Dear Regulators, Thank you for the opportunity to comment on this proposed regulation. We didn’t choose unprecedented debt or rising inflation. It’s a matter of human rights to allow individuals to choose their positions in the market with intelligence, education, and any capital that could offset the problems that have been created for us. We are trading with depreciating dollars that have already been taxed. Creating regulations in line with a “my dollar, my choice” philosophy feels fair and ethical under the circumstances. The influx of undereducated traders is real, however so is institutional naked shorting. Wall Street is happy to profit, and most of the comments would indicate that investors don’t mind the risk. The overwhelming majority of comments oppose this new regulation. I have three degrees. After spending the equivalent of college tuition and putting in at least as many hours, my investor training feels like a fourth. I have taken stock and options classes, been mentored, completed online courses, read books, paper traded, simulated trades online, and made live trades using complex products. I’ve excelled. I’ve taken losses. I am ok with all of it. Losses are lessons, and I see them as tuition. (Please don’t protect me from learning.) Respectfully, if I were to seek protection from anything, it would be the additional mandates and regulations designed for my protection. The timing of this doesn’t sit well with me given the current state of the market. If retail can’t hedge with complex instruments, who are we really protecting? If it is the retail trader, consider the protection that simple options trades offer. We can use them to hedge and manage risk. A risk graph showing long calls with a stop loss depicts significantly less risk than the risk graph of 100 shares of stock that could fall to 0. If the market tops and takes a huge swing down, the option trader in the wrong direction will only lose a certain percentage of a smaller amount. The stock trader loses significantly more capital if stopped out at the same percentage. If the trader holds to avoid losses, it can be years before the bear market finishes, a reversal pattern completes itself, and the stock returns to the break-even point. I’d argue that the option trader took less risk and that the stock trader could have avoided all this with protective puts. Not to ask a question that will surely sound silly, but are we proposing to protect retail investors from this protection by restricting them? Testing might work in theory. However, standardized tests are also a complex instrument. They can be biased, and they do not always measure what they are designed to measure. As with testing in schools, passing does not always mean learning and understanding is not the same as doing. The bottom line is that a passing score does not equal a successful trade. If that is the case, then what is the purpose of the test? Not to beat a dead horse, but if passing one test won’t protect traders from losses, how will a retest help? Licensed professionals are not required to repeat tests they have already passed or wait out lengthy cooling off periods. (30 days is plenty and test takers are often given two tries before the wait.) They are, however, offered continuing education. Might this would be more productive? For a lot of us, testing feels a bit like if the DMV were to mandate that we all take our driving tests again. Can we waive the test for traders who have taken classes in complex instruments or have a certain amount of experience? If a test were designed, what would it look like? Logistically, how would it work? How many types of tests would need to be created? Would there be a test of each type of trade or would someone who wants to trade spreads need to study futures? Which aspects of each complex product will you test and how will you check for bias? Most standardized tests have a practice run before they count against test takers so that flaws can be removed and the test can be implemented fairly. Will you consult with an education professional to accomplish this? Licensing exam preparation programs include classes, test prep materials, and practice tests before the exam. If a test is mandated, let’s make it at least as fair as a licensing exam. Finally, can we consider that even Warren Buffet didn’t start with a huge account? He used an options strategy to lower the cost basis of stocks he wished to purchase. If he were just getting started today, would he be barred from using the strategies that worked for him or regulated out of the market because he built his wealth gradually over time? Wouldn’t it be a shame to hold back our A+ traders because of the ones who skipped class? Thank you for your time.
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Anonymous Comment On Regulatory Notice 22-08
Dear Regulators, Thank you for the opportunity to comment on this proposed regulation. We didn’t choose unprecedented debt or rising inflation. It’s a matter of human rights to allow individuals to choose their positions in the market with intelligence, education, and any capital that could offset the problems that have been created for us. We are trading with depreciating dollars that have already been taxed. Creating regulations in line with a “my dollar, my choice” philosophy feels fair and ethical under the circumstances. The influx of undereducated traders is real, however so is institutional naked shorting. Wall Street is happy to profit, and most of the comments would indicate that investors don’t mind the risk. The overwhelming majority of comments oppose this new regulation. I have three degrees. After spending the equivalent of college tuition and putting in at least as many hours, my investor training feels like a fourth. I have taken stock and options classes, been mentored, completed online courses, read books, paper traded, simulated trades online, and made live trades using complex products. I’ve excelled. I’ve taken losses. I am ok with all of it. Losses are lessons, and I see them as tuition. (Please don’t protect me from learning.) Respectfully, if I were to seek protection from anything, it would be the additional mandates and regulations designed for my protection. The timing of this doesn’t sit well with me given the current state of the market. If retail can’t hedge with complex instruments, who are we really protecting? If it is the retail trader, consider the protection that simple options trades offer. We can use them to hedge and manage risk. A risk graph showing long calls with a stop loss depicts significantly less risk than the risk graph of 100 shares of stock that could fall to 0. If the market tops and takes a huge swing down, the option trader in the wrong direction will only lose a certain percentage of a smaller amount. The stock trader loses significantly more capital if stopped out at the same percentage. If the trader holds to avoid losses, it can be years before the bear market finishes, a reversal pattern completes itself, and the stock returns to the break-even point. I’d argue that the option trader took less risk and that the stock trader could have avoided all this with protective puts. Not to ask a question that will surely sound silly, but are we proposing to protect retail investors from this protection by restricting them? Testing might work in theory. However, standardized tests are also a complex instrument. They can be biased, and they do not always measure what they are designed to measure. As with testing in schools, passing does not always mean learning and understanding is not the same as doing. The bottom line is that a passing score does not equal a successful trade. If that is the case, then what is the purpose of the test? Not to beat a dead horse, but if passing one test won’t protect traders from losses, how will a retest help? Licensed professionals are not required to repeat tests they have already passed or wait out lengthy cooling off periods. (30 days is plenty and test takers are often given two tries before the wait.) They are, however, offered continuing education. Might this would be more productive? For a lot of us, testing feels a bit like if the DMV were to mandate that we all take our driving tests again. Can we waive the test for traders who have taken classes in complex instruments or have a certain amount of experience? If a test were designed, what would it look like? Logistically, how would it work? How many types of tests would need to be created? Would there be a test of each type of trade or would someone who wants to trade spreads need to study futures? Which aspects of each complex product will you test and how will you check for bias? Most standardized tests have a practice run before they count against test takers so that flaws can be removed and the test can be implemented fairly. Will you consult with an education professional to accomplish this? Licensing exam preparation programs include classes, test prep materials, and practice tests before the exam. If a test is mandated, let’s make it at least as fair as a licensing exam. Finally, can we consider that even Warren Buffet didn’t start with a huge account? He used an options strategy to lower the cost basis of stocks he wished to purchase. If he were just getting started today, would he be barred from using the strategies that worked for him or regulated out of the market because he built his wealth gradually over time? Wouldn’t it be a shame to hold back our A+ traders because of the ones who skipped class? Thank you for your time.