This is my real TDAmeritrade account. And here is the transaction that I’m talking about here
on 6/26/2020. I sold 64 of the November 30th 23.75 puts for $72.36. And just 4 days later I bought them back, the same ones (the November 30 23.75 puts), for $53.67. You can see that I brought in $463,024 and I turned around and purchased that put back for $343,567. That is a profit of over $119,000 in just 4 days. And I guarantee this is a real transaction but you want to watch this video until the end to get more insight on this specific trade.
Hey, stock market traders. Welcome back to the channel. If this is your first time here my name is Karl, Karl with a ‘K’. And I’ve been trading stocks and options online since the mid-1990s. If you are 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. Don’t be one of those suckers giving your hard-earned money to the Youtube fake financial guru. This video exposes how fake financial gurus are stealing people’s money.
I see Youtube financial guru channels grow like crazy with thousands of subscribers, costly memberships, and courses. After some investigating I figured this out. It is a certain business model. I call it the Shiny Penny Syndrome. Let me explain.
Let’s say you have a bucket full of pennies, and let’s say each penny represents a trade that a fake guru has made in their trading account. Most of the pennies are dull and very few are shiny. A dull penny represents a losing trade and a shiny penny represents a winning trade.
Here’s how the Youtube fake guru represents themselves. They have this bucket full of trades with much more losers than winners, as you can see. But they spend their time pulling out the shiny pennies, the winners. They take those shiny pennies and polish them up and showcase them on their channel. They only show their shiny pennies. Sometimes they talk about a dull penny, but they never show or even mention the bucket of pennies as a whole or all their trades as a whole. Think about this for a second. Isn’t the accumulation of all trades combined by far the most important thing?
For example, total portfolio P&L. For some reason people are attracted to the shiny pennies and don’t stop to think about the whole bucket of pennies. So they subscribe and pay money to watch these fake gurus pull out their shiny pennies while their whole bucket is filling up with dull pennies. Only after paying the fake guru do they finally realize that overall they are losing money.
So now the guru has a constant battle to keep pulling out shiny pennies to try to add more subscribers. The guru turns to trying to create larger and larger shiny pennies. It becomes a vicious cycle and the competition grows for the newbies that have not yet had the experience of accumulating dull pennies in their own account. The new subscribers are attracted to the guru with the shiniest pennies. The cycle continues and the guru does their best to create the largest shiniest penny and their promises become more and more outlandish.
Before you give your money to a Youtube financial guru. Give them a simple test. Ask them for their P&L up front. You want to see their P&L over time on video or with the brokerage statements or tax returns. You want to see that P&L on a daily basis. You want to see the daily results. Beware some gurus that photoshop their brokerage statements and put them online. Also, if you are forced to sign a non-disparagement agreement; which means you cannot share your trading experience unless it is favorable to the fake guru then run-run-run away from that guru. A non-disparagement agreement is a dead giveaway of a fake guru in my opinion.
Another way a fake guru can trick you is by trading two separate accounts. They’ll go long one account and short on the other account. They can put on big positions and pick a stock that will have a big move like one coming into earnings. The stock will move big one way causing high gains on one account and big losses on the other account, but net-net it’s a break even. But they only show the shiny penny account. They only show the account with the gain. Also, always notice that their total portfolio is always hidden. You see the little asterisks.
Another thing they do is show off their shiny pennies every few days, not every day. They talk about how they did not trade on someday or they did not trade last week or they didn’t trade over the last month. They skipped days, they skipped time. This is the sin they’re losing trades. They should be willing to show their P&L broken down on a daily basis. If they’re not showing their P&L they’re being fake. Just because a guru shows a bunch of shiny pennies does not mean they make money. If they don’t make money with their system, then how are you going to make money with it?
Okay, back to the trade. How did I do this? Well, this is only part of the total trade. This is the shiny penny part of the total trade. The rest of this position was hedged off and it actually made around $7,000 on this trade. But I do have well over $100,000 in the account so $7,000 really isn’t that much in relation to the account value.
If you want insight on how I trade The Synthetic Dragon Portfolio, you can purchase my book A Portfolio for all Markets or you can check out a course that I took that brought my options trading to another level from Ron Bertino and it’s called Trading Dominion and I left a link in the description for my book, for my review on ron bertino’s course, and for the Five-Step Course. Now also, I’ve created an options course for beginners called Options From Day One and it’s free and just see the link in the description below.