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How to Lose Money

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Re: How to Lose Money

#201

Post by greenshackle2 »

fortran77 wrote: post #185
clipradiowallet wrote: post #162

The "fastest" way of losing money - which the author says is trading options, is naive. Even with a margin account, your purchasing power is 4:1, at best! Now - if you have _enough_ money, you can write uncovered(aka 'naked') option contracts and open the possibility of unlimited losses at least, but that won't afford you any more leverage. IMHO...that "fastest" method to lose money(in the markets) is the commodity f…

I think shorting a stock is even faster.

No. Shorting cannot be faster than writing uncovered call options. They have the same exposure but the option has more leverage.

Re: How to Lose Money

#202

Post by roland35 »

xxs wrote: post #113
roland35 wrote: post #75

Earlier quoted context omitted.

This may be true for some degrees, but I feel like my engineering degrees were worth it and would still be worth it online. I feel like I could have gotten at least 75% of the value of my education online, especially with my Master's degree (both in Electrical Engineering). For me at least the value of my engineering degrees was in learning the fundamental approaches to solving problems, and most of my classes were l…

Electrical Engineer w/o a lab to practice is rather hard - I guess nowadays people can start with microcontrollers instead but that's a far cry from EE.

Yes, labs are definitely helpful to do in person as well, even with just other students and a TA there. I think they would go under the category of "building stuff", so maybe I should revise 75/25 to 60/40!

Re: How to Lose Money

#203

Post by maverik »

icu wrote: post #128
aphextron wrote: post #5

>The nice thing about options is that there isn’t just one way to lose money. No, you can lose money in many different ways – far more than I can write on this page. This is the most important lesson of options. It's never just a coin flip. You have an unimaginably huge number of factors riding against your success. It's not even remotely close to a 50/50 win/lose scenario. There are a million ways to lose, and just…

It really depends on how you use them. My favourite strategy is to identify a stock I want to own, enter the market by writing a put at a price I want to own the stock at, and then if executed (and the stock price hasn't crashed), write covered calls at an inflated strike price. If the price goes down you can buy back your call and lock in your return, and write another call. I only do this on European style options…

this is a great point. have you read the Psychology of Money?

Re: How to Lose Money

#204

Post by DC1350 »

maverik wrote: post #195
DC1350 wrote: post #169

> Do things because you have genuine interest in them... Don’t start out with a singular goal of making money. I really hate advice like this. Have you ever seen a business before? Have you ever met a person? Pretty much no interests are monetizable and almost all companies are doing really boring work. I don’t believe anyone in the world is truly passionate about things like payroll software. If I followed my intere…

fair point when it comes to employment...i think the point in the article is that when it comes to books/courses/etc they probably aren't going to be much good if you don't have much genuine interest in the subject/etc

I know, but it’s still useless advice. It reminds me of people who do competitive programming as a hobby then act smug when anyone complains about technical interviews.

Re: How to Lose Money

#205

Post by maverik »

thiago_fm wrote: post #22
aphextron wrote: post #5

>The nice thing about options is that there isn’t just one way to lose money. No, you can lose money in many different ways – far more than I can write on this page. This is the most important lesson of options. It's never just a coin flip. You have an unimaginably huge number of factors riding against your success. It's not even remotely close to a 50/50 win/lose scenario. There are a million ways to lose, and just…

Even though I agree options is generally a losing game, it does serve a purpose. You can actually even hedge your risk with options -- there are many usages, just because SOME people use it as a casino, it doesn't mean it is. A lot of hedging companies do to raw materials, oil etc follows a similar pattern. The author doesn't mention anytime that, he seems clueless, just use it to play like casino and complain about…

completely agree...options have a ton of value in risk management

Re: How to Lose Money

#206

Post by rutthenut »

JumpCrisscross wrote: post #151
rutthenut wrote: post #130

Earlier quoted context omitted.

I would think it can also be a bit easier playing with 'other peoples money' as you can hold for longer, double-down and so on, whereas with your own money, the risk is even more real and the pot usually much more limited. However, a trader that doesn't do well and makes losses won't last long in the job either. Luck could make or break either type of trader too.

> it can also be a bit easier playing with 'other peoples money' as you can hold for longer As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.) Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculat…

Certainly sounds like one of the most risky areas for trading, if not using options to hedge other positions - which is what I thought they were intended for.

Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on!

I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse

Re: How to Lose Money

#207

Post by maverik »

DeusExMachina wrote: post #44

> I have over 40,000 students taking my online courses and they have generated a few thousand in gross revenues. I have 400, and I made a living out of it for the past couple of years. Sure, I was earning more when I was a freelancer. So, I guess his point stands, I am losing money in that sense. And if money was the only metric, he would be spot on. But money is not the only reason. It's also true that most people j…

that is awesome! Are you using a platform like Udemy or something on your own? I'm also curious if you are publishing courses in areas you are genuinely interested in or strictly doing for income?

Re: How to Lose Money

#208

Post by maverik »

d--b wrote: post #46

Shorting call options also has a nice feature: there is no limit to how much you can lose. But really, what this article misses is a tip about leverage! Whatever your plan to lose money is, make sure you're leveraged. So that you can lose X time the amount you would lose if you only put your own money on the line. Eventually, you'll quickly lose much more than you had in the first place!

great point!! leverage is amazing!

Re: How to Lose Money

#209

Post by newleaf »

smiley1437 wrote: post #136

Options are effectively Zero Sum - meaning that whoever is on the other side of the contract is predicting the opposite of whatever you're thinking. Successful long-term options traders don't trade options 'directionally' (like buying 50K of GME calls), they manage a whole portfolio of options, and then take directional portfolio risk. This is sort of like diversifying, then running risk analysis, then figuring out w…

Just to add to your point which covers speculation, options can also serve as an insurance policy (hedge). Have a large exposure to the stock market and are not looking to sell? Buy puts and receive a payout if the market drops (simplified explanation, of course).

Re: How to Lose Money

#210

Post by verganileonardo »

Building an online course has been one of the easiest ways to make money in my personal experience.

The problem is that most people focus on what they know and spend hours creating the content for the course.

However, most of your success is going to come from building an email list of at least 1k people. And most of the effort should be here BEFORE you start building the course.

I've done that many times and have been profitable since, even after outsourcing most of the work.

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