The Power of Compounding Through The Conservative Approach

I want to take a moment to congratulate Lou Alfieri on completing his first full month with the VIX and Index/Sector Trading service. His contribution has already been outstanding, and I couldn’t be more pleased with the value he’s bringing to both the team and the members of the service.

We recently reviewed the trades Lou executed during his first 30 days, and—unsurprisingly—he’s off to a strong, deliberate start. He came in with the same steady, risk-managed approach that has defined his personal trading over the past six years, and he’s applying it with consistency inside the service.

Over the course of the month, Lou posted seven trades, which collectively delivered a cumulative 172% return on the option contracts. Using a 5% per-trade risk model, this translates to an 8.61% return on overall account value for the month. While that number may not sound eye-popping at first glance, when you annualize it month-over-month, it comes out to a 169% gain. And that’s using a conservative, capital-preserving approach that emphasizes risk mitigation and drawdown control.

Of course, this 8.61% return is based on just one month, and results will naturally vary. Some months may exceed that significantly—as we saw in January 2024, when we posted a 1,000% gain on trades, which would have translated to a 50% account return using the same 5% risk model. Other months may underperform or even result in losses. But this is where Lou’s system truly shines. His focus on managing risk, locking in early gains, and cutting losers quickly has allowed him to weather dry spells with minimal impact.

The results we’re highlighting here align closely with what Lou has experienced over the past six years using this same system—consistent, conservative returns that compound powerfully over time. He may not catch every home run trade, but he also avoids the deep drawdowns that can derail long-term success. It’s a methodical approach built for durability and resilience in all market conditions.

Our goal going forward is to continue leveraging high-probability, short-term setups that allow us to take advantage of the compounding power of Lou’s system, built on the VIX and Index ETF setups we've refined over the years.

To help you better understand what this kind of consistency can produce, we’ve included a screenshot of this month’s trades along with a downloadable Excel spreadsheet. This tool allows you to plug in your own numbers and visualize the impact of compounding based on different risk scenarios. It’s an excellent way to set realistic, measurable goals—and more importantly, to understand how small, steady wins can translate into big numbers over the course of a year.

This mindset shift is critical. It helps traders move away from chasing home runs—and the FOMO that often comes with that—and instead focus on a disciplined process. While it’s exciting to aim for max gains, doing so on every trade often leads to greater risk, increased drawdowns, and, for many, emotional fatigue. Lou’s approach offers an alternative: steady, strategic, and sustainable.

Thank you again to Lou for stepping into this role with such clarity and conviction. I’m thrilled to have him on board and look forward to seeing how our members grow and succeed by trading alongside him in the VIX and Index/Sector Trading service.