Q: Hi Igor, tell is a bit about yourself
A: My name is Igor Ivanovskiy. I’ve been in the business of finance for 18 years. I’m an investor, entrepreneur and an options junky. I’m also a founder and a mentor at mrtoptick.com where we help traders become consistent with their trading with a focus on income generating strategies.
Q: When did you first get started in the trading business?
A: I first started in the business of active trading back in 2010. Like many investors that transition from passive investing to more of an active approach, I started to look for ways to increase my returns or at least boost the yield while holding on to some of the long only positions by looking at selling covered calls against some of the stock positions in my account at the time.
Q: Can you remember your very first trade?
A: I know everyone has a story about how they bought their first stock when they were 8 and it was all history since then. It was different for me. I believe the first stock I bought was 100 shares of Google in 2004. No, I do not own it still, I know…
Q: When did you first realize that you could become a full-time trader? What gave you the confidence to take that step?
A: Trading is a part of my overall income strategy and I believe that anyone that wants to go full-time trading and wants the trading to be the sole source of income is setting up for a very volatile journey. Whether a trader wants to become a full-time trader or they may be considering allocating a substantial amount of their financial capital to trading, I always lean on one thing. Trading has to be treated like a business. It has to be consistent and profitable. Only then a trader could scale up size and frequency of trades to make it a full-time business or a major source of income.
Q: A lot of people want to become full time traders, how much base capital is needed to trade for a living?
A: I think the majority of people out there underestimate how much capital is required to make trading a full-time gig. Another misconception about full-time trading is that we all trade from the beach with little umbrellas in our drinks. This is far from reality. To be able to compete against other professional traders, one has to really think about if they want to leave a 9-5 to start a 5-9. I’m not discouraging people from becoming full-time traders, just be prepared and ready to commit to this business.
Q: What psychological challenges are involved with trading full time?
A: One of the biggest psychological challenges, in my view, is having a strong opinion about the market direction and expressing this opinion by trading too big based on that belief. I see this happen all the time. Traders believe that the market should do A while clearly the market is doing B, but they’re so committed and determined to prove the market wrong that they’re potentially not only destroying their financial capital, but they’re draining their psychological capital in the process. Once mental capital is gone, building financial capital back up is almost impossible. There are two very simple rules for this:
1. The market is always right.
2. If you ever feel that the market is wrong, refer back to rule 1.
Q: As a traders’ account size grows, small percentage movements suddenly have a large dollar impact. All of a sudden a 5% loss is the equivalent of buying a new car. How did you manage this transition?
A: Many traders believe that position sizing or stop loss rules are black and white. I disagree for that for the most part. Here’s why. A trader with a 10,000 account can handle a 5% loss differently than a trader with a 5,000,000 account. And it doesn’t mean that the trader with a 10,000 account will handle the loss better than a trader with 6 zeros in his account. Some people can never get over a $1,000 loss regardless of their account size. So, a percentage loss relative to overall account is not always the answer. If you’re not comfortable with the loss in dollar terms, it doesn’t matter what the account size is, the size is too big for that particular trade. Trade according to your max allowable loss acceptance level.
Q: Do you have any other tips for beginner traders or for those hoping to make the leap to full time?
A: For the beginners I would suggest to not wait for the perfect opportunity to start. It’s never the perfect time. Start small and develop a plan. For those that are more advanced and are transitioning towards doing it full time, review all of the trades. Find what works and what doesn’t (consistently). Do more of what works and less of what doesn’t.
Q: What is the most important trait of successful traders?
A: Being able to adapt and learn about oneself will translate to success in the long run.
Q: How would you describe your trading style?
A: My main focus is on income strategies. I often trade a combination of credit spreads, iron condors, butterflies to take advantage of the often overemphasized greek Theta. Reality is that it’s mostly short Vega, Theta is a nice bonus while I wait for trades to play out.
Q: What did your trading education entail? Did you have a mentor that guided you in your trading? If so, who was it, and how influential were they?
A: Over the years, I’ve spent countless hours doing my own analysis of my trades to see what works and what doesn’t. Of course, there are great contributors of content such as Gav that engaged my curiosity and forced me to challenge myself to understand all of the advanced concepts I’ve read up on the blog and how I can implement the knowledge in my own trading. There are also guys like Dan Sheradan, Dan Harvey, John Locke to name a few, that have made an impact and all have contributed to who I’ve become as an income trader over the years.
Q: What analytical tools do you use in your trading?
A: I’ve been using OptionNET Explorer to track, analyze and backtest my trading for at least 7 years. I was a fairly advanced trader before I started using this software, but ever since I started using it, my trading has become a lot more consistent and that translated to more confidence and better decision making.
Q: What is your number #1 trading rule?
A: I have 2 number 1 rules. Always have a plan and always follow your plan.
Q: Are you willing to share your worst trading experience? What happened and how big was the loss?
A: Yes, of course. We all have at least one terrible trade that goes down in the books as “WTF was I thinking”. Speaking of following rules, this one goes to show what happens when you DON’T follow rules.
Back in early 2018, I had an Iron Condor that was just a pain in the “you know where”. The market was just rallying and $SPX would go up 10 points. Every. Single. Day.
(Now for some context, when the VIX is at 10 and the expected range for the $SPX over 50 days is only 90 points, a 10 point move back to back in 1 direction for 5 days straight is a big deal.)I’ve reached a point where I had to stop out of my trade, which was about a loss of 2.5k on a 10k position, I followed my plan and closed out the trade. However, instead of closing out both sides of an Iron Condor, I ignored my own rule and decided to leave the “untested” side, since it was trading for only $0.30c. I figured I’d let it expire since it was so far out of the money and it wasn’t a real threat. And THAT was the mistake I paid for in spades. The market ran up a few days after I closed the ‘tested’ side of my Iron Condor and then reversed and ran over my ‘untested’ side, forcing me to scramble and take an additional loss of close to 5k, bringing a total loss of almost 7.5k on a 10k position. The good news is that I followed one of my other rules, which is to not trade too big in any one position.
So, the takeaway is, ALWAYS have a plan and ALWAYS follow the plan.
I hope this was helpful and I can be reached at [email protected] for any comments or questions.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
