Oct 13, 2020
People literally ask me this one question ALL THE TIME… “Allen, how did come up with such a lucrative, safe, and easy way to trade?” I explain it all in my new book Passive Trading, get your free book here! https://www.passivetrading.com/free-book
Podcast Transcript:
Hello. Hello. Hello. I had a interesting phone call yesterday. And so I thought I'd share with you, it's an interesting story. A guy calls the office and I just happened to pick it up and he's wanting to know about passive trading, what it is, how it works. And so I asked him, I said, "We have some questions that we normally ask people." And I say, "So are you doing any trading right now? You know anything about options?" And he says, bravely, or very proudly that, "Yeah, I do. I just turned 10,000 into 25,000 trading options." And I said, "Whoa, that's awesome. That's great. Congratulations. Well done, good job. How much do you have in your account right now?" And he says, "Well, I have 25,000." I said, "Oh, okay. So you had 10 before and you turned it into 25?" "Yes." "Oh, awesome. Great, great. What are you going to do with it now?"
And he says, "Well, I'm going to take the 25, break it out into five and put 5,000 in each different trade." So I'm like, "Oh, okay, cool. You're going to be smart. You're going to diversify." He goes, "Yeah, exactly. I'm going to be diversifying." So I was like, "Okay, so the first time you did it, you put the whole 10 in one. Right? How many different stocks did you do?" He goes, "Yeah, just one." I go, "Okay, so you put one trade in one stock, the whole 10 and it turned into 25. Now you're going to break it down and diversify." And he goes, "Yeah, that's exactly what I'm doing." And I was like, "Okay, cool.
So, let me see," this is me talking. I was like, "Let me see if I can try to explain to you what you did. Now, what you did was basically you went to the casino, Wall Street's a casino. So, you go to the casino and you end up at the roulette table. Now the roulette table has all these different kinds of bets that you can make. You can bet red. You can bet black. You can red odd, even. What you decided was you going to take all your money and you picked one number and you put it all on that one number and you let it ride. And you hit, which is awesome. I mean, the odds of that are really low, but you hit and it paid off. It paid off big, that's awesome. That's great. So, now what you're doing is you're taking your winnings. You split it up into five little pots and you're going to put them on five different numbers."
And he's like, "Okay." I'm like, "Yeah. So, now this is around two. The first spin you hit. The second spin and you put it on five different numbers. What do you think is going to happen?" He goes, "If it's a roulette, I'm probably going to lose." I'm like, "Yeah. Yep, exactly. That's what's going to happen if you do the same thing." And he's like, "Well, well, why is passive trading so different? Why is that so much better? I knew what I was doing. I made a smart choice. I made a smart bet." I'm like, "Yeah, maybe you did. But the chances of you duplicating it, not very big. The odds are against you. Now with passive trading I'm with you in the casino. I came with you, the same car. But I didn't go to the roulette table. I went to the blackjack table and I sat down." And he goes, "Well, blackjack it doesn't have good odds either."
And I'm like, "Yeah, that's true. If you play the regular way, black Jack doesn't really have that good odds either. But see, I don't play it the regular way." "What do you do?" I said, "Well, when I play blackjack, or basically passive trading, but when I'm doing blackjack in this scenario, I start with my two cards and I start with either an 18, 19 or 20." He's like, "What?" I'm like, "Yeah. I start with either, an 18 and 19 or 20 on every hand. Now, sometimes it gets really, really close to 21. Some trades are really close to 21, but nothing is guaranteed, so I can't say 21. So, we'll just say I start with 18, 19 or 20. Now, how many hands do you think I'm going to win, if I start with 18, 19 or 20?" He goes, "All of them."
I'm like, "Well, yeah. You do lose on occasion, but yeah, I win on the majority of them. I win on most of them. So, both of us went to the casino. You went to roulette, you did one swing or one round or whatever it's called and you won big. Then you do the second one and then you lost it all. Now you're busted. You're broke. You're got no money left. So now you have to wait for me to either run out of money or get bored, because we came in the same car. So, you're going to be waiting a long time because I'm doing well at the blackjack table. Now, you know how at the blackjack table they have space for six or seven people or eight people? I don't know how many people can sit there, but they have space for multiple people there."
"Yeah." "Well, I'm playing the whole table. I'm playing every single seat. I'm doing multiple hands and I'm starting every hand with 18, 19 or 20. And so the thing is that, I'm going to lose eventually. Occasionally I'm going to lose. But when I do lose, I lose small. I don't lose it. So that gives me staying power. That lets me sit there at the table all night long, just playing, playing, playing, playing, playing until I get bored because most likely I ain't going to run out of money. And that's the difference between buying options and selling options. Now passive trading takes it a little step further. If you're only selling options, you still have some risks you have to worry about. Passive trading takes it even further to the next level. That's why I'm really a big proponent of passive trading."
So he goes, "Oh, okay. Where can I find out more?" I go, "Well, just go get my free book. And you can do the same thing. The book is at passivetrading.com/free book. Just go there and pick up the book, learn all about it, see what you think. Learn how to play blackjack with 18, 19 or 20. Depending on whatever strategy you use, that's what number you get." And so, right now I understand what this guy is coming from. There are a lot of people like him in the market. The market is very volatile right now. Stocks are going up, stocks are going down depending on what stock you're playing. And it's a little crazy, but it's a gambler's market. And so if you are a gambler and if you're not in this for the long run, and if you're just in it to make some quick money and hopefully you place a bet and it pays off. This is a great market for you.
It's very volatile. That means there's a lot of premium and the stocks are moving up and down really crazy. And then now we have the election coming up. So there's going to be a lot more volatility, a lot more volatility. And so if you're a gambler, then this is great. You can turn your 10 into 25 and then you probably turn your 25 and zero. And then maybe you get some more and come back in and try it again. But if you do hit the 10 to 25, I hope you take some money off the table. Don't risk at all. Just whatever money you came with. Take that 10 off the table, go put it in a savings account and then play with whatever money you made. Because eventually you're going to blow it, if you're a gambler.
If you're not a gambler, if you're in this for the long haul, if you're looking for a real passive income, if you're looking for real something stable to do, then selling options is the way to go. Add passive trading onto that, take it to the next level. And you could be there playing all night and it doesn't matter what happens. It doesn't matter how volatile it gets. It doesn't matter who wins the election. It doesn't matter if there's stimulus or no stimulus. Doesn't matter if this company is doing well or that company is doing well. We play the odds and we just keep rolling. We just keep playing with the money and that's it. That's how it goes. And so, I've been doing this for a long, long time. And in the beginning, when I first started, lost a bunch of money, did all kinds of crazy things. Made money too, along the way. I had some big winners just like this guy did, but you learn that those are few and far between.
And so eventually, over time, I realized that. Hey, you know what, I need something sustainable, something long-term, something that's not going to take all my time either. And that's another major factor of passive trading, it doesn't take a lot of time. And so right now, it's a great time to start. Things are going to get more volatile, I believe. We don't know when this Coronavirus is going to be going away, or if it's going to go away, or what the world is going to look like when we returned back to normal. It's going to be maybe a new normal, who knows. But I think eventually things will go back to the way they are now, or they were before. So we'll have pre-COVID and then during COVID, then after COVID. And after COVID eventually things that go back to pre-COVID, and life will go on. And passive traders will still be trading and the gamblers will be gone. So, don't be a gambler. Trade with the odds in your favor, my friend. Take care.
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