Retail Traders Vs Hedge Funds – I Bet You Didn’t Know THIS

When it comes to the markets, there’s definitely never a dull moment when it comes to trading. And that’s what we’re going to talk about right now. Is it really possible for us to beat the market?

The Myth

There’s a myth that as a private trader like you and I, that we can’t compete with the big guys. The myth is the big guys can only make 20% or 30%.

Let’s take a look at BlackRock as an example, which is one of the biggest hedge fund companies, and look at their returns.

Retail Traders Vs Hedge Funds

So over the year, it is anywhere around 20 to 30%. If this is what the big guys do, how can I even talk about making 50%, 60%, or even more? That must be impossible, right?

I believe it’s a big lie spread by this industry that wants you to keep investing with them, with the big hedge funds, with the mutual funds, because there’s a lot of hefty commissions on this.

I want to prove to you that private traders like you and I can run circles around hedge funds.

There are 5 reasons why that is. Let’s dive right in.

Reason #1

It’s way easier to trade 1-2 million, or maybe even less based on your account size, instead of trading 2-3 billion dollars. These hedge funds often have $10 million, $15 million, $20 million, even more.

DPS sold 114 put

Let me give you an example. Earlier this week I sold DFS. I sold the 114 put and I was trading nine contracts. Let’s just round it up to make our math a little bit easier to 10 contracts.

Now, I did this based on the account that I’m currently trading, a $250,000 cash account. It’s a rather small account. If you want to trade a $1,000,000 account with this, you would have to trade 40 contracts. 40 contracts is still not a big deal.

Now think about trading $2 billion. This is where you are now trading 2,000 million contracts, and this means that you add three zeros. You would have to trade 40,000 contracts.

This is a big deal because if you’re selling 40.000 contracts of one particular strike price, and one particular option here, you would start moving the market. This is why most hedge funds trade stocks, it is more liquid.

Reason #2

When the big guys trade stocks, they have to use these so-called block orders.

Retail Traders Vs Hedge Funds

Last week, Elon Musk was selling $6 billion worth of Tesla, and he did it very quickly. By doing so, he was driving this stock down by 15%.

Can you imagine if you’re a bigger hedge fund and you do this? I mean, Elon Musk was able to get away with it. As a big hedge fund you could send the stock in a tailspin, and that’s why they’re using block orders.

Now again, for us as private traders, since we are only trading a few $10,000, a few $100,000, or even a few million, it doesn’t matter because we do not move the markets.

Reason #3

Reason number three of why private traders can really run circles around these big guys is that funds must follow their prospectus.

Retail Traders Vs Hedge Funds

Here’s a list of investment funds of BlackRock. As you can see, there’s a BGF Japan Small and MidCap Opportunities Fund. In Japan they have to say exactly how they’re buying and selling stocks, and they only can buy small and mid-cap companies.

Even if the whole Japanese economy would tank, they would have to sit there and couldn’t do anything else. And this is why often with these hedge fund managers, their hands are tied, right? I mean, they can’t do anything even though they wanted to.

Reason #4

Trading strategies like The Wheel can produce 50%, 60% a year. Some of our Mastermind members are reporting that they’re making 70%-80% a year. Our new coach Theresa is making 100% per year.

If you’re trading a strategy like this, there’s no stop loss. Can you imagine what happens if a fund would say, “Oh yeah, we were trading your money, but we have no stop loss in place?”

I mean, look at my RIDE trade. I made a mistake and I’m stuck in this trade that is right now really damping the performance here. If a fund would have a stock like RIDE, they would have a massive outflow of capital, right? Just think about that.

Reason #5

Number five, for all of these reasons, funds need to be race adverse. And this is why they’re called hedge funds, right? They are hedging the risk.

Now, here’s the thing in the market: the smaller the risk, the smaller the profits.

If you want to make 50%, 60%, 70%, you have to take on risk. And for us as private traders, this is where you choose how much risk you want to take on.

You might be okay losing 10%, 20%, maybe even 30% of your account while you’re trying to make 50%, 60,% 70% a year. A hedge fund can’t do this.

Honestly, for a hedge fund, if they’re down just 5% and they’re not making any money, oh boy, there’s really a ****storm going on. You get the idea.


For all of these reasons, we as private traders can run circle around hedge funds because we are more flexible with our trading strategies.

This is why it is a huge myth, a huge lie, that is being spread around by the big guys because they want your money so that they can charge you very hefty fees and fill their pockets.

The trading strategies that I like to trade are The PowerX Strategy and The Wheel Strategy.

If you’re interested in these strategies and would like to see how you can possibly make 30%, 40%, 50%, or more, then here are 2 videos for you:

One of them is explaining the “PowerX Strategy.“

The other one is explaining “The Wheel Strategy” in detail.

I hope you found this this helpful.

Read Next: Tesla Stock Prediction – Is TSLA Still A Buy?

Related Posts

Best Vertical Spread Option Strategy

Best Vertical Spread Option Strategy

What Type of Trader Are You?

What Type of Trader Are You?

A Beginner’s Guide To Buying Vs Selling Options

A Beginner’s Guide To Buying Vs Selling Options

How To Sell Put Options: Margin Requirements Explained

How To Sell Put Options: Margin Requirements Explained

Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}