Was right about trade in last 2 posts. Update on loss mentality.

Instead of making 1.7K that week, because I was afraid to take any losses I wound up only making .2K on the trade, pulling out before it got any good. I should have recognized the risk/reward was good at ~ 1.6:1. Great for an iron condor. And that was max risk mind you. If the market started really going against me I could have gotten out at less than max loss, especially if this was to the downside. In fact, when the market closed at 2165 the next day I knew that the trade would be OK with 2 days to spare.

Anyhow, I told myself I needed to re-calibrate and be accepting of possible losses in order to win. Just don't let those losses get out of hand...that's the secret.

Really, trading, entrepreneurship...life in generally...if you want to improve and do more/do better you will have an eye on constantly improving your results within the limits of your emotional capital. BTW, one way to have more emotional capital is to go to bed planning to get work done, wake up the next morning, and then pretty much immediately start working. Don't waste time answering email because as Brain Tracy says in "No Excuses" basically this "unproductive" activity drains your emotional commitment to your work and then when its time to actually do things you don't feel like it. Save the "pleasant" tasks like email to the end of the day.

A little more knowledge goes a long way...

So it looks like I just became a sissy and felt I needed to pull out of the trade. I do have to admit I got pretty involved with it, more and more emotionally entangled. I suppose the secret is to be emotionally detatched! If I had held till now would have been 5.5K profit. I suppose it's not good to be keeping track like this! Time to move on to another trade.

But I'm seriously thinking of trading the VIX futures directly. Gonna explore that more. The issue with XIV is that it...since it is not trading but the futures are...it can really dive when a major calamity hits and there is no way to get out of the trade. I suppose I should always have stops for protection. But if you trade the futures I don't think there's that issue. And shorting the futures seems to be a good play. Maybe shorting those options on the futures would be good as well. Just need to stick with the vision. I'm trading too large to be comfortable with failure. I know. But I need to make a lot of money. Big balancing act. I suppose I should do "moonshot" trades then, like buy puts on SPX or something. But then there's a high probability of losing.

Something has kept me safe so far. I will trust some.

Out, with a 4.4K profit, 23.8% profit on trading capital used...1.7k or so was margin.

So perhaps things will recover but I just cannot wait. XIV was going nowhere even when VIX was falling to lows. It kindof seemed like large market players were piling on in the opposite direction. I suppose I should have gotten out at strength.

So essentially the trade could have been 20.21 * 900 shares to 29.81 which would be 8.64K. I got out at 4.45K instead of the 5.2K I had seen the day before. And a bit more than half of the maximum I could have seen had I been essentially a perfect trader. After all is said and done, average buying prices was 23.36 and percentage of profit on capital committed to trade was 23.8% over a total period of 18 days. Really good from a 1000ft view but when you consider I could have made nearly 50%...well...we have some room for improvement :). Stay safe though!

I applaud myself for taking the first large volatility trade (going all in) and coming out with a sizable profit, but I know I could have done better, especially since I ended up selling during a mini crash. I seem to have a good sense of mins and maxes and I will strive to trust myself a little more in the future.

Now it's time to withdraw 1.8K from my trading account to cover expenses. Although with that additional .7K I would have had a better payday :/

Then give it a few days and put a ratio spread on VIX betting it will go up. I do think I have been over-watching this trade a bit during the last few days and I'm fairly tired of this. I need to take a bit of a break from constantly watching the markets. I also need to somehow realize that I needn't be so hard on myself and that it's quite difficult to get things spot on, if not impossible.

I must celebrate the fact that a year or two ago I was a money-losing machine, and now I'm a money-making machine. Unfortunately my hopes were higher for this trade than the result...maybe that just shows the importance of hedging or something. For instance if I had put on that vix ratio trade I would have been a bit more comfortable waiting to see if spx turned around. I also could have put on a tighter trailing stop which would have prevented most of this gain-turned-smaller situation.

Another thing is next time I should also short uvxy or vxx if I cannot short the former as well as go long xiv. A uvxy short would have provided the best returns in this scenario of ~50%

Staring a 5.2K profit in the face

So today I experienced some rare market action as the VIX dived quite suddenly mid-day and XIV correspondingly spiked to a 5.2K profit. Since the VIX is basically at super lows, the only thing which really could be going for me with XIV is the 13-14% contango rolling addition. I suppose the vix could drop another 10% but this really just isn't all that likely ya know? So basically I'm sort of playing with fire at this point by sticking in this trade. I should also put a ratio spread going long vix at this point.

And now there was a terrorist attack in France so the markets are likely to have a couple rough days. Not really the best setup for me. Well, I suppose live and learn. We shall see.

US Markets enter a New Era...

Today, SPX closed at 2152. It solidly broke the previous all-time high of 2142 or so of the day before, and the all time high of a few months ago 2135 or so the day before that. The market rally seems to be fueled in large part by the promises of central banks to support the economy after Brexit, the low returns everywhere else...bonds at negative yields in some cases, etc. And while Britain and the EU tussle over the new order. Thus the market has decisively broken the stalemate it has had for the past several months. I'm wondering how long this is going to last.

So, the volatility trade is going well. From when I went all-in on Jun 28, to today, July 12 (a period of  14 days), my trade has had the following performance:

Cost Value: 18695.07. Since I have 800 shares that works out to $23.37 per share. Now the market value is: 23112.00 at the closing price of 28.89...and it went above 29 to 29.14 in extended hours today.

This means that I have an open market gain of 4416.93. Considering the 14 days that is approximately $315 per day. I expect this to taper off as the trade is left on. At only $200 per day, that would be ~6K per month. Which would be 72K per year. Now of course this isn't going to be the reality...I didn't buy into a money printing machine so to speak. It just shows the potential power of trading. I wish on the money printing machine though, LOL. And in essence, that is what trading will become to me. I mean how hard do you have to work, really? Not that hard I think. Mostly letting your capital sit in things that will appreciate and making sure everything is going in the right direction. I guess I'm just too impatient XD.

The big issues I face right now are 2-fold. 1) I need to figure out when to exit this trade...how to time it just right. 2) I need to figure out what I will do with my funds when I exit this trade. I'd rather not have everything sitting on the sidelines in cash. I need to put it to work. Now options trades are dangerous, so I cannot put everything into 1 trade. Thus if I am going to do options or what have you, I am going to have to trade multiple things or something...and they obviously cannot be correlated because if they are...then I could lose everything if the market has a bad day or week. Maybe I just need to be more vigilant about the options trades. Basically, don't let them expire? Because if I get out early I'm pretty much guaranteed not to lose all my money. This sort of conflicts with my day trading philosophy though.

So I need to work on directional trades AND market-neutral trades. Generally, the way I trade directionally with options I cannot put too much money into these I think. The risk is too high. Market neutral trades also have a very high risk in some sense. However, they take more capital to work than directional trades...these also have a higher chance of success, theoretically, it seems.

I mean honestly, like 72K/year is a lower salary than I could probably get at a good full-time job. The job would be far more stimulating, but at the same time...I am honing my skills on something which can explode. I.E. Next stop: hedge fund. Then I will become a millionaire many times over.

Also in the process, I can do some network marketing work and work on a startup since I will have time. I can also work on my truck and on my personal and social life. Really it's a bit of a hard way since I am in control and nobody is guiding me or telling me what to do, but I guess I just need to get over the mental blocks...and I need to do the research required to make sure I'm really doing a great job.

Another thing: I need to get back into social events, especially business ones. More hangouts with friends, etc. Dates... Yeah. the works! Let it rip! Oh yeah, first I need to finish my vehicle.

Over and out!

I quit my job...now I work part time. And I fund my lifestyle like Warren Buffet.

Hereby I make this official. It is partly an initiative after seeing what is possible, and what I think is properly doable...something I have already done at some level, and something I am now going to do on a scale I have never done before and is thus new territory for me.

I quit my job. Now it wasn't a very good job mind you. 24K per year self-employed was about what could be expected at the amount of effort I was putting in and the experience and "fanciness" I was employing. However, while I will continue to do some work in this e-commerce space, I will by and large not be counting on it to be my primary source of income. I guess things are just wrapping up or something. I'm not sure I want to quit entirely but I don't want to labor over trying to make a 2K or 3K target per month. Come what may instead I guess. I also want to remain diligent, however. Not just become extremely lazy and do nothing! NOOOO. While I don't think trading should take up all a body's time by any stretch, it's really the strategy research and testing...the indicator development...the system development which should be taking up the time. And this is preparation to be an effective entrepreneur. The entrepreneur creates the system, and the workers execute it. The entrepreneur must trust himself to make a good system--and work diligently at it--and trust the employees to execute it properly...while building in safe-guards to minimized the damage if they do not. I am not an employee, I am an entrepreneur. But I must also experience my own system and the way other systems work as well. And in some cases, I must function as an employee temporarily.

So there are limited resources in all spaces.

-Time

-Energy

-Personal Financial Resources

-Location

-Technological

-Social

-Network

Basically the idea is you make the fastest possible progress by throwing off the things that consume most of your time but don't give you the same current or projected results as something which consumes maybe even less time but has much more potential. Sometimes you need to make a leap of faith...and in fact...to go at the fastest possible speed you need to continually make educated leaps of faith. It's not a tested and proven road yet but it works out in theory and you should be able to make it work. Go.

Of course there are other things which are like...it MIGHT works, but I'm not quite sure if the way I propose to go a bout it will work. DON'T GO. Take the time to define and refine. To develop and roll this out before you put your weight on it and put your trust in it. Additional research and talking to others might be the difference between life and death. And its always good to have more options than not enough. So one should always have some of these "MAYBES" in the works.

There's perhaps a fine dividing line between the two. Between "GOs" and "MAYBES"

And a man is not an island. Once a proven set of systems have been established in the trading arena, basically all I need to do to really make bank is to open a hedge fund and get investors on board. They make a lot of bank for taking the risk, and I make a lot of bank as well for providing something to them that they are not in a position to...or lack the will to...provide for themselves. (I, as well, outsource specific aspects of my operation which I am not about to do. My computer, for instance, I cannot build alone. It takes a large, dedicated team of people with different backgrounds and divers experiences to build such an awesome product. Internet service I cannot provide. I don't grow the food I eat....nor do I want to! The profit per unit is so low!!! I am very thankful to all the providers I use because I could not do these things for myself. My investors will be thankful to me just like they are to their other providers because they can then live and do what they are good at. The trick of course, is getting the ball rolling. If you're barking up the wrong tree so to speak, you will not do well. I.E. if you're trying to build a prototype of a computer you're just wasting your time. You'll never be able to compete with the likes of Apple or Intel yourself. However, if you are assembling a team and the resources to build a machine (run by individuals) which can produce a product which can compete with what is currently on the market, this is the best use of your time. The next question I suppose becomes: is the world too full of entrepreneurs? Wouldn't it be better to be a highly skilled laborer...perhaps more honorable? I think the world is probably lacking entrepreneurs. Thus by being an entrepreneur, I fill a void. Of course there are many entrepreneurs, especially in the service sector of the economy. Many of these people run small lifestyle businesses OR are self-employed. They provide useful services to others. And also, frequently, they make less money than professionals who are in high demand such as computer programmers, electrical engineers, physicians. There will always be relative scarcity in some areas, and relative abundance in others. Also, consider. In developing nations, coding projects, for instance, can be outsourced. Coding is merely a skill which can be learned. The barrier to entry is the time and commitment required to advance the skill to a level useful to employers. There is also a barrier to entry for entrepreneurs. However, the barrier to entry is variable depending on which sector one seeks to enter as say a coder or an entrepreneur. Some programmers only know Java...but some applications require HTML or something. Now a good programmer will be proficient in many languages. And they will be paid well for the value they can provide.)

There is risk in every profession. The coder risks wasting his time doing something not valuable to the company...going down a route which makes him look bad relative to the other programmers and thus getting replaced. Everyone makes mistakes here and there. The issue is the severity of the mistakes. If the whole workflow is compromised, the employee is compromised. If just a few projects go south relatively, the coder is still rewarded and even perhaps esteemed above his peers (I talk of coders because I admire them and I personally want to be able to do amazing things with the computer although I recognize that likely I will not have the time to acquire the level of proficiency I wish to have with this skill. This is unfortunate, but my inner self will NOT ALLOW me to deviate from my major definite purpose which is to be a very wealthy entrepreneur and philanthropist...I san entrepreneur because that is where the major wealth is to be created. Aside from some chance major scientific discovery say...entrepreneurs have the highest likelihood of major success. They simply have to assemble teams which create massive value. Or they must invent and commercialize. Big things are possible to anyone who has the desire to do great things in nearly any field they find themselves in. However, upside is more limited in some fields than others. And entrepreneurs have the highest upside. The richest people in the world are entrepreneurs and investors....but Warren Buffet really is sort of an exception (the richest investor ever) and a hybrid...he owns a company that investors poured money into for him to manage. Sort of a closed-end fund. So although he did extremely well and deserves much credit, he still owes much of it to the use of other peoples' money and to his purchasing Berkshire and turning it into an investment company instead of a textile factory....I think he did this by buying the shares on the open market and gaining control. Kind of a convoluted way to go about starting a company, actually. Probably not the most efficient use of capital. Starting one would probably be better....As I wrote this I decided I had to look up for a fact what happened. I nailed it:

"In 2010, Buffett claimed that purchasing Berkshire Hathaway was the biggest investment mistake he had ever made, and claimed that it had denied him compounded investment returns of about $200 billion over the subsequent 45 years.^[9] Buffett claimed that had he invested that money directly in insurance businesses instead of buying out Berkshire Hathaway (due to what he perceived as a slight by an individual), those investments would have paid off several hundredfold."

I then wondered how in the world he could have afforded to purchase Berkshire Hathaway...where in the world did he get all the money? Another clue from a Quora poster:

"At the age of 26, Buffett had already accumulated a "retirement fund" of $174k (around $1.5 million in today's dollars) having been making and investing money since he was a young lad, particularly during his years working for Ben Graham's hedge fund in NYC.  He bought his home in Omaha (the one he still lives in) for $31k cash and his living expenses were modest.  It was at this point he decided to strike out on his own and launch his investment business."

The poster then goes on to say, "He did not need to tap into this retirement fund to launch his investment partnerships, viewing that capital as the key enabler of him running his own business.  During this period, Buffett lived off income and gains coming out of this personal investment portfolio, which was no doubt rapidly growing alongside his spectacular partnership returns."

SO now I need to look into Buffet's investment partnerships. More than likely there will be a plethora of information about these! (But what I'm liking so far is Buffet didn't push. He took life as he found it, didn't try to do something he wasn't...basically he wasn't in a gigantic rush of any sort yet look at his success.)

For the buffet partnerships, apparently the compensation was as follows (I proposed something similar in a hedge fund presentation I developed, although...and later refined.) : "The compensation formula was simple.  The investors received 4% interest on their money from the partnership.  After that threshold, Buffett got 50% of the gain, and the limited partners got the other 50%.  If there were a loss, Buffett took 25% of it himself.  That means if he broke even; he lost money.  His obligation to pay back losses was not limited to his capital; it was unlimited."

"By 1959, Buffett, who had only contributed $100 to each partnership, had earned fees, counting reinvested earnings, of $83,085 and owned approximately 9.5% of the combined partnerships due to his performance."

Ah, see he used other peoples' money once he had workable strategies. This is exactly what I will do and need to do! Basically I need to get some strategies on the table which work well, in addition to some functional risk management system. Once i have proven these introductory strategies in my personal portfolio I simply show the results to investors and ask if they want to partner with me. Thus the limited partnership AKA hedge fund is formed.

I was sold (yes, I admit. I was SOLD...I didn't exactly buy...rich dad coaching.) It cost me 5K which is approximately 17% of my current net worth. Not cheap for me, but definitely a decent price market-wise. (it just shows how cheaply one can live if one has a mind to I guess). (That gives me a thought...basically I can remain in my van (temp fluctuations and all) if I simply install an overhead canopy to keep out the light and put solar panels on that, which then feed into the vehicle. All these investments! I had better make a princely sum or start my partnerships soon. Yes, time is of the essence. I love how Buffet purchased 40 acres of farmland...probably didn't do much with it at the time. He just bought an asset. Sometimes he just did things for the heck of it, it seems, as long as the potential was there in some way...btw I have also thought about moving to NC where the VFTs grow and buying some land with VFTs on it and living on that land. Interesting concept I guess. I love Cps so would love to own my own piece of their habitat. And in North America, the venus flytraps are the ones which are the most threatened of the major CP genres I guess. I guess that is another side diversion to look into. I did some looking and most of the venuys flytraps are in a tick and chigger infested "Green Swamp" in north Carolina around Wilmington. Doesn't sound promising!! Maybe another CP site somewhere else would be better. Not moving to NC any time soon it seems haha.)

So anyhow, here's to my new career as an entrepreneur and investor/trader!