How Do You Learn?

I recently started broadcasting short videos on YouTube highlighting ideas for a super-aggressive cash flow strategy using SPY options.

Going into this endeavor, I had confidence my ideas were sound and profits were a foregone conclusion. I’d thought through the strategies every which way but sideways. But it wasn’t until I got into it with real trades and real money on the line that it began to dawn on me that it just won’t work. 

I can put in all kinds of effort into reading, talking with others, theorizing, and modeling. And I definitely do all of these! But no matter my level of confidence on Day 1, my real learning doesn’t actually begin until I make that first trade. 

I wish this wasn’t the case. But it’s the only way learning works for me. And as you can expect, the best lessons cost money. In this case, we’re talking trading losses.

My conclusion wasn’t necessarily that I wouldn’t be able to make money with it (though so far I haven’t), but it was the realization that whatever profits I may squeeze out of this trading was probably not going to be worth the time and effort required to monitor the plays. The strategy was chaining me to my desk — which is the exact opposite approach I prefer. I don’t want to track every tick — nor can I!

Ultimately, it was causing unnecessary stress. It’s tough to model emotional stress into backtests. The only way for me to truly know was to do it. I have to learn by doing.

What about you?