Hey, stock and options traders. Welcome back to the channel. If his is your first time here, my name is Karl Domm. I am the original real P&L trader and I’ve been trading stocks and options online since the mid-1990s. 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 only see 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 value move up and down. If your account made 20% but it 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 that is why I share my P&L and show my daily moves of my P&L. Now, I would not buy a course from a Youtube instructor 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 March 2022.
And I have a super important announcement to make towards the end of this video so I want to make sure that you stay for that.
Now, I’m going to share my real P&L for the month of March 2022. And I’m trading four separate systems in four separate accounts. And before I get to the P&L, I want to briefly go over what the market did in March. This will give an idea of what my trading systems had to contend with over the last month. And my question always is what type of month was March?
In my book, I go over the four types of markets for premium selling options traders. And the four market types are: #1, the bull market; #2, the sideways market; #3, the grind-down market; and #4, the crash market.
Now, 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 trading systems. Now, level 5 is kind of like moving from a college athlete (level 4) to a pro (level 5). Now, 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.
Level 1 through 4 trade systems do not profit in all market environments and the only place to get a level 5 trade, that I know of, is by using one of my trade plans or from Ron Bertino.
After reviewing over 50 online stock and options courses, none of them are level 5 trade plans. They’re all level 1 through 4 and I’ve never seen proof that a level 1, 2, 3, or 4 trade plan is 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.
So looking at March. So looking at the market this is SPX, which represents the S&P 500, and the end of the month which was February 28th, is right here, you can see that we kind of went sideways and down actually for a little while. And then we just had this really good uptrend so we hit the end of the month right here. So we are up about 3.5% and this is kind of an interesting market. It kind of like was halfway, kind of a grind-down and then the other half was an uptrend market, but overall it was what I call a bull market for the month of March 2022.
Now, let’s look at the VIX. What did the VIX do? What did the volatility do? Let’s see we started here around 30 and the volatility dropped significantly here down to 20. So we had–so this is probably a really good month for a lot of premium sellers for a lot of option premium sellers because the volatility dropped significantly from 30 down to 20 over this one month time period. So there you have it for the markets for March 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 Synthetic Dragon.
Now, 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 I trade the account live. 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 March 2022. Okay, looking at The Safe Wheel last month we ended at $5,421. And let’s see, we ended here at $5,586 at the end of March. You can see the volatility in the account; not much at all. We did have this low here of $5,362. So let’s do a little bit of math.
$5,586 – $5,421 = $165 in profit. Divide that by what we started with, $5,421 and that’s a 3% return this month. That’s really good, 3% return. Not a lot of volatility, let’s take a look at the volatility. Started with $5,421 and we went as low as $5,362. That’s %59 divided by $5,421 = 1%.
So we had 1% volatility. We made a 3% return so this account is doing really well. This Safe Wheel is doing really well, a little better than normal and there’s not a lot of volatility with this Safe Wheel.
The second system I trade is 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. This system does have some volatility so I would only recommend that you start with a $5,000 account. Now, what I like about this trade is its long gamma which creates asymmetry. Asymmetry is kind of like hoping for a large move. If the stock moves either 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. And my goal is to make $300 per trade and win three out of every four trades. The cost of the service is only $259 a month.
So here are the results for March 2022 for my Earnings Edge Alerts. Okay, looking over The Earnings Edge Alerts, we started with $5,374 at the beginning of the month and we ended with $5780.
So let’s do a little bit of math on that. $5,374 – $5,780 = $406. So let’s go $406 divided by what we started with $5,374 = 7.5%. So we did 7.5% this month, and we had a losing trade this month.
So we had three winners and one loser and we still pulled off a 7.5% return this month. I’m going to show you the actual stocks that we traded. You’ll see that and I’m going to show you in the account.
So looking at The Earnings Edge Alert account. Now, in this particular month we traded Nike, got a -$392. I did size up a little bit and took that loss there. And we had DG; made $312. We had MU, Micron; made $320. And Oracle, $330 win for the month of March 2022.
Third, I’ll get into the P&L for The 5 Step Options Trading 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 large portfolio margin account. I wanted to replicate this system in a regular margin account and I back-tested over 300 different trade plans until I finally came up with a successful system that I could trade in a smaller account that outperformed the S&P with lower volatility.
Now, I make these claims based on 10 years of back-tested results along with 26 months of trading it live. And I have to make a disclaimer that ever since I’ve been trading it live, it has not outperformed the S&P. Now to see results, refer back to my previous real P&L videos.
The worst case scenario when using a system is that you can learn the mechanics of how I trade options without being subject to any major volatility in your account. The 5 Step Options Trading Success Program is not dependent on picking a direction, so unpredictable markets do not have a negative effect on the trading system because the system uses regular margin. It’s not as robust or efficient as the Synthetic Dragon and it will not perform as well as a Synthetic Dragon, but this trade plan is as close as you could get to replicating it in a regular margin account.
Okay, looking at The 5 Step, we started with $14,069.29. You can see there’s not a lot of volatility; just kind of made its way up. We ended the month at $14,156.76 and our lowest point was $13,996, around $14,000. So not a lot of volatility, let’s do a little bit of math.
$14,200 – $14,156 = $44. And divide that by $14,200 and we’re down 0.3%, basically at breakeven for the month. And as far as volatility, I mean, down a couple hundred dollars.
Let’s see, $200 divided by $14,200 so we had about a 1.4% lowest drawdown, basically there’s no volatility in this account. And this is a great learning tool. And this is really a good system if you don’t have a lot of money. If you have under that $30,000, this is a great learning tool on how to actually trade a level 5 trade plan.
As I’ve stated before, the edge to selling premium is because implied volatility is higher than actual volatility 83% of the time. The system is designed to make money in any market environment while mitigating drawdowns. In the last 26 months while trading the system, my highest drawdown was only 5.24%. The system is a great way to learn how to trade options properly without creating a lot of risk. You can learn exactly how I trade in this account by purchasing the course and I put a link in the description below.
Now, I’ll go over my main larger account where I trade my Synthetic Dragon system. I got the name from Chris Cole’s portfolio. The Dragon Portfolio was put together in order to produce positive returns in any and all market environments. The Synthetic Dragon uses options in a synthetic manner. It has been back-tested and forward-tested and has at least 10 times more occurrences versus Chris Cole’s Dragon Portfolio. And the system has created excellent results in a live account in all four market environments. If you’re interested in the back-test results for the Synthetic Dragon, I’ll put a link in the description below for the results starting in 2008. Now, this account has portfolio margin allowing me to trade with more leverage in order to take advantage of a certain trade structure.
Now before I go over the account, first I’m going to go over my take on the month of March 2022. This past month started out choppy and sideways and ended up moving higher. It looked like the buy and dip trade of the last 10 years was going to work again until the last few days when the market dropped a bit lower and stopped the uptrend. I don’t usually talk about or think about fundamental analysis, but I think in this circumstance it could be relevant.
Back when there was inflation back in the late 1970s and early 1980s, interest rates were raised to combat the inflation. This made it more difficult to borrow money because the borrowed rate had to be overcome by the return made on the borrowed money. Since interest rates peaked in the late 1980s, the market has been on an upward trajectory; and since then, the trend of lower interest rates has continued.
This made money cheap to borrow and easier to make a return compared to the borrowed interest that you were paying. And this caused a lot of leverage on the system. This was not ever a good reason to significantly increase interest rates all the way back since the 1980s because there had not been any inflation and that is until now. And there’s been significant inflation lately and the Fed. has recognized it and it recognized that they must increase interest rates to contain the inflation. And this could reverse the long-term uptrend of the market because eventually it will no longer be a good move to borrow money in order to invest it.
This will cause deleveraging in the system. This deleveraging is another way of saying that money needs to be taken out of the system. And when money is taken out of the system, it will cause asset prices to fall and this could be the beginning of a long-term downtrend in the market, similar to the last decade between 2000 and 2010 or even worse maybe a Japan type scenario. And that is that the Japanese market peaked in 1989 and still has not come back to all-time highs.
With this in mind, I think now more than ever is a good time to be a non-directional trader with your portfolio. The key is having a level 5 trade plan which is a proper trade structure and a trade plan in place that takes advantage of the premium seller’s edge and is proactively hedged at the same time. If that same portfolio can 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 the money without the time to go with it. And this is why I’m baffled when I see people spending 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.
Would it be more prudent to learn a system that creates both time and money? This month I made three adjustments that took a total of 45 minutes to manage the whole Synthetic Dragon. The system is proven and creates both time and money. This is why I highly recommend learning about level 5 trade plans and adding another dimension that can create a real edge.
Now, here are the results for my Synthetic Dragon for March 2022. Okay, looking at the Synthetic Dragon for the month of March 2022, we started the month with $189,157.08 and we ended at $193,698.12.
We’ll check the volatility there and you can see that there’s not a lot of volatility in the account. It just kind of rises. We kind of came down the last couple days, but that’s no big deal. I know it’s going to pop right back.
So let’s do a little bit of math. So last month it was $194,994 – $193,698. So we lost, we’re down, $1,296. Let’s divide that by what we started with $194,994 so we’re down 0.6%. And I know that’ll recover very quickly. What I really want to talk about now is the quarter.
So how did we do in this quarter? Because we know that the S&P has not had a good quarter. Let’s see how we did. We started the quarter with $182,800 and we ended it at $193,778. Minus $182,800. So ended up making $10,978 so far this year. Divided by what we started with $182,800 and so we’re up 6% for the quarter. The S&P is down 5% for the quarter and that makes us, you know, outperforming the S&P by 11% so far this year.
Okay, so as far as the volatility–let me put this back–I had to kind of switch this over to the actual month but I didn’t want to include the month of February here. So we were down as low as $191,858.
Let’s do some math as far as what the volatility was. So we started with $194,994 and we got as low as $191,858. So we were down as much as that: $3,136. Let’s try that see what that is on a percentage basis. $194,994. So we were down about 1.6% at one point and we ended up. We ended down 0.6% for the month. So there you have it for the Synthetic Dragon for the month of March 2022.
Now, the important announcement. The announcement is I’m pulling the Synthetic Dragon from my real P&L monthly videos and replacing it with my new Premium Level 5 trade account. I’m starting this account with $30,000 and I will share my results. The approximate $195,000 from the Synthetic Dragon account is being moved to my new broker called Dash Prime, and I will use this money to start a hedge fund called Clovis Wealth Partners, and I will trade the Synthetic Dragon system in that hedge fund. Most of you would benefit from my Premier Level 5 Trade Alerts and this requires $30,000 and uses a span margin.
Now if you like my Synthetic Dragon system, The Premier Level 5 Trade System is as close as you can get without investing in my hedge fund. The Premier Level 5 trade is a culmination of over 28 years of trading experience. I easily looked over 500 different trade plan ideas and over 10,000 back-tests to find this trade. This trade plan took well over 40 hours just to back-test. And it had similar characteristics to the Synthetic Dragon but it’s a different trade structure. This means management will be less than once a week which gives the opportunity to trade less and live more. I will typically be doing adjustments on Monday or Friday mornings unless in rare occurrences when something urgent requires an adjustment during other times.
Now, I recommend making adjustments as soon as I do, as soon as possible when I do most of the time. It is okay to not be able to follow the trades until later the same day or maybe even the next day. This depends on whether you can get a better price or within 5% of the price that I get.
The main advantage to this alert program is that the instructor, 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, you run the risk of being margin called. As margin can unexpectedly expand and cause serious losses. This system has a$30,000 minimum recommended investment and uses options on the E-Minis which requires span margin.
The cost will be only $200 per month and I was originally going to charge $500 a month, but that was too high for a $30,000 account. I had to decide between charging $500 a month with a $60,000 minimum account size or $200 a month with a $30,000 account size.
I chose the lower amount to be able to help more people and create more volume, and I’ll be trading the system in a real money account starting again with $30,000. And I will not be going over how the trade works or details on higher level trading techniques.
If you want to learn more about how more advanced trades work I recommend taking Ron Bertino’s Portfolio Margin Tactics Course, and below is a link to the course. I am an affiliate and you won’t pay any more or any less when using my link. If you use my link though, I can send you to an almost identical trade to the Synthetic Dragon trade, although I would just continue with The Premier Level 5 Trade Alerts.
Now once you complete the course, to get the almost identical trade to the Synthetic Dragon once you complete the course, just join The Mastermind Group and direct message me in Slack and I’ll share it with you. Now, if you have a smaller account, less than $30,000, you can follow my Safe Wheel for free or my Earnings Alert System.
If you’re more interested in learning how I trade options and eventually want to graduate to the
Premier Level 5 Trade System, then I recommend my 5 Step Course. See the link in the description for The Premium Level 5 Alerts, for The Earnings Edge Alerts, and for The 5 Step Course.