People are shocked when I tell them that I’ve been in the markets for almost 40 years.
I’ve been trading options and making money for decades…
I’ve even been a Wall Street market maker…
And I don’t know or understand the Greeks!
What Are The Greeks?
I actually don’t know, to be honest with you.
I know they’re supposed to be something that you use to trade options. But I’ve never used them once in nearly 40 years of trading.
I had to look this up on Investopedia and I’m not even going to try to summarize it for you. Here’s a screenshot if you care to read about it:
Best as I can tell, it’s a way to calculate different things that go into an option, like time decay and price sensitivity.
The Truth
A lot of traders — both beginners and “market nerds” as I call them — think you absolutely NEED to understand the Greeks before you place a single trade.
That couldn’t be further from the truth. And honestly, I think it does regular, everyday traders a disservice to tell them to stay away from trading until they understand the Greeks.
Have you ever tried to read a book on the Greeks? I tried once, it put me to sleep.
I never picked up the book again. I think those folks write these books to prove how smart they are.
The Black-Sholes Model
Another famous “thing” in options trading is the Black-Sholes Model. It’s a formula that (supposedly, I don’t actually know for sure) calculates the price of options.
Here’s what it looks like:
But here’s the thing. When I was getting ready to write this article, I went to Investopedia to see if I could tell you what it was about and I learned something:
Tons of traders talk about Black-Sholes and it turns out it’s not even used to price American options! Who knew? Not this guy.
What I Do Instead
I’m not a nerd and I don’t pretend to try to be one.
Sometimes I even say I’m the “Homer Simpson” of the trading community.
And I mean that as a compliment. I don’t need to be a nerd spending years of my life understanding some formula.
Early on in life, I took action. I dove in. I found work on Wall Street. I got trained by the best. And what I noticed is that those that took action made money.
And those that understood formulas wrote books.
What This Means For You
I know some folks have tried reading about The Greeks. And they read the same chapter over and over and over because it’s not sinking in.
Guess what? If it’s not sinking in, ditch it. There’s another way.
And it doesn’t need you to understand these really complicated formulas.
At the end of the day, a stock either goes up, down or sideways.
And spotting a trend is the best way to figure out what a stock is going to do next.
Reading the broad market is another good way of increasing your odds.
And using spreads is yet another way to increase your success with trading.
At the end of the day, if you’re a nerd, that’s great. Read the books if you want.
But if you’re not, you shouldn’t feel shut out of trading. Because none of that stuff is actually necessary!
If you ask me, those formulas only serve to complicate something and keep people from taking action.
I don’t believe in conspiracies, but it’s almost like Wall Street doesn’t want regular people make money from the markets!
Those 3 short articles I shared above are more than enough to get you started. I’m not saying you should trade real money after reading just those 3 articles.
But you will definitely know enough to start paper trading and getting comfortable with some basic ways to target weekly income from the markets
Remember: the most important thing is taking action!
Trade well,
Jack Carter
