Disclaimer: This is not financial advice and you shouldn’t assume that I have any idea what I’m actually talking about.
About Me: I am a former GME ape who managed to turn $5k into $30k back in January without having any idea what I was actually doing. Over the next 5 month’s I had varying levels of success with other Yolo plays. At 3 different points, I hit $60k, $65K, and $55k, but those highs were separated by lows of $28K, $32K, $42K. By the middle of May I had enough of this roller coaster and developed a trading strat that I felt leveraged my desire for big gains with my desire to protect my fucking money. Note that these numbers are **max potential values**. You don’t need to have all your cash in the market at once.
1. **The Boring Shit: ETFS – 60%**
I get it, when you had $5000 the concept of putting half of that in an ETF and letting it grow slowly over time had absolutely zero appeal. Turning $2500 into $2650 over a three-month period does absolutely nothing for you. That’s money that could go into a play that could have exponentially more upside. You’re chasing the dream. It can be hard to get out of that mindset later, it’s only after you have gained and lost something substantial that you start to understand the appeal of safe investments like ETFs.
How I distribute that capital amongst ETFs is as follows
**SPY – 20% -** SPY is *the* market benchmark. When we are in a seemingly never-ending bull market it just makes sense to have some of your portfolio move along with it. I set a trailing stop loss at 2%. My logic for that number is as follows: at 1% you could cash out on a small dip and could miss out on the potential upside when it goes back up. A 2% drop is much more likely to be a part of a much more significant correction. In that case, there is a much higher chance that I can simply buy back in further down the dip. Alternatively, a 3% trailing stop loss would reduce the risk of me cashing out on a smaller correction and missing the desired entry point back in, but would limit my ability to capitalize on the dip in price.
**QQQ – 60% -** I heavily concentrate into QQQ because it better represents the Tech/Growth market than the SPY. When I realized nearly every company I was very bullish on fell under this umbrella I decided it was better to invest a chunk of my capital into QQQ rather than opening long positions on like 5 different tech companies. Trailing Stop loss 2% for the same reasons listed above.
The other 20% I distribute between ETFs in other market sectors that I believe are poised to do well. For Example, I am invested in BETZ because I am bullish on the gambling sector, COMB because I am bullish on Commodities, and IPO so I stand to gain from IPOs without having to speculate on companies that haven’t yet entered the market. When applicable I wheel these shares with CCs at fairly conservative strikes for a slow drip of premiums while I hold. If options aren’t available it’s 2% TSL.
**LEAPS – 20%**
I use leaps to maximize potential returns on my long positions more efficiently than shares, but less risky than shorter-term calls. I cap these plays at 10%-20% of my total capital. When searching for a company to go long on I have a few parameters I always follow.
1. Only one company per market sector. – These plays are inherently plays that are trying to beat the market. I pick a market sector I am bullish on and do basic fundamental and technical analysis on a variety of stocks. I try to identify a potential growth play as well as a potential value play.
2. Only open positions at entry points based on technical analysis – Now I’m not going to try and fool anyone and say that my TA is always perfect, but being consistent with *how* I choose how to enter at least gives me a consistent data set to build off of. If the conditions are never met for entry I simply continue to wait or don’t open the position. There’s no rush to throw all your money in right away, there’s nothing worse than finding a great potential play but having your capital locked up in a shitty meme play you opened.
3. Always keep an 80-20 ratio between value and growth plays. Value plays have inherently less risk than growth plays long term, as such keeping this segment of my port heavily skewed towards value lowers my overall risk level to some degree. Value plays are usually slower, more consistent winners, making selling calls on top of the LEAPS a viable strategy with significantly less risk of unrealized gains than trying to PMCC a growth play. Another benefit to this is that it makes me be significantly pickier with whatever growth plays I choose to invest in.
4. Never over-leverage on a Long Position. I never put more than 6% of my capital into any one play. This seemed counter-intuitive to me at first especially since my first 4 months of investing I was 60%+ GME at any given time but it allows me the mental freedom to keep an eye on my entire port rather than staring at one chart because I *need* it to go up.
**Theta Plays – 15%**
These plays can consist of a variety of different options strategies that I have learned over the past half a year. What plays I choose to enter vary month to month based on the current market conditions. Theta plays are nice in that there are many different scenarios in that they can be utilized.
During earnings season I typically sell CSPs one or two weeks out, always making sure that I close the position before the earnings date. If a meme stock just exploded and IV is through the roof I might open a diagonal call spread in order to leverage the significant difference in theta between weekly and monthly calls with significantly less delta exposure than a typical debit or credit spread. Call credit spreads are used on stocks I am bearish on the short term. I don’t take time to search out bearish plays, but if a company I am long on presents a short-term bear pattern it makes sense to open a play on that. This also helps keep me grounded, it becomes easy to want to disregard potential red flags on a stock you are bullish on, but if those red flags start looking like dollar signs you will become much more honest in your analysis. If a stock I am following has been trading sideways for a long period of time I might open an Iron Condor in order to profit on the fact that that shit don’t move. The last theta strat I use is 0DTE SPY Put Credit Spreads. These can be done three times a week are pretty safe plays as far as day trades go. If the SPY has a stable bullish trend line going for the day open the spread right underneath that and close it before 3pm.
**SPY Calls – 5%**
Once a retard, always a retard. There are days (like today) where you look at the SPY chart and can’t help but buy some FDs. Obviously, this shit is a rare occasion. if I did this every week I’d eventually run out of money. But making sure that I have capital set aside *just in case* means that I don’t have to scramble closing positions in the event a big play presents itself.