Meet Joseph Barbuto
Long Island, NY
How did you start trading?
Around 1987, I was working for a small electronics company that Bear Sterns took public. This gave me some insight into the reality of small public companies. I started playing with penny stocks. What I learned about penny stocks was that I didn’t want to trade penny stocks. I’ve also used traditional advisors. I had a “friend” sell me Class A shares in a mutual fund instead of the Class B shares that I requested. On Class A shares he gets his commission upfront. When I confronted him about this, he said that “it’s because this is a great fund, so they don’t offer B shares.” I reminded him that there are thousands of mutual funds. I concluded it’s human nature for my friend, the broker, to put his needs before mine. My financial advisor friend once told me that “I don’t have time to follow the market like you do because I have to spend my time looking for clients.” Eventually, I learned how to trade naked puts and covered calls with the Long Island Stock Traders Meetup Group. Over the years I’ve read dozens of books on trading, taken classes, tried different products, like forex, and talked to people at traders expos. Although I’m not a purist, trading options the tastytrade way is by far the most engaging for me.
Favorite trading strategy for what you trade most?
My go-to strategy is selling strangles at the expected move using the feature built into tastyworks against high-volume index exchange-traded funds (ETFs). Learning how to trade futures from tastytrade’s Tom Sosnoff at a New York futures symposium opened a whole new world of trading tax advantages for me.
Average number of trades per day?
Five to 10
What percentage of your outcomes do you attribute to luck?
Around 35%? Making money in the stock market is easy. Keeping it is the hard part. Where I take a bullet is when the market shifts from some news headline that has little correlation to the real world and creates a pullback. It’s part of the reason I like trading more ETFs more than individual underlyings. Personally, I think that we find a headline to correlate with whatever the market does on any given day. As my tennis friend with a Ph.D. in economics likes to remind me, the stock market is not the economy. I like to say that you’re only as good as your last trade and your second serve.
Favorite trading moment?
When I realized that it was more important to learn how to manage losers and stay mechanical with a written trading plan than it was to hold onto a bad trade because I wanted to be right.
Worst trading moment?
The May 6, 2010, flash crash. I had just put on a bunch of new positions with no trading plan and no exit strategy. I also had a few 0 DTE SPX Iron Condor trades I’d rather not talk about. (An iron condor is two credit spreads. One on the put side and one on the call side.) The problem with 0 DTE trades is there’s nowhere to run if it goes against you.
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