In today’s fast-paced financial landscape, achieving consistent returns—especially in uncertain markets—can feel like an elusive goal. But according to Simon Ree, founder of Tao of Trading, long-term wealth growth isn't reserved for Wall Street insiders or early retirees. Whether you're in your 40s, 50s, or beyond, strategic trading can unlock powerful financial outcomes, even in volatile or declining markets.
Drawing from over three decades of experience in global financial markets—including stints at top-tier institutions like Citigroup and Goldman Sachs—Simon Ree has developed a unique philosophy that blends discipline, risk management, and high-probability trading strategies. His approach, inspired by the principles of Bruce Lee’s Jeet Kune Do, emphasizes adaptability, simplicity, and precision in trading.
This article explores key insights from Simon Ree’s methodology, including how to generate outsized returns, avoid common trader pitfalls, and harness tools like options and compounding to build lasting wealth.
The Myth of the 10% Annual Return
Many financial advisors promote a “safe” 7–10% average annual return as the benchmark for long-term investing. But Simon Ree challenges this notion: why settle for average when you can aim for 3% monthly returns—potentially 40% or more per year?
While aggressive, this target isn’t based on speculation. It stems from a disciplined system built on:
- Trend following
- High-probability trade setups
- Strict risk-to-reward ratios
- Compounding gains
Ree emphasizes that compounding isn’t just for young investors. Even midlife professionals can leverage accelerated compounding through consistent monthly gains. The key? Avoiding large drawdowns and reinvesting profits systematically.
👉 Discover how to apply high-probability trading strategies to boost your portfolio growth.
Options Trading: Simpler Than You Think
Options are often seen as complex instruments suited only for advanced traders. But Simon Ree argues that with the right foundational knowledge, options trading can be both accessible and highly effective—especially for those seeking leverage with controlled risk.
Key metrics every beginner should understand include:
- Implied volatility (IV): Helps assess whether options are over- or underpriced.
- Delta and theta: Measure price sensitivity and time decay.
- Strike price and expiration: Determine trade duration and potential profit zones.
Rather than chasing quick wins, Ree advocates using options to capitalize on high-probability moments—such as earnings announcements or macroeconomic data releases—where market movement is more predictable.
One powerful strategy he highlights is using LEAP options (Long-Term Equity Anticipation Securities) to control large positions in high-growth stocks like Nvidia at a fraction of the cost. This allows traders to ride long-term trends without committing full capital upfront.
Investing vs. Trading vs. Gambling: Know the Difference
A common misconception is that active trading is gambling. Simon Ree draws a sharp distinction:
- Investing typically involves long-term buy-and-hold strategies based on fundamentals.
- Trading is tactical, time-bound, and based on technical analysis and market behavior.
- Gambling lacks strategy, risk control, and statistical edge.
Many people who believe they’re investors are actually traders—frequently buying and selling based on emotion rather than a defined plan. This confusion increases risk and reduces consistency.
Successful trading, according to Ree, requires:
- A clear trading plan
- Emotional discipline
- Risk management (e.g., never risking more than 1–2% per trade)
- Journaling and performance review
“The market doesn’t care about your feelings. It rewards process, not hope.”
The 9th Wonder of the Investing World
Simon Ree refers to compounding combined with trend following as the “9th Wonder of the Investing World.” While traditional compounding takes decades to shine, integrating it with monthly gains from trend-following strategies accelerates wealth creation dramatically.
For example:
- A $50,000 portfolio growing at 3% per month compounds to over $140,000 in just five years—without additional contributions.
- At 5% monthly growth, it exceeds $500,000.
This isn’t theoretical. Ree’s students have applied these principles across various markets—from equities to cryptocurrencies—achieving measurable results by focusing on repeatable patterns and minimizing losses.
👉 Learn how trend-following systems can enhance your investment returns.
Debunking 5 Myths of the Finance Industry
Simon Ree identifies several widespread myths that hold traders back:
- Myth: You need years of experience to succeed.
Truth: With structured education and mentorship, beginners can learn profitable strategies in weeks. - Myth: The market is too risky for consistent profits.
Truth: Risk is manageable with proper position sizing and stop-loss techniques. - Myth: You must predict the market to win.
Truth: Successful traders don’t predict—they react to confirmed trends. - Myth: Only full-time traders make real money.
Truth: Part-time traders with discipline can outperform professionals. - Myth: You need a large account to start.
Truth: Small accounts can grow quickly with high-probability setups and compounding.
Frequently Asked Questions (FAQ)
Can I really achieve 3% monthly returns consistently?
While past performance doesn’t guarantee future results, 3% monthly returns are achievable through disciplined trend following, risk management, and focusing on high-probability setups. Consistency matters more than home-run trades.
Is options trading suitable for beginners?
Yes—if approached with proper education. Start with basics like covered calls or cash-secured puts before advancing to more complex strategies.
How does compounding work in trading?
Compounding in trading means reinvesting profits into new trades, allowing your capital base to grow exponentially over time—especially when losses are minimized and gains are consistent.
What role does risk management play in Simon Ree’s strategy?
Risk management is foundational. Every trade should have a predefined entry, exit, and maximum loss (usually 1–2% of capital). This protects your account during inevitable losing streaks.
Can you profit in falling markets?
Absolutely. Tools like put options or inverse ETFs allow traders to benefit from downward trends—turning bear markets into opportunities.
Is Tao of Trading focused only on stocks?
No. The principles apply across asset classes—including forex, commodities, and digital assets—making the methodology adaptable to evolving market conditions.
👉 Explore proven strategies to thrive in any market environment.
Final Thoughts: Building Wealth at Any Age
It’s never too late to build wealth. Simon Ree’s Tao of Trading offers a realistic, disciplined path for midlife professionals and seasoned investors alike. By combining time-tested principles like compounding with modern tools like options and technical analysis, traders can aim for returns far beyond the traditional 10% benchmark.
The journey begins not with luck, but with education, strategy, and emotional control. Whether you're new to trading or refining your approach, the core message remains: consistent action beats passive waiting every time.
By embracing a mindset of continuous learning and process-driven execution, anyone can navigate market complexity—and emerge with greater financial freedom.
Core Keywords: options trading, compounding returns, trend following, risk management, high-probability trading, monthly returns, Tao of Trading, Simon Ree