s not a sustainable approach.
I bought this green book about options. The book was awfully dry and I couldn’t ask any questions so I joined CTU.
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