——Let me talk to you about my monthly trading of $100 million in alt options
I have been very busy participating in the options competitions of various platforms recently;
For example, a star friend recently asked:
Mr. Sober, how can we make steady profits in the blue ocean market of options?
This question caused me to think deeply: Why is it that most of us keep making profits and losses after trading for a long time and can never get out of it?
Psychology has a great impact on trading. Most people always think that they can completely overcome it, but the facts prove the opposite. Most people always make mistakes again and again. In fact, there are methods to practice, but you won’t listen when you are told, and you won’t do it when you listen, and you won’t persist when you do it. This is the reason why you can’t do well in trading.
It just so happens that the last few options competitions are almost over;
In the past month, I have traded nearly 100 million US dollars in alt-options on BIT, and I have raised the transaction fee to VIP 9.
After a quick calculation of the past three months, I was able to earn about 20,000-50,000 USD in prize money each month. (As shown in the figure below)
This is one of those games where players with high team trading volume can earn 1000-1500U per week;
Even if the players complete the guaranteed task, they can still receive 200-500U of competition bonus.
In addition to the prize money, I have been trading with a stable cash flow option strategy for more than a year. So let’s talk about this topic.
We know that any transaction is a probability-based job. We are just constantly looking for a period of time when the price is relatively predictable to hold it.
Some people ask me “You used to be a trader, can you teach me how to trade options?”
I will patiently sit down and listen to the ideas of some players who come to me for a 1 v 1 consultation for an entire afternoon, and most of the time, I will find that they don't really want to be a trader.
They don’t even understand the difference between trading and investing. They just think that options offer explosive returns, and coupled with the high volatility of cryptocurrencies themselves, they want to make more money here than investing.
I usually try to make him understand the difference between trading and investing, explaining that they are two different things. Mixing the two together will lead to a terrible disaster. Trading options seems to be a simple thing, but most people fail, mainly for the following reasons:
1. Not taking trading seriously
What is trading? In essence, it is a professional thing, and the biggest difference from other professional players is that in the short term you don’t know whether he is a liar or a real trading expert; just like doctors, lawyers or engineers, there is a huge difference between non-professionals and professionals.
What is common to all these industries is that all of them require the right mindset, as well as formal training, patience and practice.
People who are good at options trading have a skill that allows them to make money no matter what the market conditions are or where they are. It's like having a money printing machine that can print money at any time during trading hours.
Of course, you can't get this skill for no reason. You must spend time and energy to acquire the necessary techniques for this skill.
Trading is also a business, a serious business. You can imagine creating your own business, we compare opening a boutique hot pot restaurant and being an options trader.
If opening a store requires investing a lot of time and money into store rent, equipment, employee recruitment, training, business license, etc., you still cannot guarantee a profit after the investment. This is true not only for opening a coffee shop, but for any business.
In comparison, starting a trading business is relatively simpler and easier. In fact, you can open an options trading account immediately in the crypto world (if it is in A-shares, you need to pass the exam and the account must be at least 500,000 RMB), without any fees (qualification required), and start trading tomorrow.
Of course, I don't recommend you to do this immediately unless you are really ready. After all, the process of trading options from opening an account to entering the market for trading is obviously easier than starting any other business, and the process is relatively simple.
The simplest example is that if you buy a certain BTC or Sol options that I particularly like to trade, you can immediately recognize the loss and exit if you notice that the market situation is not right.
Compare it to the coffee shop you opened. You invested a lot of energy in it. But when you find that the location of the shop is not good, not enough customers come, and you are suffering continuous losses, you want to close the shop. However, there is no way to recognize the loss within a few seconds by clicking the mouse twice like trading. The process of option trading is so simple that people think that trading is a simple industry and do not take it seriously.
So the first reason why most traders ultimately fail is that people do not take trading as a serious matter at all. They regard it as a form of gambling, hoping to make a quick fortune.
Of course, there are some people who find entertainment and excitement through trading, and regard trading options as some kind of cool behavior, or that the identity of a trader gives people a sense of superiority and makes them more attractive. This is what I felt back then and I tried every means to become a trader.
2. Not Prepared Enough
Imagine that you run a boutique hotpot restaurant (not to mention a top restaurant like Haidilao), can you open the door to receive customers before you are ready? During business hours, when customers are halfway through drinking, you cannot suddenly suspend business because you are in a bad mood or lack of ingredients. You must be ready in advance to serve customers at any time.
This is no different than trading options; you must be prepared for any market move.
So what do you generally prepare for trading?
1. Trading plan.
You need to have your trading plan. How will you enter and exit the market? How much position will you take each time? What products will you trade? Many things need to be prepared in advance.
2. Study and practice.
I found that in the crypto world, because of the get-rich-quick effect, many people start trading without proper trading training. Many people even start trading without knowing what options are.
Most people would think twice before buying a mobile phone, and would learn about the pros and cons of various brands before making a decision, but they would have a different attitude towards something as serious as trading options. Just imagine, can anyone become a surgeon after reading one or two books?
Anyone who reads a book and watches a few videos can become a qualified lawyer? In reality, it is unlikely. Trading options is no exception. Before you start trading, you can't make money by just reading one or two books. You must simulate trading and practice, and you may even have to attend classes and receive solid training.
In fact, either you study intensively with a teacher for a year, or you are very self-taught and study on your own for a year.
3. Starting capital.
Many traders fail because they do not prepare enough funds. Because trading, like all business ventures, takes some time to succeed.
If the starting capital is too limited, beginners are often forced to save some actually necessary expenses.
They will try to use the most limited resources to achieve the greatest effect, resulting in a death spiral. Because traders with insufficient trading capital tend to take higher risks to obtain satisfactory expected returns, unreasonable risk/reward will make trading capital smaller and smaller, which will cruelly and directly destroy their trading dreams.
Therefore, if you want to make trading a career, you must be fully prepared.
3. No Discipline
This is the main reason why everyone fails in trading.
Imagine that you opened a hot pot restaurant. You cannot expect to make money every day. Sometimes business is slow and the income of the day is not enough to pay employee salaries and rent, but on days when business is good, these losses can be offset, just like trading does not make money every day.
In options trading, you have to accept the simple fact that you cannot expect every entry to be correct. It is impossible.
Trading is a probability-based job. We are just constantly looking for a period of time when prices are relatively predictable to hold positions. We must also have great patience to identify entry opportunities with attractive potential risk/reward.
If you observe the trading records of top traders, you will find that there are a large number of small losses in their transactions, but there will never be large trading losses, because as long as the trend does not meet expectations, stop loss will be executed.
This is the most basic thing you must learn about trading: every transaction includes a stop loss setting and there is absolutely no room for negotiation.
Because the market will not change just because you wishful thinking. A sudden crazy trend can destroy your entire account in an instant.
Unscrupulous traders who do not really grasp this fundamental principle (stop loss) are doomed to fail. This is a common problem among beginners. They are unwilling to accept small losses, but only by accepting this can trading enter the threshold.
If you are trading now and you don’t know where your stop loss is or should be placed on that trade, then you shouldn’t be trading at all and you don’t have a proper plan ready.
This is when you should take a step back, re-evaluate your strategy, and work your way back to the preparation stage.
The reason for lack of discipline is often the lack of ability to manage losses. It is easy to take profits, but it is much more difficult to face losses. Most people tend to delay losses in the hope of having a chance to break even.
But monitoring the stop loss price is like a diver monitoring their oxygen reserves. This is a clear boundary that must be adhered to. Once it is exceeded, there is only death. You must have a thousand reasons not to stop loss. In order to convince yourself to continue holding the losing position, you will say: "You know that it is a whale or ETF funds that are buying the bottom of BTC and entering the market. It is absolutely impossible to watch it continue to fall. I want to wait for a while."
You can always come back and establish a position again, but once losses expand, it will be difficult to make up.
I know you don't want to accept a loss of 1000U, but you probably don't want the loss to expand to 10000U. Of course, I don't want to see you end up with a loss of 100WU. This thought may make a month or even a year's hard work go to waste.
What traders do every day is risk management. Your only job during the trading session is also risk management. If you lack excellent risk management skills, you cannot become a top trader even if you are proficient in the most effective trading strategies.
4. Easily influenced by emotions
In the process of trading, beginners often feel lost and frustrated when they encounter setbacks in their operations. At this time, they usually have the determination to learn more market knowledge, master new strategies, and use more technical indicators.
They begin to turn their attention to other traders and join different chat rooms, trying to find answers from them. However, they may not realize that the root cause of their failure is not the lack of technology or strategy, but the lack of restraint on impulse and problems with risk and money management.
Successful traders often focus on the execution of trading skills rather than the results of profit and loss. They accept every positive or negative trading result and regard every transaction as an opportunity for self-improvement rather than negative emotions such as frustration and depression.
Trading is stressful, and options trading is probably the most stressful of all forms of trading.
One mistake can ruin a month's efforts, and missing an appropriate profit-taking opportunity can ruin a week's efforts.
Therefore, you must not be swayed by your emotions. Even if you have to stop loss, you must leave the market gracefully, eliminate negative emotions, and avoid the idea of recovering losses immediately. Don't forget what we said before, the logic of trading is "you must wait until a relatively predictable price opportunity to hold it". The idea of revenge will make you sink deeper and deeper.
If you find the stress unbearable, don't make any trades. Go outside and de-stress until you are sure you have regained your composure and can stay focused before you enter the trade again.
Trading is a process that requires continuous learning. Even if you have been able to make stable profits for many years, you still cannot relax. If there are no surprises in the market, surprises will surely come.
As long as a trader becomes overconfident and thinks he is smarter than the market or that he does not need to learn anymore, the market will remind you and you will lose money.
Let us encourage each other and work together to create a stable cash flow with options, reject anxiety and reject FOMO.
