Beginner Route

tom

tom

Well-known member
Administrator
Seeking opinions on the best route for a beginner... :)

Totally new to options, so far I've studied the greeks and various strategies (straddles, strangles, butterflies, bwb, etc). Also had a look at the Dough platform and their tools (easily calculate standard deviations, IV rank, etc). Looking to get OV/One for backtesting in the future.

I don't want to waste time on things that don't work, so was thinking of diving straight into a relatively affordable course. I also don't want to allocate too much capital initially (demo first, followed by 10-30k account, ramping up funds if I perform well) so I'm looking for small-account-type strategies. JL's M3 course seems highly recommended, but it costs about 1k :)
Rhino seems to be recommended but I'm having a hard time signing up for it - is it discontinued?
Otherwise, I was considering signing up for maybe Kevlar? Some kind of bwb strategy seems to be where most beginners start?
Also, where should I go for basic questions if I don't understand something taught in the course? The cboe site seems mostly geared towards hedgers (though I only gave it a quick scan).

While I'm aeons behind most members on this site, I'd love some advice please :)

Posted by winters
 
I'm not sure a bwb strategy is where most beginners start, but it probably IS where they should start. I wish I would have started there. John Locke is a great teacher, so the M3 can be a good place to start, even though that isn't my favorite BWB variant. The Road Trip Trade is another good option, as you can watch the basic trade setup for free if you are a member here. Take a read through the long thread in the Long Term Strategies forum here and watch the videos in that thread. Disclaimer: I am a happy subscriber to the RTT service, and I have purchase John Locke's courses.

EDIT: I will say that if you want lots of diving into details and a detailed trade plan, the M3 has that in spades, and John is continually diving deeper and teaching you more. The RTT is much lighter on the detail and is more of a general structure and you can watch what the guys do and learn from it.

Posted by Peavey
 
tom said:
I'm not sure a bwb strategy is where most beginners start, but it probably IS where they should start. I wish I would have started there. John Locke is a great teacher, so the M3 can be a good place to start, even though that isn't my favorite BWB variant. The Road Trip Trade is another good option, as you can watch the basic trade setup for free if you are a member here. Take a read through the long thread in the Long Term Strategies forum here and watch the videos in that thread. Disclaimer: I am a happy subscriber to the RTT service, and I have purchase John Locke's courses.

EDIT: I will say that if you want lots of diving into details and a detailed trade plan, the M3 has that in spades, and John is continually diving deeper and teaching you more. The RTT is much lighter on the detail and is more of a general structure and you can watch what the guys do and learn from it.
Click to expand...

Thanks for the reply! The more I research M3, the more I think I'll go ahead and get it. One reason I might go for M3 over RTT at this stage is because I keep seeing mentions that M3 is suited for a broader range of market conditions. I'm also the kind of person who enjoys learning more about the ins and outs of something.

I'll definitely take a read through the long thread you mention. Out of curiousity, what are your favorite trades, bwb or otherwise?

Posted by winters
 
You don''t have to sign up for the Rhino service, watch the presentation(free to all members) & download the pdf (only available to paid up members), which has all the rules, then backtest the strategy to familiarise yourself with how it performs under different volatility regimes & also the challenges you will have when you have strong trending mkts or falling mkts. This way you will know what your own delta limits are. Hard work, yes, but you will learn a lot about the strategy.
If you like the M3 but don't want to pay for the course, JL has been very generous over the years with his knowledge & if you have at the time a search through the archives here will give you enough information to backtest the strategy. John has provided quite a few examples in the round table discussions & has also given his basic delta guidelines, basically enough to get up & running, you can then ask questions here from the experienced M3 traders on this forum. There are also some very good M3 threads here.
Lastly subscribe to JL youtube channel, he has videos going back to 2012, I think, where he demos all his strategies every single month, M3, Rock, Bearish Fly, V-Condor. All for free. Full Disclosure I have purchased JL's M3 course.
 
I reiterate the above advice. all good. John Locke's bearish butterfly course is fully mechanical system as it's written and can be a great way to learn how butterfly's trade as well for a beginner. The M3 will take some time to learn but worthwhile. Also John Locke and Dave Thomas offer mentoring that i hear has been invaluable to people getting started with the M3. Road Trip Trade is great cause Dan Harvey is so good. Look around and find something that seems to work in broad market environments and really dig in and master it. There are no Holy Grails but lots of good trades for different mkt environments. But start with 1 and master it then add more to your collection of trades. Good luck!!
 
There are many posts on this forum in response to similar questions. I would set aside some funds for education and go ahead and buy M3 courses. (BB is a more mechanical system but requires a strong stomach to handle big drawdowns, it is not for a beginner). Join JL's community and watch his weekly videos updates and recordings. You can do it with a free membership. Look through the Library on this site and you can find many recordings and discussions on various BWB strategies, if you become a paid member you can download all presentations and recording and study them at your convenience.

So start with M3, trade it with IWM, you will not make much money but will get a sense of real trading. Paper trading is good for leaning the mechanics, but will not teach you how to trade. Add some other BWB strategies, learn the mechanics and then trade small. Later you can take on the BB, but is not really a Theta trade, you need the a market reversal to the downside to make the targets.
 
tom said:
Thanks for the reply! The more I research M3, the more I think I'll go ahead and get it. One reason I might go for M3 over RTT at this stage is because I keep seeing mentions that M3 is suited for a broader range of market conditions. I'm also the kind of person who enjoys learning more about the ins and outs of something.

I'll definitely take a read through the long thread you mention. Out of curiousity, what are your favorite trades, bwb or otherwise?
Click to expand...

The RTT is suited for almost all market conditions, just as the M3 is. That said, if the market starts to get crazy and you feel like you are losing control of the trade, always get out. That can apply to any style of trade.

The RTT is currently my favorite trade. It has a very good ratio of return vs. stress.

You really can't go wrong with either the M3 or RTT, as far as I'm concerned. There is enough free material on both to get a feel for how they work, so that should help you pick one.

Posted by Peavey
 
The M3, Road Trip, Kevlar, Rhino, etc. are all variations on the same theme of a Theta generating structure, usually behind the market with some hedge or structure to minimize upside risk. Each has its pros and cons and any one will be a good place to start. Right now the Road Trip in the SPX is performing quite well. You don't need a lot of capital to trade one tranche (6 butterflies) and you can follow the trade with Thinkorswim thus avoiding the more expensive software and larger capital needed to properly trade many of the others. If you can attend Trading Group 2 on Tuesday afternoons and are willing to share and participate, you will find it a great place to learn.
 
Wow, thanks so much everyone for your replies! :)
I think my plan going forward will be to go through the M3 and RTT archives, and see what they're like (I'm going on a week's holiday from tomorrow - so over my holiday period). They both appeal to me in terms of their risk profile and the fact that they're suited for non-US timezones, given that I live in Australia.
Once I'm back at my desk, I'll get OV/One and backtest. Next, hopefully I'll sign up for either M3/RTT and demo for a month while following along with the forum community. Finally, I'll start trading small (possibly a 10k account to start) and then gradually ramp up the funds (possibly capping at 50k for the first year) as I feel more confident. I'm excited about the journey ahead :)

Posted by winters
 
I`m trying to find my way as well. As I prefer to have an alert service as an initial support, I wonder which to order. Especially I miss a comparison of the different services and the minimum account size required to trade them in their smallest variation ( multiple, not replacement with IWM etc..).

Thanks

Posted by Heuut
 
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