The 2023 Year in Review Event was the best we've ever done. The engagement was fantastic with such great questions and comments, and we really hit the mark with what we shared on how to win and make money in 2024. Doc's strategy overview and breakdown was awesome!
We also announced multiple new Masterclasses, new strategies, and some very special offers including a Masterclass for FREE - but you will need to act quickly because it all goes away on Sunday, January 28th at Midnight! Here are answers the questions we received about the specials and offers at the event.
0 Comments
Have you heard of the term “Random Walk” as it relates to trading strategies?
The author Burton Malkiel wrote the book “A Random Walk Down Wall Street” in 1973, and has served to be kind of a bible to those in the investment community that believe that predicting forward price movement is impossible. This, of course, flies directly in the face of those that use technical charting studies to analyze price behavior and predict future movement. So you have two religious “camps” in the investing community:
Which camp do I ascribe to? Actually, both. I DO believe that price can do whatever it wants, WHENEVER it wants to. Actually predicting the forward movement of price action is a fool’s errand. But I also believe in the power of analyzing price movement and patterns, and some things repeat over and over again. Range Expansion leads to Range Contraction. Exhaustion leads to Consolidation. Those don’t change. Instead of forecasting future price movement, I will go so far as to give the benefit of the doubt to one direction or another. Strong convictions, loosely held. I use a somewhat hybrid approach that allows me to see and react to what’s actually happening, instead of forming a bias based on what I think SHOULD happen. The longer that I have been trading, the more that I admit to myself that I don’t know what’s going to happen in the next five minutes, let alone in the next month. That affords me a sort of freedom in a way, but only if I’m using a strategy designed to work with this “Random Walk” approach. In general, strategies designed to work with a Random Walk approach are generally better reward-to-risk, and exchange a decreased probability of success for better reward-to-risk. They also have more mechanical entry conditions, instead of waiting for a specific technical signal. Learning about and using them might make a difference in your trading. Ask us how you can get started. In your corner……..Doc Severson In the realm of options trading, selling covered calls stands out as a strategy that can potentially boost your income while holding onto stocks. Whether you're new to trading or looking for an additional income stream, let's break down the concept and explore some actionable steps to get started.
Understanding Covered Calls What Are Covered Calls? Covered calls involve selling call options on stocks you already own. This strategy is great for those who want to generate extra income while keeping their stock positions. Why Covered Calls?
Selecting the Right Stocks Choosing the right stocks is crucial for successful covered call strategies. Here are some recommended stocks, each priced under $15, that align well with covered call opportunities:
Step-by-Step Guide to Selling Covered Calls
Managing Your Covered Call Positions Once your covered call positions are in play, it's essential to manage them effectively:
Risks and Considerations While covered calls can be lucrative, it's crucial to be aware of potential risks:
Congratulations! You now have a simplified guide to start selling covered calls and potentially boost your income. Remember, like any investment strategy, it's important to stay informed, adapt as needed, and enjoy the potential benefits of this income-generating approach. Happy trading! There’s a perception that a professional trader is someone who is constantly tossing contracts into the market, going long and short on the tip of a hat, trying to catch a move. While some could be like that, I like the idea of trading like a sniper, waiting for the right moment to pull the trigger. In some ways, effective trading could be like musical composition. I believe that it was Mozart who said something to the effect of: “The music is not in the notes, but in the silence between.” So then “trading” could be defined as: “Profitability is not in the trades, but in the pause between.” Let’s show an example; in August and into Mid-September, we were quite busy with our non-directional trades since the market was in a low-volatility condition and nicely range-bound. But two problems started to emerge:
We closed down all of our trades and waited for the Market to make the next move, and “move” it did! Over two hundred S&P points to the downside, and counting in just a few days. In this chart, the red circle shows the energy peak, and the yellow arrow shows the triangle apex; while we’re not in the business of predicting the future, we know from experience that this is a condition that likely brings about big moves that we’d prefer to avoid if we’re trading non-directional strategies.
Had we just kept trading those strategies, undoubtedly a number of them would have been closed for a full loss. While you’ll miss 100% of the shots that you don’t take (Wayne Gretzky) sometimes it’s better to let the silence between the notes (or your trades) play out. Know when to wait vs. when to act. In your corner……..Doc Severson In his classic trading text “Trading in the Zone,” author Mark Douglas finishes his book with an exercise that he calls “Learning to Trade an Edge Like a Casino.”
And it’s this skill that separates most amateurs from professionals in this field. We might have a statistical edge, but we give up at the first hint of trouble and run off looking for the Holy Grail. Does a Casino do that? Not if they want to stay in business. They don’t panic when someone wins big, because they know the odds are in their favor. It’s really worth your time to read through the entire exercise, but I’ll summarize the steps here:
How is this different from most retail traders running a system? In many ways! First, few precisely define their entry and exit rules, and then they compound this error by giving up too early when they find out that they are not truly comfortable with the aggregate risk. Consider running the Mark Douglas challenge with your own strategy, and let us know if you need any help doing so! |
Get a 14-Day FREE Trial of 12 Minute Trading services!Archives
March 2024
Categories
All
Get Your FREE Copy of the 5 Key Elements E-Book! |