A career in the gritty Texan construction industry might not seem like the ideal preparation for becoming a stock trader.
However, staying safe on-site demands precisely the same qualities of meticulous preparation, attention to detail, and self-care that keep successful traders alive in the markets.
Maybe that’s why newly retired ironworker Tim Heischberg of Houston has found himself so fascinated by the trading process. And he definitely has an affinity with the principles of risk management that are so crucial to profitable trading.
Not that Tim’s first steps have met with unqualified success. On the contrary, he’s only too happy to admit that it has been “a bumpier ride” than expected, but getting the job done right is his ironworker’s mantra.
Fortunately, with the expert guidance, he’s getting at Profit Prism, he’s very confident of turning things around.
Truth be told, while there are traders who become profitable almost immediately, there are others who need more time.
For these people, the most important thing is to have the resilience to persevere, the self-awareness to recognize their mistakes, and the determination to develop a trading style that suits their personality and abilities.
Tim has key qualities like perseverance, self-awareness, and determination in abundance. He also has the patience to take things slowly and trade small.
Such qualities are vital because new traders often find themselves faced with a bewildering menu of possibilities.
Are they going to be day traders or look to hold swing positions for a few days or weeks?
Will they focus only on long trades or try to short as well.
Will they trade penny stocks or options on blue chips?
Seasoned traders know there are no right or wrong answers to these questions. There is no single surefire method that trumps all others. Much depends on the trader’s desired lifestyle and his or her personal preferences.
Options, for example, can be a great way of quickly growing a small account, but they do bring extra layers of complexity and don’t suit everyone.
Tim found that, in his own words, he “didn’t do options well at all.” And that’s perfectly okay. It might be that with time and practice, he’d overcome these difficulties, but the fact is, there’s no need to.
At Profit Prism, Tim has found a variety of ways of growing his account, and he’s now enjoying learning with Jeff Williams in particular. “I’ve been trading while learning,” he says, “but trading small to limit my losses until the training wheels come off and I can fly.”
So the point is not whether options are good or bad in and of themselves, but that every new trader needs to take the time to find the instruments, strategies, and indicators that work for them.
“I was looking to supplement my retirement without blowing up my small account. The wife told me I won’t get another chance if I do : )”
The same is true of stop losses. Tim initially struggled with some of the technicalities of placing his stop orders, but even many successful traders disagree about the best way to manage their stops.
Some believe that entering stop losses into the system can make them more likely to be triggered and prefer to keep their stop price in their head, entering a sell order only when that price is reached. Others may protect themselves by buying put options entitling them to sell at a specific price.
The key thing is not so much how it’s done, but that the trader has a clear idea of the price that’ll deliver the maximum acceptable loss on a particular trade. Also, the trader should avoid the temptation to move a stop hoping that a losing trade will suddenly turn round.
“I needed a small account specialist who could help me get my account going in the right direction. I don’t do options well at all.”
Having traded briefly without stops, Tim now appreciates just how crucial they are. But stops are nevertheless only one aspect of risk management, and he has also been remarkably quick to develop an understanding of the other vital elements, which have a lot to do with the psychology of trading.
“When you have a bad day, shrug it off,” advises Tim. “Don’t let the market get into your head or else you’re dead.”
As he puts it, “Don’t be greedy. Pigs get fat, hogs get slaughtered. A small gain is better than a big loss, and if you miss a trade don’t chase it or it might back up and run you over. It’s easier to sleep with missed opportunities than lost dollars.”
Of course, statements like those might sound cliché, but it’s only because variants of them can be found in almost any quality trading manual. And the reason they’ve been quoted so often is that they’re both valid and vitally important.
“Getting a lot of good counsel and education from Jeff Williams in the trading/training room. The payoff is coming soon.”
As Tim has realized early in his trading career, there’s much more to risk management than the precise computation of risk and reward ratios, position sizes, and maximum acceptable losses.
What really matters is having the right attitude and having the self-control to stay out of the market until the right opportunity comes along. Luckily, under the expert guidance of Jeff Williams and his team at Profit Prism, Tim is rapidly improving his technical skills and steadily gaining in confidence.
“I really want to get to the point where my small account blossoms into a large one,” he says, “I’m restarting at $2,500 and would like to see it at least double by year’s end.”
Most would agree that Tim’s goal is ambitious, however, with the mental resilience he has shown so far, bolstered by his acute grasp of the essential principles of risk management, it’s a very realistic goal.
And now, there’s a high possibility he’ll go on to enjoy the financial freedom that’s his primary trading motivation.
Ask any successful stock trader how what he does differs from gambling, and you’ll likely get a rather robust response.
Successful traders take great pride in the knowledge, skill, and experience they bring to the markets. And so they should.
What they do every day is about as far removed as can be imagined from those happy go lucky weekenders in Las Vegas who risk their rent money on the spin of a roulette wheel.
That said, there are striking similarities between the mindset and skillset of traders and certain types of “gamblers” like Dollar Ace student, Vincent Rinaldi, who take poker so seriously they’re prepared to test their skills, but not their luck, on the professional poker tour.
Traders do not, of course, face a flesh and blood opponent directly across a table. The markets neither know nor care that the trader exists, and they cannot be bluffed or conned by any subtle psychological stratagems.
Although the trader doesn’t have to face down an identifiable human adversary, he does need to have someone on the other side of his trade.
To buy a stock at a certain price, there needs to be someone willing to sell at that price. Both buyer and seller need to believe that the agreed-upon price makes the transaction advantageous to both of them.
Of course, they can’t both be right.
Just as the poker player tries to assess the strength of his opponent’s hand in relation to his own, traders use candlestick charts, patterns and indicators to try to determine the sentiment of the market, the relative numbers of buyers and sellers, and the likely direction of the next move in price.
For both players and traders, the ability to accurately analyze this data at speed and under pressure, taking only those trades that offer the right ratio of risk to reward, is essential for success.
But that’s not the whole story.
“I wanted to be able to trade options profitably.”
Survival in the markets, as well as the poker table, requires excellent risk management. That’s to say, knowing exactly how much it’s safe to risk on any given trade or hand and adhering strictly to a predetermined limit, no matter how strong the temptation to chase what appears to be a lucrative opportunity.
Successful players and traders also share several key psychological attributes such as robust self-confidence, the ability to control their emotions, to take responsibility for their own decisions, and perhaps above all, to accept their inevitable losses with equanimity.
As a professional poker player, Vincent developed these qualities in spades. Also, having worked as an investment advisor, he was ideally placed to start a new career in the markets.
“I’m not afraid of venturing into options like I was once before. My position sizing has improved, and I learned to set both upper and lower goals.”
Vincent knew that options could be a great way to generate an income and build a trading account quickly. Still, he was also aware of their reputation for complexity and approached them only with considerable professional caution.
It was Kyle Dennis’ mentorship that convinced him to take the plunge and rewarded him with a spectacular early win.
Currently priced at around $49, down from a pre-coronavirus high of just over $60, Coca-Cola is an undoubted blue-chip stock and still pays an attractive dividend even in these precarious times.
The returns on the $1 billion stake he took back in 1988 have been a significant factor in making Warren Buffet one of the wealthiest individuals ever to walk on planet earth.
Of course, you may not think of Coca Cola’s stock as the most obvious place to look for short-term trading profits.
The beauty of options, though, is they can produce immediate results from almost any stock and in any market.
“KO, right off the watch list… 201% in 28 minutes!”
For example, Vincent was able to bank a 201% return on Coca-Cola options by following Kyle’s recommended entry and exit. The trade played out in just 28 minutes, which is faster than most hands of poker.
After a quick win like this, he has become an enthusiastic fan of Kyle’s methods.
“The popular press tells us these things can’t happen and that what Kyle is doing is not possible. Well, I’m here to say he’s one of a kind. He has made it possible to do the impossible.”
What Kyle has really done, as he has for so many Dollar Ace students, is simply remove the unwarranted fear that so often surrounds options trading.
“I’m not afraid of venturing into options like I was once before,” confirms Vincent, “My position sizing has improved, and I learned to set both upper and lower goals.”
It’s this systematic, calculated approach to risk management that is the real key to success in both poker and trading.
By combining Kyle’s knowledge with his own experience at the tables, most would agree that Vincent is exceptionally well-placed to achieve his goal of generating consistent, safe profits for himself and his loved ones.
It may seem unlikely that any busy lawyer, let alone one running his own firm, would want to take on the added demands of learning to trade stocks.
But the truth is, a college degree and a well-paid profession no longer offer the so-called “secure” future that previous generations took for granted.
And for attorney Chris Thompson, of Redmond, Washington, seeing that his retirement savings had grown by only 2% during a major bull market was a huge shock.
Chris knew right away he needed a way to start building extra wealth that would fit his working routine, and learning about a single trade a day, set and forget, method quickly persuaded him to sign up with Daily Profit Machine.
“I was curious about simplicity as a new trader,” he recalls, “one pick a day, entry, exit. Set it and go about your day.”
It sounds easy, but just how does a trader analyze thousands of stocks and dozens of charts, not to mention the 24/7 barrage of news announcements, and reduce them to a manageable number of potential opportunities?
For Chris, the answer was clear; you have to reduce the number of variables you look at, and the best way to do that is with the guidance of a talented and experienced mentor.
He thought that trading options offered him the best and lowest-risk way of achieving his financial goals, and that meant following Ben Sturgill.
After paper-trading for a while, Chris began risking some “poker money” on a few day trades, but always with the determination that he would not chase the market.
If no viable opportunity is present, he’s happy to wait until the next day. And neither will he enter at other than the optimum price.
So, for example, if Ben’s recommendation is to buy a call at $2.00 and the price has moved higher, Chris will not buy. His low-risk, “busy-lawyer” strategy is to set a limit order with his broker to buy if the price comes back to $2.00, and then go back to running his firm. If the price doesn’t come back, there’s no trade that day, and that’s just fine with Chris.
Having started with a small account, Chris is, in any case, restricted in the number of day trades he can place, and is more than happy to reserve these for the best of the best setups he gets from Ben and Daily Profit Machine.
“I was curious about simplicity as a new trader. One pick a day, entry, exit. Set it and go about your day.”
The Financial Industry Regulatory Authority’s (FINRA) Pattern Day Trader (PDT) rule effectively restricts margin traders with less than $25,000 in their trading accounts to no more than three day trades per week.
Some new traders resent this regulation and see it as unduly restrictive. However, in reality, it almost always works to their benefit by preventing the overtrading that is one of the most common causes of heavy losses, blown up accounts, and the premature end of would-be trading careers.
In Chris’ case, the PDT rule helps to reinforce his natural caution and disinclination to chase the market by taking low-quality opportunities. It has also helped by pointing him towards his most successful trade so far.
In one recent week, Chris found himself prevented by the PDT rule from taking any more day trades, so he chose instead to take an overnight options trade on O-I Glass Inc, which was recommended by Ben.
“Since upgrading to ELITE I have almost exclusively traded Daily Profit Machine. My small account only allows three day trades a week, so I save my trades for DPM.”
“We got some news that sent the market down to a record day,” recalls Chris. On the biggest drop of the week (over 2,000 points), I made over 150% on a put. That, coupled with other trades from the week, gave me a total 190% increase on four trades. I paper traded the rest of the week.”
Looking back he realizes that he could have made even more money on this stock, perhaps as much as 400%, if he had been allowed to place more day trades that week. Nevertheless, Chris is well aware that it’s not spectacular one-off successes, but frequent smaller wins that build wealth over time.
And he knows, too, that his considered, step-by-step approach, under Ben’s guidance, is setting him up for a long and profitable trading career.
It’s also an excellent indicator of future success that rather than bemoaning his misfortune at being excluded from the market, he chose to spend the rest of the week paper trading.
Practice is something that both new and seasoned traders can never have too much of, and the patience to put in the necessary screen hours is one of the essential traits that sets the successful trader apart from the failed trader.
“We got some news that sent the market down to a record day. On the biggest drop of the week over 2,000 points, I made over 150% on a put. That, coupled with other trades from the week, gave me a total 190% increase on 4 trades.”
That’s not to say that Chris wasn’t naturally delighted with such a significant early win. But as befits an attorney, he remains cautious and pragmatic, rather than exuberant, in planning for his future. And it’s the quality of life that trading can offer him, rather than the pursuit of wealth for its own sake, which is his primary motivation.
If he can keep learning and profiting from Ben’s recommendations, in time, he’ll be able to find and act on his own trade ideas. Chris believes that eventually, he may be able to replace some, or maybe all, of the income from his law practice.
“Trading gives me more time with my family,” he explains, and will help “reduce the financial stress of owning my own law firm.”
Even if his results fall at the lower end of his hopes, Chris is confident that he’ll continue to build his retirement funds significantly faster than if he had relied on traditional investments whose returns had alarmed and disappointed him.
In the best-case scenario, Chris hopes to accrue extra wealth fast enough to allow him to retire early. In any event, the trading bug has struck, and he’s sure that he’ll always be “a loyal Daily Profit Machine member and part-time trader.”