Saturday, September 26, 2009

What's Your Perspective?

I've been writing these articles for quite a long time, now (maybe too long) and I have received many, many comments. Some have been very thoughtful, others very kind, and some just plain annoying, but, in retrospect, they have taught me a lot about the widely varied perspectives of the readers. I know, for example, that if I write anything with even the slightest political overtones I can expect high praise and ultimate damnation. I've seen that I can rile up the readership with any discussion of social security and I certainly am not going to discuss health care. I once entitled an article "More Than One Way to Skin a Cat" and got a couple of the nastiest comments I ever hope to receive. I guess those few readers took it a little too literally and thought I was going to write a set of instructions. Actually, using language from Mark Twain's A Connecticut Yankee in King Arthur's Court, I only meant there were many ways to accomplish a task.

Last weekend, there were a couple of apparently divergent comments on the blog that got me to thinking about the different perspectives readers have as they read these articles. The first comment suggested I publish all my trades and that they be audited. Better for business the writer believed. While I am sure it was very well meaning, it indicated to me that the commentator was probably both suspicious and unbelieving. He didn't just want to see everything I was doing, he wanted it audited. I'll return to that perspective shortly.

The other commentator (whom I do not know) reported that he has been in the trading business for 33 years and referred to my articles as "a breath of fresh air," and went on to elaborate how important the concept about which I had written was to successful trading.

So, as I see it, we had two very different perspectives. The old pro affirmed that I had at least attempted to write about an important and useful concept. The other writer, whose experience is unknown to me, was looking for some higher proof of credibility. I don't blame him for searching for the credible in a sea of information and misinformation. I guess what I want to say is that the suspicious fellow need only test the information for himself. That is something I have been advocating for years. Paper trade the strategy. See if it works; if it doesn't then you can be assured I am full of bean soup. If it does work, maybe you have been given some valuable information. If it is valuable, use it.

Motive, too, is important. I, quite frankly, have several motives in writing these articles. Though the disbelievers will automatically reject the first motive, it is that I really do want to help people succeed. Secondarily, I would like it if you bought my books or signed up for one of my paid subscription services, but I will tell you that whether or not you buy a book or sign up for a subscription service will have almost no effect on my life. Of course, I do receive some modest income from each of those endeavors, but if they were my livelihood I would probably starve to death. The same is true of income from the few coaching sessions I do each year. I do them because they are fun; they are challenging, and they help keep me sharp in my own trading. Whether I do them or not has no influence on my life or lifestyle other than to require me to devote 10 or 15 days a year to try to help someone else solve their own trading problems.

So, bottom line, whatever you do is up to you. You can choose to believe or disbelieve. It doesn't matter to me except when I am called dishonest. You can come from a trusting or distrusting perspective, but in the end, it is you who must determine, on your own and for yourself, what is or is not worthy. It seems, though, that if you are really serious about your own trading you should not reject things out of hand or make some demand that my life be audited for you. Instead, how about reading the concepts, see if they make common sense, apply them in situations where you are not putting money at risk (like paper trading), see whether or not they work, and if they do, use them; if they don't work, reject them. The responsibility can only lie with you.

by Bill Kraft, Editor
Copyright 2009, Makin' Hay, Inc.
All Rights Reserved

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To comment on Bill's article click on the "comments" link below.


Anonymous said...

Well stated. Unfortunately, Bill, in this day and age it seems that very few people are willing to take responsibility for themselves.

Anonymous said...

Hi Bill,

I have read both of your books and the techniques that you use work. Most good options traders sell credit, use positive theta, and buy time if you going long options. Most of your positions are hedged which is the only way to play.

Forget the naysayers. They are a waste of your energy.

Anonymous said...

Mr. Kraft, You do a wonderful job! These people don't know what there talking about. I'm a novice trader, to say the least, and I feel any advice is good advice. So to discrimenate your words and theories is assanine and disrespectful. Keep writing and thank you for all of your work. Tim.

Anonymous said...

Bill, I look forward to your article every week. Please don’t let the naysayers get to you. You provide an extremely valuable service.

I don’t agree with Tim that “any advice is good advice.” However, if that was qualified like this “any advice from Bill Kraft is good advice” I would agree. However, it is still incumbent on us to evaluate and use the advice. Proving concepts with paper trading is outstanding advice. Keep up the good work!

Anonymous said...

Bill, The fact that some of your readers took your comment "more than one way to skin a cat" literally and complained, must tell you something about their lack of intellectual capacity and common sense. Don't bother to say anything in reply to that sort of drivel.

Unknown said...

Sir, Differences of opinion make up markets. You can not be held responsible for others lack of expertise or the wisdom to take good advice. I am sure you have made mistakes in your trading and that is why your advice is helpful. Let the water run off your back.


Roger said...

I, for one, greatly appreciate your comments and advice. I've been trading (and investing, too) for years and make a good income from trading options spreads, covered calls and more as I enter retirement.

Yours is the first email I read on weekends and I always look forward to your column. Keep up the good work.

Those who appreciate the complexity of the market also appreciate your wisdom. Those who want to "audit" your trades betray their own insecurities about securities.


Anonymous said...

I look forward to your article every week. I for one trade only naked options with time value -- I am the seller. Time is my best friend and I lives by my picks. Hence, picking the right stock is the only game for me.

Anonymous said...

I've read your columns for quite a while now, but I do have a question...I noticed that I wasn't receiving the weekly columns for a good portion of the downtrend late last year and the first quarter of this year. Was that just coinsidence or do you only trade during overall market uptrends? Thanks in advance.

William said...

Hi Bill:

Great article and well thought out responses. As noted by another respondent, people need to take responsibility for their own gains or losses. We who do, appreciate your insights and your sharing your past experience.

Bill Kraft, said...

Thanks to all the commentators for your kind comments so far this weekend. I really didn't mean to give the impression that I was upset by the fellow who wanted to see an audited account of my trades. I already had let him know that was not going to happen. As one writer suggested, what I am really interested in seeing is that folks take on responsibility for their own studies and actions. I really didn't intend to whine if it came off that way. I certainly am not upset by people who want proof. I'm just more interested in giving some information that I believe will be helpful and letting them decide for themselves. As far as I am concerned, only the IRS has a right to demand an audit.
Bill Kraft

Bill Kraft, said...

No, Anonymous, the articles have been going out every week regardless of market direction. Earleen at the office included the following information that may be helpful: "The answer to his technical question is that it depends on his ISP and if they were blocking our emails, which does happen periodically if our address is not whitelisted and the ISP updates their spam filters. He can call me Monday and I'll explain what he needs to do." I hope that helps and I hope you get a chance to read those articles that you may have missed if you would like.
Bill Kraft

Bill Kraft, said...

Thanks, William. I completely agree that each of us must take complete responsibility for the consequences of the trades we choose to enter. It is always our own money and our own risk.
Bill Kraft

Unknown said...


I'd like to add the third PERSPECTIVE to your newsletter - serious students who want to have a detailed path to follow.
I've been your newsletter reader for a long time and really enjoy it.
I have problem to use covered call correctly. I want to use covered call to make a little extra money when trading. One day, you mentioned you bought a stock and made quite a few covered calls during a downturn market period. At the end, you lost money for your stock trading, but made money on the covered calls. So the overall trading was a winer.
I made a comment to you at this comment area how you did it and would like to see the trading log if possible to learn how I should do it. There is no trust or suspicion issue here. All I wanted was trying to copy you for my future trading because I just can't use covered call correctly, either getting called out while the underlying stock was going up or making small money that was far less than the lost from the stock. I am still learning now, hoping getting better next time.
What I want to say here is to give you the third perspective, to tell you that your credibility is solid, and we like you. Thx.

Mack S.

Bill Kraft, said...

Thanks, Mack S. While I actually don't recall the specific situation to which you are referring, I do recall a collar situation where I bought the stock, bought protective puts, and sold calls and traded the puts and calls in and out depending on stock movement and while the stock lost quite a lot (BIDU) I made a handsome profit overall. A fellow from Israel contacted me about that and I arranged a phone call after sending him all the trade info since he had really been interested in how it was done. I know that wasn't you, Mack, but your point that it can be done is well taken. Unfortunately, I simply don't have the time to engage in that kind of communication very often. However, you can read through the old email alerts in the Archives link located at the bottom of the MarketFN home page where you would be able to follow my old trades. It may help you understand better how the trades work.
Bill Kraft