#782 - Is Trading Really Profitable?
Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Is trading really profitable?” I think the short answer to this question is of course, yes, trading is profitable, but it’s profitable for those people who frankly just stick with it and have a system in place. We hear all the time this quote that’s thrown around which is that 90% of traders lose money. I don’t think that’s actually true. I think that 90% of traders actually just quit before they’ve given it enough time to let the numbers work themselves out. We talk about this all the time here at Option Alpha, the fact that if you want to be successful trading, you can’t whimsically tiptoe into this. You have to treat trading like a business. You have to find an expected probability edge or an expected outcome that you can take advantage of in the market. In our case for Option Alpha, it’s premium selling, it’s implied volatility and the over-expectation that we see in option pricing compared to actual in volatility that options experience. And so, once you have an edge that you can take advantage of, you have to build a system around capturing that edge. For us, it’s things like trading uncorrelated ticker symbols, small position size, high probability setups and lots of occurrences. I think if you can build a system around that and have proper risk management protocols in place, you will be successful trading. It’s just a matter of time and patience. And so, I think a lot of people who find failure in trading frankly just quit too early or don’t really have a system in place or the right risk management protocols to protect themselves in the case of trades that go against them. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.