How To Retire on 10K in One Year
I just wanted to share this link on investing and thought it offered some valuable information on financial freedom.
I haven't actually read the entire document but I browsed through and its pretty good!
http://tradesmartu.net/documents/How...ire_on_10k.pdf
Just read it. Looks really interesting. I don't know much about the stock market, so I don't completely understand it. Hopefully someone who knows stocks can break it down!
I couldn't save the file, however, I took 5K and invested it to "retire" a few years ago. It doesn't take much, but the key is to keep going. So you have enough passive income to pay all your bills and don't have to work? Great! What's next?
"Let go of the past and go for the future. Go confidently in the direction of your dreams. Live the life you've imagined. " Henry David Thoreau
I am not a pro in the stock market, but the things he is talking about are not too complex.Originally Posted by MikeC
His "theory" is this:
1) Learn how to analize the market and stocks technically.
2) Based on your analysis, invest in the option market (writing options).
3) Use a system for your investment, and minimize the risk you are naturally exposed to when writing options.
4) Earn 20% a month, every month.
5) Retire.
Simple no?
What he refrains from talking about is that if your fund is 10k, and you invest 5k with the numbers he describes, one loss can cost you a net of 4K (40%).
He "forgot" to put losing money scenarios in his compound interest table..
Retiering using this system? That is selling people a dream.
It is true that some people can make this tactic work, and hypotetically even enable them to "retire" from the over all gains over loses they produce. For the average person who dosenīt deal with financial markets professionally this is simply an unrealistic dream (unless he is planning to do it professionally).
While the system itself is not bad (I believe traders actually use it daily), the context is VERY bad.
He is basically saying it is easy, and that everyone can profit from it.
Like everywhere else in life there is no easy, safe, money making trick. And if you try his system amaturishly you are much more likely to lose money rather than earn money.
Why would someone who can do 20% a month, every month, bother to have a business in financial courses?
Sounds like a faliure in the guru credibility test.
Although most of the document is effective marketing, the meat of the document actually talks about generating capital using bull call credit spreads and bear put credit spreads.
Bull spread
Bear spread
The bull spread involves buying the at-the-money call and selling another call at a higher exercise price.
Generally just buying the at-the-money call puts your premium at risk at face value. However, by selling the call at the higher exercise price the investor reduces their premium cost (and hence the hurdle they must overcome in order to turn a profit). And although it limits the gain to the sold call at the higher exercise price, it reduces the loss if the price of the stock goes down.
In short, the technique increases the chance of making a profit IF (and this is a big IF) the investor makes the correct determination of a bull move within the time frame before the options expire.
Vice versa for the bear put credit spread.
The technique is not difficult (for me) to understand. However it is important to emphasize again that in order to succeed, it is key that the investor is proficient at determining if the stock will be bullish or bearish. Did I mention that this was important?
Can this technique generate 20% a month in profit? Perhaps, but not by me, and I'm fairly knowledgeable about stocks.
Thanks for sharing. I personally found document interesting! I always like reading how others use the stock market to make money - especially if they did it in a way that is vastly different than myself!
Best regards.
Visit http://www.ticonline.com now and read about how I became a millionaire shortly after 30 and how you can too!
I can tell you how to NOT make money on penny stocks, if you'd like. Well, let me rephrase, how to make a lot of money one months and lose a lot more the next
If you do what most people won't, you will live like most people can't. - PHXMJ
topherea (Feb 13th, 2011)
I've always wondered that if 90% of people lose money trading, why can't we just do the opposite of someone who sucks at trading? Wouldn't you make money 90% of the time then?
Statistically it should work...
I believe that the majority of people lose money trading because of amaturish management, falling into traps and some basic human pshycology problems.
Things like not setting up stop loses and limits,not cashing out on time, not admitting when you are wrong (the stock will bounce back soon! the company is showing profitability!), and listening to tips and "gurus" instead of doing their own analysis.
Once you stop doing these mistakes (or atleast minimize them as much as possible), your chances to make money grow significantly.
Pros lose money and make wrong choices aswell - but they admit it, and prepare for that possibility.
Esentially doing the opposite of the amatures would be trading professionaly
I'm not sure where that statistic comes from or if it's even true or verifiable?
Best regards.
Visit http://www.ticonline.com now and read about how I became a millionaire shortly after 30 and how you can too!
topherea (Feb 13th, 2011)
I'm actually taking the free course: The Foundations of Stocks & Options. Its a free webinar that is hosted by the owners every Tuesday & Thursday night at 9:30 - 11 PM.
The essence of their strategy is to be an active trader rather than an investor and follow the channels of either their top 50 stock, or any company that appears to have some sort of channel (repetitive pattern in their price).
You buy and sell based on support & resistance, making a small amount every time you do so. Say for example you buy Google for $245 on Monday. On Friday the price goes up to $260 so you decide to sell, and make a profit of $15. Then you buy again, and the price goes up again so you decide to sell again. It's a kind of swing trading. And that is why they yield such high returns per month.
Therefore, the greater you invest, the greater your return. Which is why they suggest the $10K. But you can start with any amount.
Correct. That is the basic strategy. Good luck!
Best regards.
Visit http://www.ticonline.com now and read about how I became a millionaire shortly after 30 and how you can too!
topherea (Feb 13th, 2011)
I'm taking the course as well. Good stuff all around. I don't like how vague they are on some topics, but I guess it's just good marketing.
For those interested in designing, practicing and learning (from) active trading strategies, I'll help get you started over at the stock trading and investment group forum:
Stock Trading and Investment - Millionaire Entrepreneur Forum
All you need to learn with is a sim (fake) account.
Naja H (Feb 13th, 2011)
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