Review: Totall Bull
Rating: 1 out of 5
Date: 09 28, 2013
As in title this book is total bull.Book contains of five parts:1. How genius you can be (and author is) and how much money you can earn2. What are options3. Making money on spreads and condors4. About Elliot Theory5. Making money on index trading.What is wrong about those partsAd. 1It is just for writing anything. It doesn't have anything to do with rest of book and is of no value. But OK, lets say it can be acceptable. Book is thicker and easier to sell. And it makes you wanting to read whole book and invest like author.Ad.2There are few pages about what is option what are Greeks etc. Such knowledge is to be found and obtained online in five minutes. And those are only basics - if one want to be option trader one have to have much more knowledge.But lets say again OK, it can be acceptable.Ad. 3Making money on spreads and condors.Author many times says how simple buying options, buy & hold and directional trading are for suckers. That it is only loosing money.But in later parts author says that is using simple averages and buying when trend is up and selling when trend is down. Isn't it form of buy & hold? Isn't it directional trading?Author present some examples of spreads and condors. Says that you can earn money in 80%-90% of cases.Spreads in examples can give you about 150$,  while you can lost up to 3000$ on them. It is beautiful to earn 150$ every month but what in month that you lost? Whole 3000$?Author forgets to mention that it is probability. You can earn 150$ 90% of  times but finally you ALWAYS hit month with 1000$ or 3000$ loss. What than?There is one sentence about it - buy back the spread if it goes in wrong direction. But there is one problem with it. Those are credit spreads. In moment it goes in wrong direction you starting loosing money on it. In very most cases you won't be able to buy back it without loosing money.It's all based on probability. If There is 90% chance that your spread will not loose money than it is priced such that you earn 100$ 9 times and loose 900$ next time. In long time you will win the same amount as you loose (loosing transaction costs in addition). It is because options are priced based on volatility, and author is using the same volatility to determinate chance of winning.The same with condors - it can be good on flat markets, but than option will be priced according to flat market and money earned will be very little compared to possible money lost. And in long term you may win few times but it is SURE that eventually market will move somewhere and will no longer be flat. And in that moment you will loose what you scraped for previous months.There are no solid data - % of winnings, win/loss ratio etc. Just few charts and examples. I could find proper chart and example to anything. In such way I could even proof that markets are connected to flowers on my window and average return is connected to average number of leafs on my flower.Ad. 4Again - few pages, few charts. No solid data. If I'd like to know about Elliot Theory than I will go to proper books. And why this theory is described at all? Author is not using it in trading so why describing it?Ad. 5Many place about how author earn plenty of money using two simple moving averages. Again no solid data, just few pictures supporting idea.SMA's were good for turtles in 1970's, now 40 years later markets are a bit different.Again there are only few examples supporting idea, but what about all wrong signals? There is one sentence - better to be on market and loose than not to be and not earn. Maybe. But without any win/lose, draw-dawn etc. it is pointless. I could prove anything that way.Nearly last - author prefers to use ETFs with multiplied ratio. That means that when market moves 10% ETF is winning (or loosing) 30% instead of 10%. Author says that way you earn more. Probably true. But that way your draw-dawns are 3 times bigger. Would one be strong enough mentally and financially to survive that? There is no way to know because author didn't present any numbers. Besides if one can earn month after month that way than why use multiplying ETFS? You will earn the same with usual ETFs, it will just take a bit longer. But how much safer.Author just maintains that he earns much more than mutual funds and market. And how mutual funds managers are suckers and should be charged of loosing money.But lastly - there is one immortal sentence - that author does not guarantee that you will be able to earn in future using his methods....OK, just for ending.I think that this book is very dangerous. It describes few option and ETF strategies, but did not present any solid data how those strategies work in reality.I don't recommend this book for beginner because it is simple way to loose money, and advanced traders won't find anything valuable here. Even advanced traders will loose money just by buying this book.