If you have a question that isn’t answered below, use the question box at the bottom of the page to reach me.
1. I have never traded options before, will I be able to “follow” or understand Theta Trend?
Answer: Theta Trend assumes a basic understanding of options. If you understand what options are and know what makes up a vertical spread, you will be in great shape.
2. Does the System Document really provide rules?
Answer: Yes, that’s pretty much the entire point of the document. My goal with the document is to give you the tools to become a profitable trader. The document itself won’t make you a profitable trader, but it will send you down a path that has worked for me.
3. Can I trade the System with a small account ($5,000 or less)?
Answer: Yes, absolutely. Theta Trend works well on both large and small accounts. I frequently trade small positions because I have so many different positions on at one time. I believe in trading conservatively and managing risk. The beauty of trading this way is that it is very easy to control the amount of risk you take, which enables you to trade this in a small account.
4. What underlyings or vehicles do you trade?
Answer: I trade a wide range of ETF’s including IWM, TLT, SPY, USO, UNG, FXE, FXI, EWZ, GLD, and SLV. I can have as many as 20 positions on at one time, but you can keep it much simpler.
5. What about commissions?
Answer: Commissions are a very real part of the game. In fact, I include commissions in all of my risk management calculations because they can really add up. Basically, the lower your commissions, the better. I currently pay about 1.50 per contract and while I wish I paid less (don’t we all?), I can make the system work.
6. Do I need special software and what software do you use?
Answer: You don’t need special software, however, you need the ability to analyze vertical spreads. I currently use Thinkorswim and highly, highly recommend them. Their software is free whether you have a paper account or a live account.
7. I have a normal job and can’t monitor the markets during the day. Can I trade this way?
Answer: Good. Seriously, watching the markets all day is not the purpose of trading this way. I designed Theta Trend so that the trades could be managed in 10 minutes or so every day. This is a systematic approach to trading and really doesn’t require ongoing analysis, it just requires moving your stops.
8. Will I make money trading this system?
Answer: You have the potential to make money with this system. If you can’t follow a system or manage risk, you probably won’t make it. I’d love to tell you that you can absolutely make money this way, but it’s up to you. Theta Trend is a toolbox, but you’re the carpenter. If you have horrible risk management skills, you are likely to lose money. I’m sorry, but it’s just the truth.
9. Aren’t you worried about basically giving away your trading rules?
Answer: Not really. The markets I trade are extremely liquid and have a huge number of players. Additionally, my hope is that we’re able to help each other out and become better traders.
10. Theta Trend is only 20 something pages, shouldn’t there be more?
Answer: TT is intended to be sufficiently long to clearly explain a profitable trading system. TT is not a novel and there is no “fluff.” That being said, there are probably some unspoken rules to the system that come about through practice and active trading.