From Dale Brethauer @ Options Infinity
Confessions of a Mechanical Engineer Turned Hedge Fund Owner
If you don’t know me, my name is Dale Brethauer. I founded optionsinfinity.com after 30 years of trading many different markets and retired early from Dupont where I was a mechanical engineer ( if you’ve ever seen, or maybe your own home has Dupont Tyvek Housewrap, think of me because I was awarded 6 separate patents) and introduced the company to using currency trades to save money on international projects.
So, it’s pretty safe to say I’ve had an all out love affair with numbers my entire life. My other passion is teaching. While at Dupont I was also a top rated teacher with the American Management Association and have written three books, two non fiction: “The Power of Strategic Costing” and “New Product Development and Delivery” and one fiction “The Takeover Group” about a small team that purchases the company they work for.
Once I pulled the early retirement ripcord (candidly I wish it would have been sooner) I really turned my entire focus to trading and developed a set of systems and principles with the goal of making a unified method of making money in any market.
You’re thinking “Yeh great Dale you were a phenom from the start..sure..” But you’d be very wrong. So I’m going to tell you a little story about my first trade.
My first exposure to the world of trading was a book I picked up on writing covered calls. This guru book made it seem so simple that I was 100% positive that I was going to be a millionaire in less time than Rockefeller. Now this is way before the computerized world of trading we know today (and I mean in the beginning I was plotting technical charts on graph paper) so I saved up a chunk of money after I had “mastered” this book and strategy, went down to Dean Witter opened an account and put all of it on a covered call trade on the Alcoa Corporation… Well… Within a week Alcoa went from trading at $40 down to $5 dollars, my account was gone…in 6 DAYS.
You want me to say the next trade I figured it all out right…
Well I had to sulk around for a minimum of 3 months, grinding my teeth, asking myself rhetorical question after rhetorical question UNTIL…I found my next trading book and this time it was promising a full proof system for trading futures. I was going to be a millionaire “God’s gift to the markets” and even better it was all going to happen OVERNIGHT.
I waited a full year (after the sulking) building up another account and looking at historical data all based on this book. I was positive that at this certain time of year, T-Bond Futures would go up BIG TIME. Now, if you don’t know how futures operate you can lose more than the money that you have in your account… I can hear your inner monologue, “Dale…not again man, please!” not to worry I can write about these experiences now with a smile on my face (more on that later).
Not only does my account EVAPORATE but now I’m legitimately in jeopardy of losing my house. Thankfully I was able to exit before that but you can imagine at this point the sulking was going to be EPIC, a solid 6 months of “How – why – its the markets fault” ensues. So I gave it all up, right?? HECK NO! how could I! This was the greatest challenge I had ever faced in my life and I was going to win.
But first I obviously needed to look at some of the core principles ( if I even had any before ) that were obviously out of whack when it came to “winning” as a trader.
You may have noticed a pattern here: My trading journey so far was: Learn >>>>> lose >>>>> sulk >>>>> learn more >>>>> lose more>>>>>> sulk more >>>>>>> So now I was back to learn, and hopefully MORE this time right? Wrong. I made the essential pivot to building a PRINCIPLED METHOD FIRST after going to a live seminar taught by mentor Dr. Van K. Tharp. For lack of a better descriptor is was my “AHA” Moment and suddenly I realized that I wasn’t trading the markets, the markets were trading me..and making a killing on it.
The human brain is simply not structured to succeed in the markets due to that silly “fight or flight” basal instinct we used way back when to get the heck away from saber-tooth tigers. Without a pre-meditated approach which takes YOU and your basal ganglia out of the game FIRST, the market will inevitably be your saber-toothed tiger.
Now…because trading is an isolationist sport everyone comes to the “trading table” with a certain sense of “I’ll be different, I’m smart and I’ve succeeded at everything I’ve done” I DON’T WANT HELP.
Imagine we’re at the beaches of Normandy together in the greatest theater of war ever seen on this planet. I’m positioned right in front of you and yell back “Follow me!” we enter the hail of fire and WHAM WHAM I immediately take 2 bullets (bullet 1 & 2 were my first 2 trades) that would have dropped you like a sack of potatoes but instead on the way to the great beyond I heaved a grenade and cleared the path for you to make it to the objective. This analogy is a little strong but the message is sound, I’ve gone down HARD in the world of trading but have since learned EXACTLY what needs to happen for you to win, and turned what I teach into a hedge fund and a life of complete financial freedom. You don’t have to trade exactly like me, but at a bare minimum take THE PRINCIPLES and use them to expand on your own trading methodology.
My Principled Method allows me to:
Never second guess, worry, or spend an inordinate amount of time watching the market. 10 minutes in the morning and 10 at night is usually the maximum I need to execute multiple razor focused systems. Who wants the anxiety of having to screen hawk or place a complicated trade with zero research from their phone. All my trades are decided the night before as price action reaches a target zone.
I don’t take losing trades personally because they are already built into my models, although sometimes I’m even expecting them! An example would be last year my SPX W.O.R. (Weekly Options Regression) system had 1 losing trade out of 24. So 19 in a row were killers and at that point I was like I should have had 2 losing trades by now what gives!!
Sidenote: This is where “get rich quick traders” depart for the facebook video ad promising 50k to 100K to millionaire in a year. Instead of doing that, keep reading, I’ll teach you how you can do just that but in a slightly longer time frame.
Treating each trade like a business transaction, each dollar sent into a trade is an employee working for me while I do other things, ( for me it’s riding my custom Harley Davidson 1440 Super Glide Trike ) and keeping good records so they can go back and optimize their practices after the fact.
So, the story continues that slowly after installing these principles to my core trading business I began to win. As time progressed I won more and more, eventually I was so confident in my principled trading methods that I returned to my love of teaching and began mentoring people 1-on-1. Each of these high net worth individuals were surely interested in trading themselves but continually hounded me to manage larger sums of their money. Honestly I was 50/50 on the prospect but started Option Infinity Growth Fund LLC. my very own hedge fund. But I got away from being able to teach, and after multiple successful years I told my investors, that I was dissolving the fund and moving back to teaching. That’s where I am now. I started optionsinfinity.com six months after and have been doing what I love since.