Hey stock and options traders. Welcome back to the channel. If this is your first time here, my name is Karl Domm. I’m the original Real P&L trader, and I’ve been trading stocks and options online since the mid-1990s. And if you’re here to learn about trading or to figure out if a stock or options course on Youtube is worth the money, then make sure to subscribe to the channel.
One of my goals is to change this industry. I want to change the buying criteria when anyone wants to buy a stock or options course on Youtube. If promises are made by a Youtube instructor when selling a course, then I believe they should prove their credibility. And I see only one way to prove credibility and that is to share their P&L. Not only share P&L but also share the account P&L volatility. Which means how much did the account move up or down.
If the account made a 20% return but was down 60% at one point, then the 20% return is not a good return on risk. Sharing the P&L volatility is important because risk adjusted returns are the truth, and this is why I share my P&L and I show my daily moves of my P&L. Now, I would not buy a course from a Youtuber that makes promises without sharing their P&L and I hope you won’t either.
In this video, I’m going to go over my real P&L for the month of May 2022. I’m going to share my real P&L for the month of May 2022 and I’m trading four separate systems in four separate accounts. And before I get into the P&L, I want to briefly go over what the market did in May. This will give an idea of what my trading systems had to contend with over the last month.
My question is always: what type of market was May? In my book, I go over the four types of markets for premium selling options traders. The four market types are: #1, the rising bull; #2, two sideways market; #3, the grind down market; and #4, the crash market.
All of the trading systems I trade are proprietary and were created to make money in any market environment. And I call them Level 5 trade systems. Level 5 is kind of like moving from a college athlete, at level 4, to a pro, Level 5. Except, when it comes to applying these trade systems, you can cut in line and go from grammar school, Level 1, directly to the pros, Level 5, because the trade plans have etched-in-stone rules to follow. Now Level 1 through 4 trade systems do not profit on all market environments, and the only place to access Level 5 trades and see real P&L is here on my channel.
Now after taking over 30 online stock and options courses, I’ve found that none of them are Level 5 trade systems. They’re all Level 1 through 4 and I’ve never seen proof that a Level 1, 2, 3, or 4 trade plans are consistently profitable, and I’m still looking. And if you see any instructors that share their P&L, please let me know in the comments below so I can take a look.
Next, I’m going to briefly go over the market to see what my trade systems had to contend with for the month of May 2022. Okay, so what did the market do in May 2022. Let’s start from the end of the month, right here. And we ended here yesterday; I mean, that’s literally break-even. I mean, it did not go up or down. The market did come down and then made its way back up. So from this point of view, basically, it’s a sideways market, of course, because it ended up sideways.
Let’s see what the $VIX did. So the volatility went from around 33% down to about 25%, so that’s good for option premium sellers. Most option premium sellers probably did quite well in terms of the volatility dropping like that because they sell premium. So there you have it for the market for, the S&P 500, for the month of May 2022.
Next, I’ll get into my four separate trading systems. The trading systems are: #1, The Safe Wheel; #2, The Earnings Edge Alerts; #3, The 5 Step; and #4, The Premiere Level 5.
So first, The Safe Wheel strategy. This is a strategy I give away for free every Monday morning at 7:15 a.m. Pacific time, I do a live stream and trade the account live. And I show up my P&L. I also answer any and all questions about the system in order to help people learn it. The easiest way to find the live stream is to subscribe to my channel and hit the notification bell.
Now, here are the results for The Safe Wheel for May 2022. Okay, looking at The Safe Wheel for May, we started at the beginning of the month at $5,861. You can see we came down a little bit, $5,892. Hardly any volatility in the account, not even worth calculating. You can see what we’ve done. Went up. Remember Macy’s? Kind of did well. Went down pretty good and then it came back up. So we kind of took a little bit of the profits off the table there and we ended at $5,872. So $5,872, let’s do a little bit of math. It’s hardly worth doing because we’re pretty much at break-even. $5,872 – $5,861 = $11. So basically just broke-even. Divide that by $5,861. I mean, not even but near a tenth of a percent or anything. It’s just insignificant. Broke-even. Basically, broke-even for the month, and that’s the same thing the S&P did so that’s interesting. Also, I’d like to mention that this accounts up about 18% year-to-date. So there you have it for The Safe Wheel for the month of May 2022.
Second, I trade my Earnings Edge Alert system. This system is based on trading certain stocks coming into earnings. The goal is to turn a small account into a large account. Now, this system has some volatility so I would start small with a $5,000 account. What I like about this trade is its long Gamma. Which creates asymmetry. Asymmetry is kind of like hoping for a large move in either direction, up or down. And the more it moves, the more profitable the trade becomes. Now, I started with a $5,000 account, and I look to make one trade a week when earnings trades are available. My goal is to make $300 per trade and win three out of every four trades. The cost for the service is only $259 per month.
Now, here are the results for my May 2022 Earnings Edge Alerts. Okay, looking at The Earnings Edge, we started the month with $6,666 and you can see we took a loss. We had one loss and we had a gain. You can see then we had a gain then we had another gain. And now we’re in another trade which is currently down, but it’s not closed out, but we ended the month at $5,910.
This right here we would have broken-even pretty much, but we got into the new trade, and here. We are down here. So let’s do a little bit of math. Started at $6,660 and ended $5,910. So we’re down -$750. [Divided by] $6,660, so we’re down about 11%. So like I said, this account there can be some volatility in the P&L in this account, and that’s just the volatility of being in one trade. Hasn’t even closed out, we don’t know what’s going to happen with it, but down about 11% this month. But as far as the year to date, we’re up about 17%-18% on this account. Started with $5,000.
Third, I will get into my P&L for The 5 Step Options Training Success Program. This system is proprietary. It took me over three years to develop as I kept racking my brain trying to replicate what I was doing in my larger portfolio margin account. I wanted to replicate this system in a regular margin account. And I backtested over 300 different trade plans until I finally came up with a successful system that I could trade in a smaller account that would outperform the S&P 500 with lower P&L volatility.
Now, I make these claims based on 10 years of backtest along with 28 months of trading it live. And I have to make a disclaimer. Since I’ve been trading it live, the system has not outperformed the S&P. To see my results, refer back to my previous real P&L monthly videos.
The worst case scenario when using this system, is that you learn the mechanics of how I trade options without being subject to any major volatility or major drawdowns in your account. The 5 Step Options Trading Success Program is not dependent on picking a direction. So an unpredictable market does not have a negative effect on the trading system, because the system uses regular margin. It’s not as robust as The Premier Level 5 and it will not perform as well as The Premier Level 5, but this trade plan is a close replication making it the best Level 5 trade plan learning tool for people with smaller accounts like $6,000 – $8.000.
As I’ve stated before, the edge in selling option premium is because implied volatility is higher than actual volatility about 83% of the time. The system is designed to make money in any market environment while mitigating drawdowns. In the last 28 months, while trading this system, my highest drawdown was -6.2%. Now, this system is a great way to learn how to trade options properly without creating a lot of risk. This is a great way to learn how to become a Level 5 trader with a low amount of capital and with very little risk, and you can learn exactly how I trade in this account by purchasing the course, and I put a link in the description below.
Okay, looking at The 5 Step account, we can see we had an original balance of $13,806. That’s the ending balance of last month. That’s what I have. And you can see that there’s not a lot of volatility here in this account. The low went to $13,303. So let’s do a little bit of math. $13,806 – $13,303 = $503 was the largest drawdown for the month. Divide that by $13,806 and it was about 3% on the drawdown. Which is not bad at all. And we ended with $13,589. $13,806 – $13,589 = $217. Divided by $13,806 = -1.6%. So down about 1.6 % on the month. Which is not bad. Not bad at all. You’re just here learning. You’re not going to really take heavy drawdowns. And so there you have it for the month of May of 2022 for The 5 Step.
Now, I’ll go over my main larger account where I trade my Premier Level 5 system. The Premier Level 5 trade alert system was put together in order to produce positive returns in any and all market environments. This system was created to achieve excellent results with very low drawdowns in a live account in all four market environments. If you’re interested in the backtest results for the Premier Level 5, I put a link in the description for the results starting from October 2011. Now, this account has span margin allowing me to trade with more leverage in order to take advantage of a certain trade structure. Now, before I go over the results I’m going to go over my take on the month of May 2022, and I look at the S&P 500.
This past month, we hit new lows and the lows we haven’t seen since early 2021. But after the first few trading days, the market made its way back up. So as the market recovered like it did in the last few trading days, the market made its way all the way back up to the beginning of what it was in the month. That we broke even and I’ve noticed that up days have less volume compared to down days. And technicians would say that this is something that happens in a bear market. Where the market will continue to make new lows, but the market could rise to all-time highs again soon.
Did you notice I just did what all the other instructors do? I basically said the market could go down or it could go up. Well, it’s a good thing my capital appreciation is not dependent on market direction. Bottom line is market direction is not predictable. With this in mind, it is always good to have a non-directional system within your portfolio. The key is having a Level 5 trade plan with a proper trade structure and trade plan in place that takes advantage of the premium seller’s edge and is proactively hedged at the same time. If this same portfolio could be managed in less than 15 to 30 minutes a week, then I believe it’s a good system.
Now, I understand people trade to make money, but what good is money without the time to go with it. And this is why I’m baffled when I see people spend their time learning how to day trade which puts them in front of the computer, stressed out, all day. Not to mention, day trading is unproven. Wouldn’t it be more prudent to learn a system that creates both time and money? This month I made three to four adjustments that took around 30 minutes to manage The Premier Level 5. This is why I highly recommend learning about the Level 5 trade plans and adding another dimension that can create a real edge.
Now, here are the results for my Premier Level 5 portfolio for May 2022. Okay, now we’ll look at The Premier Level 5. Now, we ended that account at $29,865, that’s what it was in the beginning of the month. And we started this account with $30,000 overall. Now, it’s a little frustrating here when you have /ES futures contracts; because at the end of the day, the tick is way off and they’re just off with their end of day numbers. And these are just not accurate at all. Let me look at today’s… So today is… This thing only lets you go one day back. So today is the first of June, but it won’t let me show the first of June. So I can only put it at the end of the month there. So we’re on the first of June, you can see we had $30,105. This is accurate. This is not accurate at all. $26,000? No, there’s way more than $26,000. This is just not an accurate thing. It’s pretty frustrating to try to show my P&L when you have this inaccurate thing here. But if you take this number right here, and you subtract how much money we made today, that $30,105 – $350. Let’s do some math because we can do some accurate numbers with these numbers here up top. $31,105 – $350 (is the profit for today), so $29,755. So $29,755, that’s the realistic, that’s the ending balance. And how much of this drawdown? Well, I can just tell you from watching it every day, it was down a maximum of 2% over this month. It’s probably more like 1% but it was it might have been down 2% at some time, some point.
So let’s do some math. We started the month with $29,865. We ended the month with $29,755 down about $110. Divide that by $29,865 = .34%. So it’s just not even a half of a percent, and you can see the market, it’s already recovered just in one day. You can see that on the next day. So this has very low drawdowns, a very good system. Hasn’t hit profits really yet, and it has to do with concavity. And if you understand. that’s more of an advanced concept, but it’s not a big deal, and we’re going to see this thing come into profits here in the next month or two pretty easily in my opinion. And I’m pretty sure I’m right because I’ve done this before. So just barely kind of breaking even as we move along here the the first six weeks, but we’ll have our day in the sun.
Okay, so there you have it for the Premiere Level 5. Most of you would benefit from my Premier Level 5 trade alerts. This requires a $30,000 minimum and uses a span margin. You can use portfolio margin also. If you like The Synthetic Dragon, The Premier Level 5 is as close as you can get without investing in my hedge fund. The Premier Level 5 trade alert is a culmination of over 28 years of trading experience. I easily looked over 500 different trade plan ideas and performed over 10,000 backtests to find this trade.
This trade plan took well over 40 hours just to backtest. It has similar characteristics to the Synthetic Dragon, but it is a different trade structure with a very similar trade plan. We make an adjustment less than once a week. Which gives the opportunity to trade less and live more. I’ll typically be doing adjustments on Monday or Friday morning. Unless, in rare cases when something urgent requires an adjustment. I recommend making adjustments as soon as possible when I do, but most of the times it’s okay to not be able to follow the trades until later in the same day or even the next day as long as you get a better price within about 5% of my price. But the trade structure moves very slow so it’s very typical to be able to get a good price after my trade.
The main advantage to this alert program is that the instructor, that’s me, that created the trade structure is guiding you on the most efficient way to extract the edge from the trade. If you trade this on your own, margin can unexpectedly expand and cause serious losses. So as far as the Premier Level 5 Alert system costs, they’re only $200 per month. The Premier Level 5 Alerts is a learning experience for my subscribers. Watch me trade this in real time and watch how I handle certain situations, and this will bring significant insights to my subscribers.
I added a link to the description for The Premier Level 5 Trade Alerts. If you have a smaller account less than $30,000, you can follow my Safe Wheel for free or you can take my Earnings Edge Alerts. If you are more interested in learning how I trade options and eventually want to graduate to The Premier Level 5 system, I recommend my 5 Step course. See the link in the description for The Premiere Level 5, The Earnings Edge Alerts, and the 5-step course.