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This interview features Tony Pawlak—full-time trader and current leader at Real Life Trading—breaking down how he went from overtrading and pressure-driven mistakes to a calm, rules-based approach that actually pays the bills. He’s candid about blowing up accounts, rebuilding from scratch, and the mindset shift that let him slow down, size correctly, and choose the right tool for the market in front of him. If you’re a newer trader wondering how to turn scattered tactics into a reliable playbook, Tony’s story is a straight shot of practical wisdom.
In this piece, you’ll learn why Tony favors swing-traded credit spreads for their built-in cushion and capped risk, how he hedges losers before they balloon, and the simple risk framework that keeps each trade around a 3% account risk. You’ll also see how he uses price action and volume as his “diagnostic” before choosing a tool—options, shares, or spreads—so he’s trading with momentum instead of chasing it. It’s concise, beginner-friendly, and focused on repeatable steps you can put to work on your next setup.
Tony Pawlak Playbook & Strategy: How He Actually Trades
Core Philosophy: Calm Rules Beat Hot Takes
Tony keeps his trading boring on purpose. He builds a repeatable routine around capped-risk option plays so one trade can’t wreck the month. These rules show how he slows things down, sizes right, and lets probabilities do the heavy lifting.
- Trade only strategies with predefined max loss; no unlimited risk structures—ever.
- Keep decision windows fixed (weekly planning, daily review, intraday alerts) to avoid impulse trades.
- If a setup isn’t obvious on the chart within 10 seconds, skip it—clarity over cleverness.
Markets & Instruments: Simple Universe, Deep Familiarity
He doesn’t chase every ticker. A tight watchlist and liquid options chains keep fills clean and slippage low. You’ll trade better when you truly “know” your names.
- Watchlist cap: 10–15 symbols with tight spreads and reliable volume (e.g., SPY/QQQ + 8–12 leaders).
- Options only on tickers with penny-wide increments and open interest > 500 on working strikes.
- No earnings-lottery: avoid opening spreads within 7 trading days of a scheduled earnings event.
Set up Criteria: Price Action + Context First.
Before options come into play, the chart must earn the right to be traded. Trend, structure, and momentum define the “context,” then he chooses the tool.
- Trend filter: higher highs/higher lows = bullish bias; lower highs/lower lows = bearish bias; chop = neutral.
- Key levels: use prior swing high/low, daily 20/50 EMAs, and volume shelves as decision areas.
- Momentum confirmation: price above/below 20 EMA with expanding volume; if volume contracts into a level, expect pauses.
The Credit-Spread Engine: Cushion, Time, and Probability
Tony’s core is swing-traded credit spreads that sell when the price is unlikely to revisit soon. The edge is time decay plus distance from the current price.
- Preferred structures:
- Bull Put Credit Spread in uptrends (sell put, buy further OTM put).
- Bear Call Credit Spread in downtrends (sell call, buy further OTM call).
- Sell 20–30 delta short options, 3–6 weeks to expiration; 3–5 point wings on mid-priced names, 5–10 points on higher-priced.
- Minimum credit: ≥ 1/3 of wing width (e.g., $1+ on a $3-wide spread); otherwise, skip.
Risk & Sizing: Never Let One Idea Define the Month
He caps risk first, then thinks of profits. This protects psychology and allows the law of large numbers to work.
- Per-trade risk cap: 0.5%–1.0% of account on defined-risk spreads; absolute max 3% for A+ conviction.
- Hard portfolio limits: max 4 open spreads, max 2 in the same directional bias, and ≤ 50% total buying power used.
- No “doubling down” on the same thesis; new exposure must be uncorrelated (different ticker or opposite bias).
Entry Timing: Let Price Come to You
Entries are patient and mechanical. He prefers fading emotional pushes into known levels.
- For bull puts: enter on pullbacks into rising 20/50 EMA or demand shelf; for bear calls: into falling 20/50 EMA or supply shelf.
- Require a reversal trigger: intraday higher low (for bulls) or lower high (for bears) plus rejection wick at the level.
- Avoid opening within the first 15 minutes of the cash session; let opening volatility settle.
Spread Placement: Make the Floor/Ceiling Do the Work
The chosen short strike should be outside the “noise.” Structure the spread so normal chop doesn’t threaten you.
- Place short strike beyond the most recent swing + ATR buffer:
- Bull put: short put strike ≤ swing low − 0.5×ATR(14).
- Bear call: short call strike ≥ swing high + 0.5×ATR(14).
- Ensure the short strike sits outside a visible volume shelf or pivot cluster daily.
- If implied volatility is low, widen wings to maintain acceptable credit; if IV is high, you can narrow wings and still hit credit.
Management & Adjustments: Fix Small Problems Early
He treats losers like a house fire—contain fast, don’t hope. Winners are left alone to let theta work.
- Hard stop: exit the spread if loss reaches 1.5× initial credit or if price closes beyond the short strike.
- Defensive roll (one time only): roll out 1–2 weeks and 5–10 strikes further away if the thesis is intact and IV favors a credit.
- Hedge the delta: if the trend flips against you quickly, buy a cheap counter-directional debit spread for the same expiry to cut net delta.
Exits & Profit Taking: Bank the Base Hits
He prefers base hits over home runs. The consistency compounds.
- Take profits at 50% max within the first half of the trade’s life; at 65–75% after that.
- If prices sprint to your short strike zone, scratch early near breakeven rather than “waiting for the bounce.”
- Never hold a spread into the final 2 trading days; assignment risk and gamma spikes aren’t worth it.
Weekly Routine: Prep Once, Execute Many
A steady weekly cadence beats reactive trading. This is where most of the edge really lives.
- Weekend (60–90 min): mark levels, trend state, ATR, earnings calendar; pre-select 3–5 A-setups per side.
- Monday open: no trades in the first 15 minutes; verify your thesis against fresh volume/market internals.
- Midweek audit (Wed): close laggards, roll only if credit and thesis justify; add new spreads only if total risk limits allow.
Metrics & Journaling: Make the Process Visible
He tracks the cause of results, not just P&L. The journal answers “what to repeat” and “what to retire.”
- Record for every trade: context (trend), reason to enter, exact rules used, delta/credit/width, stop/targets, and exit reason.
- Tag outcomes: rule-followed win/loss vs rule-broken win/loss; aim for ≥ 90% rule-followed trades monthly.
- KPI set: win rate ≥ 55% on spreads, average winner: loser ≥ 1 1.2, rule-violation rate ≤ 10%, weekly realized volatility of P&L ≤ 1/2 benchmark’s.
Psychology & Discipline: Boredom Is the Edge
He engineers boredom into the system so emotions have no room to roam. When the rules carry the day, confidence follows.
- Daily max pain: stop trading for the day after 2 losses or −1.5% equity—whichever hits first.
- No “idea hunting” after a red morning; only manage existing trades.
- Pre-commit: write tomorrow’s plan today; if a setup isn’t on the plan, you don’t trade it—period.
Example Playbook: Bull Put Spread in an Uptrend
Here’s how it comes together when the chart cooperates. Follow it step by step and resist the urge to improvise.
- Market state: higher highs/lows on daily; price above rising 20 and 50 EMAs; ATR stable or expanding.
- Level: identify prior swing low and a demand shelf; confirm increasing volume on upmoves and lighter volume on pullbacks.
- Structure: sell 25-delta put, buy 15-delta put, 30–45 DTE; minimum credit ≥ 1/3 of width.
- Entry trigger: intraday higher low at the shelf plus rejection wick; enter after the next 5-minute candle confirms.
- Management: take 50% profits if achieved within 10 trading days; hard-stop at 1.5× credit or daily close below short strike; exit 2 days before expiry regardless.
Example Playbook: Bear Call Spread in a Downtrend
Same logic, opposite direction. Let falling structure and supply do the heavy lifting.
- Market state: lower highs/lows; price under declining 20 and 50 EMAs; momentum aligns with expanding downside volume.
- Level: prior swing high + supply shelf; confirm weak bounces (smaller ranges, lighter volume).
- Structure: sell 25-delta call, buy 15-delta call, 30–45 DTE; minimum credit ≥ 1/3 of width.
- Entry trigger: intraday lower high into the shelf; enter on confirmation candle making a new low-of-day.
- Management: 50–70% profit targets; 1.5× credit hard-stop or daily close above short strike; close 2 days before expiry.
Fast Rules for Newer Traders: Start Small, Build Trust
If you’re new, the goal is confidence through consistency. These constraints keep you safe while you learn execution.
- One spread at a time for the first 4 weeks; per-trade risk ≤ 0.5% of equity.
- No trades on days with CPI/FOMC/Jobs premarket; reassess after the first hour if trend is clean.
- Promote a setup to “live” only after 20 paper trades with a≥ 55% win rate and documented rule compliance ≥ 90%.
Upgrade Path: When to Add Complexity
Only add tools when the baseline is proven. Complexity should raise your floor, not your ceiling alone.
- After three green months with ≤ 10% rule violations, allow a second concurrent spread.
- Introduce calendars/diagonals only when you can articulate the exact volatility edge you’re harvesting.
- Expand watchlist by 2 names at a time; keep average bid–ask under $0.05 on working strikes.
Size Risk First: Cap Losses, Let Probabilities Work Daily
Tony Pawlak starts every trade by asking one question: “How much can this cost me if I’m wrong?” He decides the maximum loss in dollars first, then chooses position size and structure to fit inside that box. By locking in defined risk before entry, he protects his week, his month, and his mindset. Tony keeps individual trade risk small relative to account size, so no single idea can dictate performance.
Once risk is capped, Tony lets math and repetition do their job. He favors setups where the probability edge is clear and the downside is known, then manages them the same way every time. If the planned loss is hit, he exits—no averaging down, no hoping for miracles. With risk sized first, he can trade consistently, stay objective, and allow the law of large numbers to compound results in his favor.
Sell Time, Not Direction: Credit Spreads With Defined Risk
Tony Pawlak focuses on selling options where the clock is his edge and the risk is capped from the start. He uses credit spreads—bull puts in uptrends, bear calls in downtrends—so the underlying doesn’t have to make a big move for him to win. Targeting 20–30 delta shorts with 30–45 days to expiration, he positions his strikes beyond recent swing levels so normal noise won’t threaten the trade. The aim is simple: let theta decay do the heavy lifting while keeping max loss predetermined.
Execution is mechanical once the context is set. Tony Pawlak enters on pullbacks into support for bull puts or rallies into resistance for bear calls, then takes profits at 50–70% depending on how fast decay arrives. If price closes beyond the short strike or loss reaches roughly 1.5× the initial credit, he’s out—no averaging or “give it room” exceptions. By consistently selling time with defined risk, he converts probability and process into steady, repeatable outcomes.
Use Volatility To Choose Widths, Duration, And Profit Targets
Tony Pawlak tailors every spread to the volatility regime instead of forcing a one-size-fits-all template. When implied volatility is elevated, he narrows wings and still collects healthy credit; when volatility is muted, he widens wings or adds duration to maintain a sensible return for the risk. He watches IV percentile/rank and ATR to decide whether 30–45 DTE is enough or if 45–60 DTE gives theta more room to work. Tony places short strikes outside recent swings plus an ATR buffer, so routine chop doesn’t threaten the position.
Profit targets flex with volatility as well. In higher IV, Tony Pawlak takes faster 50–60% wins because mean reversion can snap against spreads; in low IV, he allows 65–75% targets as decay tends to be smoother. If realized volatility expands unexpectedly, he tightens management—reducing DTE on new entries, taking early profits, or rolling once for additional credit only when the thesis is intact. Volatility isn’t noise in his playbook; it’s the dial that sets width, time, and the speed of exits.
Diversify By Ticker, Strategy, And Timeframe To Smooth Equity
Tony Pawlak spreads risk across symbols, structures, and expirations so a single theme can’t dominate results. He limits correlated bets—no piling into three tech names with the same direction—and keeps at most two positions sharing the same bias at one time. When a setup appears in a highly correlated group, he picks the cleanest chart and skips the rest, protecting the equity curve from sector shocks. Diversification for Tony isn’t about owning more trades; it’s about owning different risks.
He also diversifies by strategy and duration to balance P&L rhythm. Tony Pawlak pairs credit spreads with occasional directional debit spreads or shares when momentum is strong, and he ladders expirations—near-dated for faster theta, further-out for stability. He avoids stacking trades into the same macro catalyst window, spacing entries so CPI, FOMC, or earnings won’t hit all positions at once. The result is smoother equity: smaller drawdowns, steadier wins, and fewer emotional decisions when one idea goes cold.
Process Over Prediction: Routine, Checklists, And Strict Trade Management
Tony Pawlak treats forecasting as a trap and process as the edge. He starts the day with a written game plan, checks trend, key levels, and volatility, then decides in advance what qualifies as an A-setup. A checklist gates every entry—context, risk, strike placement, and exit rules must all align—or the trade doesn’t happen. By front-loading the thinking, Tony keeps emotions out of live decisions and avoids the “it looks good” impulse.
Once in a trade, Tony Pawlak follows management rules like a pilot runs pre-landing checks. He takes partials at predefined profit targets, cuts losers at the hard stop without debate, and refuses mid-trade improvisation. If market conditions change, he adjusts only within the written playbook—rolls, hedges, or exits must meet specific criteria. The scoreboard is simple: did he follow the plan? When process overrules prediction, consistency compounds—win or lose, the account stays on script.
In the end, Tony Pawlak’s edge isn’t a magic indicator—it’s a disciplined toolbelt and the restraint to use the right tool only when the chart earns it. He frames trades with defined risk first, favors credit spreads for their built-in cushion, and exits fast if price closes beyond the short strike so a small, planned loss never becomes a crisis. His sizing logic keeps damage contained—think risk in percent of account, not dollars—and his routine does the heavy lifting: plan on weekends, wait for clear trend and levels, then let probabilities and time decay work instead of prediction.
Just as important, Tony’s story is a warning against pressure trading: patience funds longevity, and diversification by ticker, structure, and expiration smooths the equity curve when one idea goes cold. When he’s wrong, he cuts or hedges early; when he’s right, he banks base hits and avoids the final days of gamma risk. The lesson set is simple but powerful: tools over tinkering, process over prediction, and small, frequent wins over heroic calls—so you can stay in the game long enough for skill and compounding to show up.
