In the fast-evolving world of financial markets, few voices offer both depth and clarity like Simon Ree, founder of Tao of Trading. With over three decades of experience across global institutions like Citi and Goldman Sachs, Simon has transitioned from traditional finance to empower retail investors with actionable strategies rooted in discipline, risk management, and market psychology. His insights—shared through a series of compelling podcast appearances—reveal a powerful blueprint for achieving consistent returns, even in uncertain economic climates.
Whether you're in your 40s or 50s and worried about late-stage wealth building, or a beginner intimidated by options trading, Simon’s methodology offers a structured path forward. He debunks common myths, demystifies complex instruments like LEAP options, and introduces strategies designed to generate 3% monthly returns—potentially translating to 40% annual portfolio growth.
Let’s explore the core principles behind Simon Ree’s approach to modern trading and how they can be applied to build lasting financial success.
The Myth of Late-Stage Investing
Many believe that if you haven’t started investing early, substantial wealth creation is out of reach. But Simon Ree challenges this notion head-on. While compounding works best over decades, strategic trading can accelerate returns at any stage of life.
The key lies not in time alone, but in high-probability trading strategies, disciplined execution, and leveraging tools like options to control large positions with limited capital. For midlife professionals, this means focusing on consistency rather than chasing unrealistic gains.
👉 Discover how to design a high-conviction trading plan that aligns with your financial goals.
Trading vs. Investing vs. Gambling: Know the Difference
One of Simon’s most important distinctions is between investing, trading, and gambling. Many people who think they’re long-term investors are actually short-term traders—without the risk controls or strategy to back it up.
- Investing involves holding assets for long-term growth based on fundamentals.
- Trading requires active management, technical analysis, and defined entry/exit rules.
- Gambling lacks structure, relies on emotion, and ignores risk.
Simon emphasizes that successful trading is systematic, not speculative. It involves trend following, volatility assessment, and strict stop-loss protocols to protect capital. Emotion has no place in decision-making; instead, traders should follow a repeatable process.
Mastering Options: Simpler Than You Think
Options often intimidate beginners due to their complexity. But Simon argues that with the right foundation, anyone can become proficient—and profitable—in weeks.
Key metrics every trader should understand include:
- Implied volatility
- Time decay (theta)
- Delta and gamma exposure
- Probability of profit
Rather than trying to predict market direction perfectly, Simon teaches traders to identify high-probability moments—times when market conditions favor specific outcomes. By combining technical analysis with options strategies like credit spreads or LEAPs (Long-Term Equity Anticipation Securities), traders can gain significant market exposure at a fraction of the cost.
For example, controlling shares of high-growth stocks like Nvidia using LEAP options allows traders to participate in long-term trends while limiting downside risk.
👉 Learn how to use advanced derivatives strategies with precision and confidence.
The "9th Wonder of the Investing World"
Simon refers to compounding returns through consistent monthly gains as the "9th Wonder of the Investing World." While most investors aim for 7–10% annual returns, Simon advocates for a more aggressive yet achievable target: 3% per month, which compounds to over 40% annually.
This isn’t about reckless risk-taking—it’s about stacking small, high-probability wins. Using trend-following systems and disciplined position sizing, traders can capture upward momentum while minimizing losses during downturns.
He also highlights the importance of:
- Risk-reward ratios (aiming for at least 2:1)
- Position scaling (increasing size as confidence and track record grow)
- Journaling trades (to refine strategy over time)
Risk Management: The Trader’s Foundation
No discussion with Simon is complete without emphasizing risk management. He stresses that preserving capital is more important than making quick profits. Every trade should have:
- A predefined entry point
- A clear exit strategy
- A maximum acceptable loss
By never risking more than 1–2% of trading capital on any single position, traders protect themselves from catastrophic drawdowns—even if several trades go wrong in a row.
Additionally, Simon warns against overtrading. Quality beats quantity. Waiting for optimal setups increases the probability of success significantly.
FAQ: Common Questions About Simon Ree’s Trading Philosophy
Q: Can I really achieve 40% annual returns safely?
A: Yes—but not through luck or speculation. Consistent 3% monthly returns require discipline, proven strategies, and rigorous risk management. Over time, compounding turns these gains into substantial wealth.
Q: Do I need a finance background to succeed with Tao of Trading?
A: No. Simon’s methods are designed for real-world application. Beginners learn step-by-step, starting with foundational concepts before advancing to complex strategies.
Q: How much capital do I need to start?
A: You can begin with modest amounts. The focus is on percentage returns and process—not absolute dollar size. As profits grow, so can your position sizes.
Q: Are options suitable for conservative investors?
A: Certain options strategies—like cash-secured puts or covered calls—can actually reduce risk and generate income. The key is understanding which strategy fits your risk profile.
Q: How does trend following work in practice?
A: Trend following means buying assets that are already moving up and selling (or shorting) those in decline. It’s based on momentum rather than prediction. Simon uses technical indicators to confirm trends before entering trades.
Q: Is now a good time to start trading?
A: Markets always present opportunities—bullish or bearish. With proper education and tools, traders can profit in any environment.
Building Abundant Wealth in Any Market
Simon Ree’s philosophy transcends market conditions. Inspired by Bruce Lee’s Jeet Kune Do—a martial art emphasizing simplicity, directness, and efficiency—his trading approach cuts through noise and focuses on what works.
The goal isn’t perfection; it’s progress. Through continuous learning, journaling, and refinement, traders can develop a personalized system that delivers consistent results.
👉 Start building your own high-performance trading strategy today.
Whether you're navigating inflation data impacts, earnings season volatility, or long-term portfolio growth, the principles taught by Simon Ree provide a durable framework for financial independence.
By integrating compounding, trend following, options leverage, and ironclad risk controls, traders at any level can aim higher—with confidence grounded in logic, not hype.
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