How to Minimize Your Options Trading Risk
Ryan here. To the untrained eye this projection graph shows no risk.
But it’s there. It’s a small risk in a small area.
What this does is demonstrate the quality of the trade.
And the ability to yield a gain whether the market moves higher or lower.
It also shows a tremendous overall set of risk/reward metrics you will be hard pressed to beat with any other strategy.
This strategy if traded correctly can produce 1k to 1.5k in income based on a single trade, and single lot size.
I’m going to show you this trade in action and how you can start making it as well.
The current market conditions make this trading strategy a no-brainer.
- Can be traded using SPY or SPX
- High Probability of Success
- Large Win/Loss Ratios Available
- Provides Consistent Weekly Income Potential
- No Mid-Trade Management Required
- Works Whether Market Moves Up, Down or Sideways
- Flexible, Customizable
- Dozens of Opportunities Every Week
Geometric Growth
Let's talk about the geometric growth in your account.
Here is an example.
Let's say you are looking at a strategy that requires 25,000 in the account.
A possible drawdown of 5,000 and on an annual basis, you're expected to make about 20,000 noncompound.
So, 20,000 noncompound after five years that grows to 100,000.
Not bad.
Again, non compounded, it's not bad.
However, if you compound it according to my Money Management Fixed Ratio strategy, which is a compounding strategy, it turns that 25,000 account into approximately 2 million after five years based on this performance.
So, if non-compounded returns produce an average of 20,000 per year after five years and compounding it, it turns it into 2 million… which will drastically blow away your aggressive goals that you have for your trading?
Now you look at this and you might say, “Yeah, but Ryan. How much am I risking if I do this and I grow my account to $2 million and then I go into this 5,000 dollar drawdown?”.
“How much of my account am I risking?
It has to be a lot.
Right?”
No it's not, actually.
And in fact, if you do that, you're only risking less than 10% of your profits if you then go into that 5,000 drawdown per trade size.
So per unit, if the minimum unit is one and you expect a 5000 drawdown, by the time you grow to 2 million, you're obviously trading a larger trade size.
But even with that larger trade size and suffering through the worst case drawdown, you're still only risking 10% of your account.
And it's actually less than 10% of your profits.
This is an incredibly important piece of information that you need to wrap your mind around as much as you possibly can in order to achieve your goals while avoiding over-trading.
And that is the Truth About Trading.
Trade Smart,
Ryan Jones
GET MORE OUT OF YOUR TRADES WITH TRADEPARTNER
There are 3 main components of TradePartner:
SmartFills get you the best fill every time. You could sit there and place an order at the Bid and just keep canceling and replacing your order… or you could let SmartFills get you the best price.
SmartOrders help reduce risk. This stemmed from a 1000 hit to my profits I took all because of brokerage limitations. That’s gone.
SmartShare allows you to link to your other services. You’ll never have to worry about missing a trade.
