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  • Writer's pictureScott Richter

Staying profitable

Let’s assume you’ve been watching my YouTube channel from the beginning, since I first announced that I was going to be investing five million dollars into options trading. If so, then you saw my meteoric rise in the first few months, with unprecedented profits, and if you were one of my Patreon members – making the same trades that I made, when I made them – then, proportionally, you were seeing the same profits for your own portfolio, as well. So, congrats! You made some profit. That’s the first step. But now let’s focus on growing that profit. And that’s where we’ve seen some mis-steps in more recent months. There are really three main things that all of us should be doing as we trade. I’ve tried to be diligent with all of these, but I haven’t been perfect at sticking to them all, and frankly, even if I had, these points aren’t guaranteed to help you stay profitable. They will increase your odds, but there are never guarantees with investing – some things are still beyond anyone’s control.

Anyway, first, you need to take into account your own financial situation and trading personality. For me, that’s pretty easy to identify: I’m a bit of a risk-taker, which can be dangerous, but I also have a lot of capital to work with, and that gives me something of a safety net that not everyone has. Still, the same guideline applies to me, just as it applies to everyone else, and I say it (and live by it) all the time: Only invest what you can afford to lose. Yes, I did put up five million dollars right at the beginning, and for most people, that’s life-changing money. But not for me. Even if I lose it all, my family and I will be just fine, financially. So, if you’re investing, put your investment money aside and consider it gone. Then, if you lose it all, no major headache, but if you turn a profit, then that’s a bonus. This is why you’ve seen me invest so much into positions that I’m very confident about (but might be wrong about), like CCIV. I’ve stuck it out for so long with that stock because I’ve been very confident that it’s going to be extremely profitable. But even if I’m wrong, I won’t lose my house and my kids’ college funds. That would be overleveraging, and that’s never recommended.

Also never recommended: Irresponsibly increasing your position size. You should really have a rule for yourself in place on how big you’re willing to go. For example, even though I’ve been very confident about CCIV, I didn’t put all $5,000,000 into CCIV! That would have been irresponsible. Sure, maybe it would have skyrocketed, and I’d be a billionaire by now, but even with all my confidence in that stock, I know it’s unlikely, so I didn’t overconcentrate my funds into a single place. That would have been a surefire path towards unprofitability, long-term.

The final rule of profitability is one that I’ve been improving upon a lot lately, but it’s still the weakest of the three for me: Admitting when I don’t know something about a stock. It’s hard for anyone to really take a step back and say, “I just don’t know.” Or sometimes, I think I know a lot about a company, but I rush in without knowing other important and crucial points. (Sometimes, but not often.) Fortunately, more recently, as you’ve probably noticed, during my live streams, I’ll frequently ask for input from you guys. All of your comments and feedback during the streams have been instrumental in (a) reminding me to abide by this rule (recognizing there are some things I just don’t know), and (b) filling in the gaps of my knowledge with pertinent information that has proven to be helpful.

So, thank all of you for helping me with that, and thanks for continuing to watch! I hope you will also recognize that you can’t possibly know everything about all stocks, and I hope you will only increase your position sizes in a responsible way, and I hope you will only invest what you can afford to lose, and trade with these principles in mind. If you do that – if we all do that – I think we’ll see many big money-making times ahead.

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