A Review of My Experience with the
Investools is a registered trademark. Investools is an affiliate of TD Ameritrade, Inc.
ThinkOrSwim is a registered trademark. ThinkOrSwim is an affiliate of TD Ameritrade.
The Investor Foundation Workshop is an educational offering of Investools.
First things first:
Lets identify the players:
- Do I think Investools is a rip-off or scam ? NO
- Do I think the Investor Foundation Workshop is a rip-off ? Read on
- Investools - An educational organization with a nice Web-based stock screening tool call the Investor Toolbox. Investools merged with ThinkOrSwim a few years back.
- ThinkOrSwim (TOS) - A brokerage firm that developed an incredibly powerful, very sophisticated (read "kick ass") analysis and trading platform targeted towards options traders (but good for stock traders as well).
- TD Ameritrade (TDA) - A discount brokerage firm that was the result of a merger between the discount brokerage firms of TD Waterhouse and Ameritrade. In 2009 TD Ameritrade acquired the previously-combined Investools/ThinkOrSwim organization.
The logic behind TD Ameritrade acquiring the Investools/ThinkOrSwim organization is that educated traders stay in the game longer and place more trades. And I suppose it doesn't hurt that there's big money to be made in trader and investor eduation.
I want to state right off that I'm a more-than-satisfied TD Ameritrade customer. I think the fact that you can call for assistance 24/7 and get someone in the US is important, and I am very happy that they just give you (their customers) the ThinkOrSwim platform to use. I also like their training Webcasts.
In mid-2010 TDA e-mailed me about two free, consecutive, one-day workshops they were conducting in my area, the "Trading Strategies for Todays Market" workshop and the "Risk-Defined Options Strategies" workshop held Friday and Saturday respectively at local hotels. I fully expected to get a sales pitch for something at these free workshops. In this day of Webinars they're not going to pay for hotel conference room space and staff travel expenses just to be nice.
There were two basic sales pitches during these two free workshops:
- one for Investools training opportunities where they give you a brief taste of the Investor Toolbox, a Web-based stock and sector screening tool.
- one to get you to move any accounts you have with other institutions to TDA.
Prior to attending the workshops I'd been studying options for some time and dabbled with a few trades but the fact is that you can have all the fancy options strategies in the world but if you don't base them on the correct underlying stock or index they're not going to work. You need to be able evaluate stocks and market trends for options plays. That's why I was happy to see the Investor Toolbox offered during the Investools sales pitch. Even better was the fact that it only cost $29/month to access it (which is cheap compared to most other similar offerings I've looked into).
But before you can access the Investor Toolbox you need to take their "Investor Foundation Workshop" for $299 to learn how to use it. Given that the $299 included 6 months access to the Toolbox ($174 value) I planned to sign up for it. However, given that I was going to be attending the second workshop the next day I just took the application home with me the first day so I could do some researching. Doing some Googling I was shocked to find out that the Investor Foundation Workshop used to cost $2,999! Whether the $299 and $2,999 versions of the workshops are the same, I have my doubts (see below).
When you sign up for the Investor Foundation Workshop you have the option of taking the course on line or live the following Friday and Saturday at a different hotel ballroom. What's not clearly pointed out is that you can do both. Sign up for the live class and, in my case, take the on-line version before the first live class session. When you fill out and hand in the application and your $299 fee you are given a login ID and password that you can use to access and play around with the Investor Toolbox and take the on-line version of the course.
The next morning I arrived for the second free (Options Strategies) workshop with check in hand and signed up for the $299 Investor Foundation Workshop. What I found "interesting" was that at the Options Strategies workshop they didn't offer the $299 option right away. They only offered a more expensive course targeting option traders (and prospective options traders). Only after they had gotten all the applications they were going to get for the more expensive course did they offer the cheaper Investor Foundation workshop. I thought that was kind of sleezy behavior.
All in all I think the two free seminars were well worth the time, although I would not recommend the Options Strategies workshop until one understands options because they move through the information quickly (to leave time for the sales pitches).
Investor Foundation Workshop
During the following week I went through most of the 7 steps using the on-line version of the Investor Foundation Workshop including taking the 10-question quizzes at the end of each step. The material is good, giving a good foundation in the use of the Investor Toolbox and covering some pricipals of fundamental and technical analysis. I was anxious to get to the live class to get an instructors slant on the material.
Friday arrived and I got there early to get a spot in the front and before lunch I was disillusioned. How was the live version of the Investor Foundation Workshop? In a word:
I expect to get a sales pitch at a free workshop. But to get one after another after another at a workshop that I paid money to attend is incredibly sleezy. And I do mean one after another after another. I would conservatively estimate that 40% of the workshop time was filled with out-right sales pitches for more advanced Investools offerings (going up to $23,000) and, in some cases, the same TDA sales pitches given the at the free workshops the week earlier.
When Investools sends you an e-mail reminder about the workshop they include a link to a PDF of the course syllabus. According to the syllabus, 5 of the 7 steps in Investools "formula" are to be covered the first day. This isn't unbalanced given that more time is spent on technical analysis (Step 6). In my class we only got through Step 3 the first day due to all the sales pitches. Even worse was that fact that, because all the sales pitches left less time for the course material, the instructor moved so fast you couldn't get a question in edge-wise. This was perhaps the most disappointing thing to me. The whole point of a live classroom is interaction with an instructor. This was more like watching a video.
Above I said that 40% of the class time was filled with "out-right sales pitches". Another 15 to 20% was lost to a more subliminal sales tactic. The instructor would say he's going to cover something a little more "advanced" just for a few minutes like he was giving us some extra stuff. What he would present is some advanced, multi-legged options trade or some advanced chart pattern and show how you could use them to make money and then start talking about how much you need the Investools advanced technical analysis course or their advanced options course. Even "breakout sessions" were nothing more than telling you how much you need their advanced training.
The result? You pay $299 for a two-day course in which only 5 to 6 hours total is actually devoted to presenting course material. In my case the instructor whipped through Steps 4 through 7 the second day so quickly that I would've been totally lost had I not taken the on-line version first. I think the instructor was aware of this as he did take time to take more questions the second day.
Perhaps the most disgusting thing is the missed opportunities. They say starting out the first day that the single most important thing is having a trading plan. But they're so busy trying to get you to buy something they never go into it further or help you develop one (but you're instructed to work on one in nearly every step of the on-line course). Of the 10 biggest mistakes investors make, 7 of them were never even covered in my live course. It seems to me that these two topics would be the most critical to the investors who would be taking this course.
Given that you pay $299 whether you attend the live sessions or not, the only cost of attending them (over doing the on-line version only) is your time. Whether it's worth it is something only you can decide. There is a benefit to a live setting. Others may ask questions that never occurred to you. You may even want to hear a sales pitch about their advanced course offerings. But the relentless nature of the sales pitches taking away from valuable class time is a sleezy way to treat paying students. Near the end of the second day they even offered a scaled-down "apprentice" program to try and squeeze out a few more registrations out of those who hadn't signed up for any advanced training, again taking away from course material presentation time.
I don't know if this is how the Investor Foundation Workshop was always presented, but if I had paid the $2,999 instead of $299 I would have asked for my money back. Hopefully TD Ameritrade will at least reduce the sleeziness of these workshops. The heavy-handed nature of these sales tactics did just the opposite, it turned me off of further Investools training. If they had presented it once, maybe twice (once each day for 15 to 30 minutes), in a professional manner instead of acting like used car salesman maybe I would've signed up for further training. Given that most self-directed retail investors are educated professionals I was surprised by their short-sighted unprofessional tactics.
The Investor Foundation Workshop aside, I do enjoy the Investor Toolbox. It filled a stock screening hole for me and at $29/month I will likely be with them for quite some time to come. And there's no need to use the Prophet Charts on the Investools Web site to do any technical analysis because you can use the TOS (ThinkOrSwim) platform to do that (if you're a TD Ameritrade customer). With recent upgrades to TOS, even the Investools Market Forecast Graph and Phase 1 and Phase 2 information is available in Prophet Charts in TOS.
If you do find yourself signing up for the live Investor Foundation Workshop, do yourself a huge favor and go through the on-line version of the course before the live version starts. In going through the on line version you may come up with questions that you can ask the instructor (during breaks).
The Best Options Trading Education and It's FREE
Lucky for us (retail traders) when one of the creators of ThinkorSwim sold to TD Ameritrade he didn't take his millions of dollars and go buy a tropical island. He started TastyTrade. (I have no idea how he comes up with his names.) Tastytrade is a network in the media sense of the word. From their Website they stream eight hours of live programming every weekday and every minute of it is focused on educating retail traders on how to trade options. There are no fees to watch the programming and the archives of all past programs are also available for free viewing. The star of most of the programs is the ThinkorSwim creator himself, Tom Sosnoff. He, together with his friend and the person who was in charge of trader education at ThinkorSwim Tony Batista (call him "Bat"), delivers content that not only educates but, through in in-depth research performed by their sizable research staff, shows why what they are saying is supported by the facts of the markets.
Not only does Tastytrade stream live video content every day, they also created a new options trading platform (what else would you expect from the creator of ThinkorSwim) that is targeted more at beginning traders called Dough. Dough is more visually oriented than ThinkorSwim and allows you to follow the trades placed by a number of different Tastytrade staffers so you can see how they do it.
And if all that isn't enough, Tastytrade and Dough are not only free but they can actually save you a lot of money in commissions. If you use the TastyTrade or Dough Websites to open an account with TD Ameritrade, you'll get a reduced commission rate far below that of other traders. This can really add up over time to some serious savings (especially when you "trade often").
The Tastytrade methodology for those who are learning to trade options or with small account balances (under $25K) is simple:
1 - Sell $1-wide option spreads on stocks with:
a) a price between $15 and $50 (stocks above $50 typically don't have options with dollar-increment strikes in their options chain)
b) a "Current IV Percentile" above 50 (you can find this stat on the ThinkorSwim or their Dough platform)
and the options themselves should be:
c) "penny-increment" options indicating sufficient liquidity
d) around 45 days to expiration to "give yourself time to be right" (meaning if a trade goes bad it will have time to turn around)
e) have about a 70% probability of expiring out-of-the-money (another stat available on the ThinkorSwim and dough platforms)
2 - Manage winners, not losers, meaning if you get a decent profit (50% to 75% of max profit) close the trade but give losers time to turn around.
3 - Above all else, TRADE SMALL (single-contract spreads on dollar-wide strikes for the first year or two) so your losing trades don't lose you that much and TRADE OFTEN so the higher "number of occurrences" gets the "law of large numbers" theory to work in your favor (have 6 to 10 trades on at any given time as your account balance allows making sure not to have more than half your account value at risk at any given time). Your long-run odds of success are much better if you routinely risk $70 on each of ten trades than $700 on one trade.
For example, you sell $1-wide spreads that expire in 45 days collecting 30 cents ($30) which gives you 70 cents ($70) of risk on each trade. With a $2,000 account you can have $1,000/$70 or 14 trades on at a time. When your "P/L Open" (profit since opening the trade) is up $20 to $25 close the position and go on to the next trade.
Note that we're not talking about big-money trading here. Making big money requires taking big risks and it's just a matter of time before traders who take big risks blow out their accounts. Starting out we're talking about making $20 to $30 on a winning trade. But with these small wins comes small risk which allows you to stay in the game long enough to figure out how to trade consistently. If you can't make money trading a $2,000 account you're not going to have any long-term success trading a $100,000 account. You'll just lose more.
Even with all the help and reduced commissions and free platforms don't expect results any time soon. It takes years to find your trading style, to find what strategies and what underlyings work best for you. Be patient and trade and try different strategies and trade and try different underlyings and trade and trade and trade. Learn the strategies, learn how the different underlyings (indexs vs. ETFs vs. stocks) act. It can get very disheartening at times, especially when the markets insist on moving in one direction for long periods of time, but hang in there and one day light bulbs will start to come on and things will start clicking and markets will start flattening and you'll start to consistently make money.
The Best Trading Book
Trading In The Zone was recommended during one of the free Investools workshop and it was probably the most valuable piece of information I gained by attending. It is the best trading book I've ever read. It isn't about strategy selection or chosing underlyings or analyzing charts or anything else you find in 99% of the books on trading. It's about how our preconceived notions and the behaviors we were raised with can actually sabotage our success as traders. It will help you see why you're making the mistakes you're making. It will help you see the markets in new perspective, a prespective every trader needs in order to succeed.
Here's a few helpful educational links I've found:
CBOE.com - The Web site of the Chicago Board Options Exchange offers live educational Web casts with Jim Bittman, Dan Sheridan, and others as well as an extensive on-line archive of past Web casts for viewing any time. There's also information on how you can tour the CBOE trading floor.
OptionsEducation.org - The Web site of the Options Industry Council featuring videos on options from fundamentals to advanced strategies.
LearningMarkets.com - A wide range of short on-line instructional videos covering a wide range of skill levels and subjects from broker commissions to trading the VIX.
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