How To Stop Panicking While Trading with Carl Nord - 160

The Option Genius Podcast: Options Trading For Income and Growth

Allen: Welcome passive traders to another edition of the Option Genius Podcast. Today I have a special guest with me, Mr. Carl Nord, We’re going to be talking about something pretty interesting that goes back to a few episodes ago, something I talked about, which was back on episode 140 of the podcast, I introduced something called the 66 Trade challenge, which is something that people can do if they are having trouble with discipline, it's one of the ways that we talked about of how to overcome the deer in the headlights syndrome, or the not knowing what to do syndrome or just not doing what you're supposed to do while you're trading.

Allen: And we've all been there. And it's a it's a mental thing. You know, I talk about it a lot that trading is 90%, mental 10% skills. Most of us know what to do, we just don't do it for whatever reason. And we all have our individual hang-ups. So Carl here, he's in a couple of our programs. He listened to that episode, he took it to heart. And he reached out and said, You know, I'm doing the challenge. And I've been following him. And he's been giving me updates all along the way. And I said, You know what, this is awesome. We need to get Carl on the show. We need him to share his expertise, his wisdom about going through the system and going through the challenge, and basically, his results. So, Carl, welcome so much.

Carl: Thanks, Allen. So glad to be here with you.

Allen: Yeah, it's so it's a wonderful for you to share your time and experience experience with us. I'm really happy to have you here. And it's part of what we like to have in the Option Genius community where we help each other. So appreciate that. So Carl, let's let's get started. What was it about the challenge that made you decide to do it?

Carl: Well, actually, it was a combination of two of the podcasts. I listened to the 66. Great Challenge first. And then I listened to the one right before it number 139. When you have tried everything, and you're still not profitably trading that one, which is a long, long podcast, and over and over in there, you were saying, You got to have a plan, you got to follow the rules step by step and, and this other thing, and I was thinking, you know, if I'm gonna get this down, the 66 trade challenge will make me do the things you were telling that the other fellow in the podcast just previous to it, it was a combination of the two. That made me do it. But mostly it was because also, like you said, I had no discipline. I panicked all the time. Yeah.

Allen: Hey, cool. So I mean, yeah, I remember. I remember that one that was 139. I think that one was like a it was like a coaching call. Basically, someone had written in and said, You know, I've been trying this for years and years, and I haven't had any success and what helped me, what am I doing wrong? And so I got on them. And I asked him, I was like, Hey, would you be willing to have it recorded and shared? And he was like, yes. So we got on the call. And yeah, it was about an hour and a half long.

Carl: He had either an English or Australian accent?

Allen: Yes, yeah. And he's actually in our, the free Facebook group that we have. He's in there. And he responded, it's been about a year I think, since that episode, or I don't know how long it's been. It's been a while. And he responded on Facebook. Just recently, I think it was last week that he's been he's made a lot of strides. He's listened to that interview several times. And it really helped him. And he's made a lot of changes, and he's doing much better. So I'm glad. I'm glad that was helpful. So basically, you said that you were having a problem with discipline. How bad was that problem?

Carl: Well, it was bad enough that I wasn't making money. You know, it just yeah, if the market went against me, I was just panicking all the time and either selling too soon, or, you know, exiting the trades too soon or too late or something, you know, just kind of got overwhelming for a little bit. And I was looking for an answer when that can't win when I listened to those two podcasts and put it together for me.

Allen: Sweet and so what were the things or some of the things that you had tried before the challenge to overcome that problem?

Carl: Well, I guess I just Well, I had taken the class so I was trying to apply what I learned there. But until I did the challenge, I couldn't get myself to stick with it the way I needed to. And even after the challenge I started with the challenge. There were some things that happen along the way for one thing I didn't want to do adjustments. And in that cost me I saw big time. The the last, next to the last trade that I did, I did an adjustment, I tried doing an adjustment on it. And after all was said and done, I came out with six bucks ahead. So you know, don't lose money. That's the big thing, don't lose money. And, and so now, I keep an eye out for for doing adjustments. But by that by the time I got done with the, towards the end of the second half the last 33 of the trades. I was starting to settle down pretty good. And profitability was going up. I was doing better in percentages and stuff like that. And on my returns and fewer, fewer losers. Certainly. No, no big big losers. Awesome.

Allen: Cool. Yeah. So that kind of leads me to my next question. So before the challenge, what were your results?

Carl: Well, my results were mixed mostly down. But I had a few winners here and there. But I wasn't, I wasn't applying all the rules. As I was just looking at a chart for a company, I'd pick something and look at the chart and see if it was starting to trend or if I thought it was going to and then I looked at looked for the look for the option. Look at the option list there and, and pick out something I wouldn't look at. You have a whole lot of particulars. And I don't know how much you want me to get into those. But I mean, it just things like dividends, I didn't worry about whether a stock had dividends or not. And that was important as far as the stability of the company. And then there's the some of the Greek stuff, the betas and that I hadn't been paying attention to that even though I know you had emphasized that. When when you were when I went through your course.

Allen: Okay, so that's really interesting. So you have you had the passive trading formula course you had all the rules, you had all the plan, you had everything. But it sounds like you kind of picked and chose what you wanted to follow in what you left alone. And what strategies were you using before and during the challenge? Like what? What was the naked puts covered calls, credit spreads?

Carl: No cover calls. I did call spreads on the call side and the foot side. Most of them were naked quotes actually. Okay. But as I went on, the spreads seemed to be working for me better. Puts on the spread side. And I did those four things naked calls.

Allen: You did naked calls?

Carl: Yeah. So Naked calls.

Allen: Okay.

Carl: Just a few. Not a lot. Actually. I think. No, yeah. Right. I there was not a lot and I only did two. I take that back there was a bunch of bunch of call spreads that I did. Okay. There was two naked calls that one was a loser one was a winner. Overall. That way was aware of the to the naked puts and then put spreads, put spreads, gave me a better percentage when not necessarily a better dollar and better percentage, which overtime would have been better, I think.

Allen: Okay, and how long were you? How have you been trading options before you took the challenge?

Carl: Ever since last October.

Allen: Okay, so what is that? Almost a year? It's coming up on a year. Yeah. Okay. And so how long when did you start the challenge?

Carl: I started the challenge it on January 25th.

Allen: Okay, so October, November, December?

Allen: So about four. So you were trading for about four months before you took the challenge. Okay, cool. All right. So now just to recap, you know, you've been trading for four months using different strategies. And you said that mostly your results before the challenge were that you were negative and you kind of didn't didn't really know what you were doing. So what were there

Carl: I still wonder that.

Allen: We all do so then What were the results? So what are your now that the challenge has been completed. And the whole point of the challenge was to have you and just a little bit of background for people who haven't heard that episode, the whole point of the challenge is to have everybody do 66 trades in a row of following the rules exactly as they're laid out. And the idea behind it is, if you do that, it should help if not trigger a habit-forming response. So we want to make following the rules a habit where it's just automatic, you don't have to think about it. And, you know, go back to psychology and whatever, they say that the average is about 66 times that you have to repeat something for it to be a habit. Now, it can vary depending on the emotional response in the whatever the person, but 66 is about, about average. So that was where we came up with it. And so if you've, the idea was if you take a trading plan, you do it 66 trades in a row with no deviation from the plan, then it will make it much easier to have that discipline as you continue. So now that the challenge is complete, Carl, what are your trading results after the challenge?

Carl: I use ThinkOrSwim. And so when I go to put on a trade, first I check the chart on a company if I've got one picked out. And I check the chart on it to see if I can spot a trend or whatever, if I want really want to do the company, then I go to the to the trade to get the option chain. And Thinkorswim has, you can lower it and it gives me the beta the dividends while volume and the trades and all that stuff, you know what's going on with it. My eyes just start, I just started the left and go across the top and okay, it's got this, it's got this has got this, okay, it's got all that now, I go down. And that takes care of the underlying, I go down to the option chain, and I started looking for the price on the individual options and making sure that the delta is within the range that I want, first of all, and then and then go to the price itself. And if I'm doing a spread, I want to get not less than 30 cents on the spread. If I do a naked put if I liked the company well enough on you know, it's 30 cent minimum to you know, just 30 cents is a base. So any if it's above that great, wonderful. So, so I do that.

Allen: Okay, so that's the process, but what are we how are we? How are your results now? Like? Because before you said you weren't winning on too many trades? How about now?

Carl: Oh, yeah, no, no, yeah, the second half of that set of trades, I had out of 33, I had maybe four losers five losers as all, which was good for me. I mean, it was much better for me, it's without a doubt. In the beginning, I got hurt in some of my average is in the dollar amounts. Because I started using five contracts for trade, paper trading. And it wasn't after about five trades in I heard you telling somebody somewhere along the line to do it like we would really be doing and I could only afford one contract on a trade. So I reduced it. But in those five I had two losers that were really really big, dollar wise, that hurt me there. So, but all of that, as I went on, it became practice with following the rules and getting a little bit better at reading the charts. Just between the two it helped check the company once in a while to make to on the fundamentals to see if the company is standing in good with some of the analysts or in Wall Street or whatever.

Allen: Okay, but let's say guess I'm trying to in my mind, I'm trying to create like a progression, right? So before challenge, during challenge, after challenge now before challenge, he said things were not too good. You were still pretty new. And so you were having more losses than winners. During the challenge. As you said in the beginning the first 30 trades or so, you were you were paper trading while you were trading a little bit larger size, then you actually have the capital for so eventually you cut that down. But because of those two losses, you're saying that you were negative, and then for the last half of the challenge, you said you did about 33 or 35 trades or something. And there were only about four or five that you lost on. Is that right? Right. Okay. And then when did you finish the challenge? What date?

Carl: Do know? I didn't look at the data when it's finished. If I can get that for just a second.

Allen: Yeah, I mean, I'm just looking for ballpark, you know, because he started in January.

Carl: June 5th

Allen: Oh so it took about four No, about five, five months to do the whole challenge. Now, from June to now, because right now, as we're recording this, it's August. So we got June, July, August, or June, July. Really? How have you been doing these two months?

Carl: The trades that I've done have been winners, but I haven't done very many trades because of the oils. We're working with you. Okay. trading program. Yeah. Okay.

Allen: So you're doing fewer trades, but you're switching what you're doing?

Carl: Yeah, well, things kind of evolve over time, you know, as you do stuff, like, I can afford to put on one contract for the oils. But it gives me just enough to do one contract in equities if I picked a low enough value company. And for that, gotta follow the rules for that with Lauren companies, you got to you got to get it. It's hard to find a company that's really stable and can can give me what you need. But so I've been, I've just started doing that kind of evolving into that. And so far, I've got two trades of one. Yeah. And, and that, that side of it is going good for me the oils, I need to work on,

Allen: Right. I mean, anytime you're learning, it's something that's going to take some time. But it seems like the challenge the I guess, what it seems like the biggest benefit for the challenge was that it forced you to actually use the rules. And it forced you to actually dig deeper into the material and be like, Okay, I paid for this. I'm in this program. I gotta make sure that I'm actually following the book. Is that Is that safe? Yeah. Okay.

Carl: Yes. Okay. Cool. And it was what I needed. Because I, you know, like I said, at the beginning, I panicked a lot. If the market went against me, and I get out too soon or too late. Just the rules are there for a reason, they set you up so that you can get in and out at the right times. And if you're down, then, you know, how to adjust and, you know, what, what time do you want to pick to do the adjustment? And that kind of thing? It was important, you know?

Allen: Yeah, I think something you said is what you just said is like, really, really important. Because, you know, in the progression, I'm like, Okay, you went from new trader to having a little bit of experience and losing trades, and now you're winning on most of the trades. And that's great, you know, the, the, you know, you're making more money than before, it's, it's showing potential, but I think what you said is that before, you used to panic now, because you've done so many trades, and I think this one challenge also forced you to do a lot of trades, you don't panic as much and that in itself by itself, even if even if, you know we don't even look at the money or the wind Ross ratio or anything like that. But the fact that you have more confidence in the system in the trading plan, and in yourself as a trader, I think that's huge, because that will go you know, well into the future.

Allen: And I think for me, that was one of the one of the things that helped me switch in my mind from "Oh, hey, I'm a new beginner. I'm just messing around to Okay, now I actually know what I'm doing. Now. I'm confident now, if the market goes against me, I know how to bail myself out. And so that allowed me to sleep at night. Because you know, it's like oh my god i trades a triple what do I do? You know, in the beginning it's like oh my god, the trades are trouble. Oh, I hope I hope the stock goes up tomorrow. I hope the stock goes this tomorrow. I know you're praying and you're not sleeping at night, your chicken the name the overnight markets. But once you have that confidence that hey, you know what, even if it goes against me tomorrow, I know what I'm doing. And I know how to get out of it. I know how to if I have to take a loss I know I can take a loss or if I know if I want to adjust I know what to do and how to do it. That gives you a peace of mind. That is kind of like what puts you in the zone. You know I don't know if you play sports but you know for for basketball players or for foootball players, they just get into this mental state where they see everything, they can do everything and they don't mess up. And that's where the the greats really have a lot of that, you know. So I think what you just mentioned, is because of the because of the challenge, and because of you just doing it over and over and over again. I think that's a huge benefit that's going to carry and help you for the next, you know, years and years of your trading.

Carl: Yeah, yeah, it trained my eyes to when I bring up the screen. It's just automatic. No, clicking across the different things, this fits this fits. Nope, that doesn't. Let's go on. Another thing that that it's done is where before I did the challenge, I was watching the watching the numbers all day long. Click-Click-Click. Now. Now, I know that if it doesn't make this percentage, or, you know, whatever, to get in or out where that gets triggered, there's no point in even looking at the computer. So now I'm stuck wondering what I'm going to do with the rest of my day. It's been, it's been good, because I know I don't have to worry about it anymore. It just, I just follow the rules. So two or three times a day I check where where I'm at. And that's it. Yeah.

Allen: Yeah, we call it passive trading for a reason. So what I'm hearing is that I think, and this was a side benefit, like, I don't even think about this, but it seems like because of the challenge, you put on a lot more trades than you would have normally.

Carl: Well, yeah, when I was paper trading, I could, you know, I had a limit thought I had. I mean, I knew, even if I had the money, I probably wouldn't do more than six trades. And if I had the money, I wouldn't learn I would limit myself to probably 10 contracts. Or if I had the money, and that was going to be my overall limit someday down the road. I did do the six trades. I did do that with the paper trading. And in order to speed up the process, I didn't want to do one at a time only all the time. And, and so I just kind of went through that. But..

Allen: Yeah, so. So it seems like you by doing the challenge and doing the trades and wanting to get through the challenge, you actually sped up your your learning process. Because it's because I mean, you've been trading for less than a year and you're talking in a way that I don't hear a lot of beginners talk, you know, you're you're speaking like a option traders that's been doing it for like several years now. So I think this was like one side benefit that I didn't even think about that we wouldn't be when we have somebody new to options would be like, okay, you know, here, here's the basics is what you got to do. And then do you got to do the challenge. You just have to do the trades. This is how many trades we want you to do over and over and over again. So that you put in the reps you put in the time you put in the you get that experience and you build it up as quick as possible. So that you go from "Hey, I don't know anything. I'm not disciplined. I'm not experienced. I'm scared" to "Okay. I've been through the war. I've been through the battles. I know exactly what to do, when to pull the trigger when not to and you come out the other side and you're like, okay, hey, I got this. So yeah, this is this is awesome. Cool. So what did you learn about yourself when doing this?

Carl: Well, I learned that I needed help. that I that I shouldn't just try to figure it out to do it by myself. I learned that I had to put in a little bit of time and work on it more than a little and I learned Yeah, I learned to focus on the right things and then not get get so worried about where the other money was going up or down and stuff and the trainers sticking with watching percentages and watch how it's rising and falling to the rules. So before it was grad I can't stand to lose as much money I'm out and then I get out and the next day it is right be right back up again. And I'd have lost all that money.

Allen: Yeah, yep. Yeah, that's a big one. That's a big one that a lot of people never overcome. And that's something that I'm actually learning myself again, right now, because as we're trading for the fund, you know, the fund is much larger than I've had in any one account. You know, I mean, I have multiple accounts, overall, the, the size is big, but now that I have that whole big, big pie in the fund, we look at it and if a trade is going bad, or not going bad, but the trade is just not going the right way, the number, the last number is really, really big. Oh, my God, you know, we're losing a lot of money. But when you when you ignore that part of it, and you just look at, okay, when is I'm getting out, or when am I having to adjust, I would realize that, Oh, hey, this trade is not even in trouble. It's not even anywhere close to being adjusted or getting out. It's just that because the trade is so large, that the numbers are really big. And so when the trade goes, well, then the numbers get really big on the good side. So I'm learning this whole process again, myself about, hey, don't worry about the numbers, you know, don't worry about the amount the dollar amounts will focus on the trade, the debit, the debit, the delta, and all that other stuff. So yeah, it's something that we keep learning over and over again. So that's cool. Now, when it comes to the challenge, what was the hardest thing for you to do?

Carl: Well, the hardest thing was to I got 28 trades in and blow it, you had to restart.

Allen: So okay, so 28 trades in and then you know.

Carl: You know, all of it Allen has been trying to pick is is trying to find is trying to be right in the chart that I look at and use and and the assumptions I make about whether it's trending up or trending down or whatever like that, that is always the hardest. I mean, the rules are easy, you've made them simple. It has got to do them. But but you know, there's just no accounting for the market. Yeah, that's the part that started is true.

Allen: Right. So I mean, you know, depending on the strategy, of course, it varies. I know for the spreads themselves, we do cover that in the program, I can go through that with you, if you need to. But it's, it's really, you know, basically, the idea is very simple. It's okay, if I'm trading a credit spread, I don't want to be guessing on what the market or the stock is doing. And I don't want to be trading something that I don't It's not talking to me, pretty much. I mean, it's a weird way to say it, but like, I want to look for a stock that's trending, you know, it's either going up, it's going down, or it's going sideways, the sideways once I don't even mess with you know, if it's going up or going down. Those are the ones I will I will trade spreads on. So I think we do cover that. And there's some things maybe I can go over with, again, to see how to make sure that it's, you know, what are we looking for, to say, hey, it's trending. But in in that sense? There, it's still trading, right? And so we can we can line it up and do it and have the perfect setup. But then the thing just stops and turns around it goes the opposite way. Or like what have it.

Allen: And that's why we need to be able to follow the rules. It's not just finding the perfect trade, it's also managing the trade. And when do we get out? When do we pull the plug? When do we adjust it? Or how do we know if we should adjust or get out? So there's, there's all that stuff. And I'm really glad that you actually went through this, because the only way to know is to be in that situation over and over and over again. So kudos to you for that. Now, now that the challenge is over, and you said that I want to go back to this, you said that you did I think what was it? 28 trades. And then you had to start over again. So why did you start over?

Carl: Because I took on a trade without checking one of the one of the rules is to have a dividend. What I don't know if it's your rule, but it was one of my rules that fit your, your structure there. My I had to have a dividend or a yield over 1%. And, and I didn't look at that. And it was zero. And I had already put the trade on. And then I was going back to do the paper do to fill in my paperwork. And I saw that not Doggone it. No, no dividends. So that company was off my list. But I done it. So I had to start over again.

Allen: Yeah, because that's one of the rules of the challenge that you have to follow the rules on every trade. And if you mess up or if you don't follow the rules and you gotta go back to the beginning and start over again. And that's that's kind of what makes the habit you know, just doing it over and over and over again. So I mean, good. Again, kudos to you like most people would have been like oh, Oh, that's not a big rule, I'm gonna just budget and keep going. But it shows that you're serious about this. And that's one of the things I want to point out to everybody that, you know, when you we see you on the call on the coaching calls, you know, you ask questions, you, you post and say, Hey, this is what I'm doing. You know, this is what this is what I have, and you want to do it, you want to learn, you're putting in the time you're putting in the effort, you know, doing a 66 trade challenge is not easy.

Allen: It's definitely most people will not do it. I would say just because, you know, like, I say that the mental aspect is 90 trading is 90%. Mental, I can say also, that 90% of option traders who are learning this stuff are not going to go through and do an entire 66 trade challenge. You know what you describe that? Oh, hey, I missed up on this one rule. I messed up and I started over again. Most people would be like, yeah, no, I'm just gonna keep going. So, you know, that shows that not only do you want to do it, but you have the willpower and the discipline. And I don't know if that came from the challenge, or it just you had a naturally but that's a challenge. Well, that's awesome. Because that's what it takes to do it. Yep. And that's what it takes, you know, that's what it takes to get good at this. And, and like, you know, from what I'm seeing, I've seen a change in you yourself. Right from from the beginning, from when you start started the program to now I've seen a change in you, your demeanor, your questions, and you've come light and day. So if there's anybody listening is like, Oh, how do I learn options? The fastest way? Well, I think it's, you know, do the challenge, get a trading plan, do the challenge. Put yourself in that position, do the reps, and you'll make light years of progress. So that's, that's really, really awesome. I think I might have already answered this one. But what has changed for you now that the challenge is complete?

Carl: Well, I'm more sure of myself with doing the trades. I mean, the the part of putting on the trade, selecting the underlying and putting on the trade and that are just, you just it's just the rules. It's it's only figuring out whether it's going to go up or down or, you know, along those lines, and that's always going to be there. But, but for me, I don't have to wonder if I'm doing the right thing with putting on the trade. Because I know now with with the trade that when I look at the Options that that I'm doing everything right? I just need them the market to go in my direction as all. And like I said, Now I only check on it two, three times a day. And it's it's it's a it's been a relief, you know, to be able to go I went fishing all day yesterday and didn't have to worry about it. I could have checked on my phone, but I didn't guide. It's just let it rip.

Allen: Yeah, I mean, some people say, Oh, this is like passive income. I'm like it is. And it is it. You know, I mean, it is income and we still have to watch it. So it's not like you're not doing anything, but it has a it has a hint of excitement. But it's not overwhelming. It's not like terror most of the time. Yeah, well, I had those episodes. So yeah, but that's that's the progression of going from like a newbie to you know, an experienced trader that's been doing this for some time that you don't be you don't have as many of those. Cool. So now the final question for you. The challenge itself, did it help you form some habits? Or no?

Carl: Oh, yeah. Like I said before, it's it's like it's automatic. My eyes just go to the things I want to check. I've got a worksheet that I made up for myself and, and then I just fill in the numbers as they go on. My but even when I'm looking now to see if it's a trade that I suspect I might want to do, my eyes are still traveling from right to left the line on Thinkorswim. They're checking off the things on the underlying that, that I know I'm going to need to have in place before I even go any further with it.

Allen: Wonderful. Wonderful. Yeah, I mean, it does, in a sense, make it more boring. The trading can get more boring when you actually know what you're doing. And you have a set plan, you know, it's like, Hey, I do this then I do this and I do this and I do this and once you have that, it's like oh man, it's not so exciting anymore. But I think that's the that's the goal. You know, I mean, if you want to excite me go buy a lottery ticket or you know go

Carl: Yeah, well, I do that to

Allen: Cool Beans. All right. So is there anything that else you would like to share with our audience? Any tidbits of advice or anything like that? Well,

Carl: I guess I guess we've covered most of everything. Whether you do the challenge or not, I would say, you know, follow the rules, right? Just, you got him, and they work so well on, you'll reduce your number of losers and increase your numbers of winners.

Allen: Yep. Yeah. I think we, I've heard it over and over and over again, it's like, just follow the rules, just follow the rules. It's like it. But that's the hard part. That's the hard part of getting getting people to do that, you know, getting them to follow the rules. And that was the whole idea behind the challenge. So I thank you again, for your for your time and for your wisdom. I'm very happy that you were able to complete this and that he got the results that you have. And I can't wait to see the future and what it what it Hell's in store for you. So thank you so much.

Carl: You're welcome.