Month: November 2015

How to Survive the Markets Without Stop-Loss Orders

The New York Stock Exchange recently announced that it will no longer accept stop orders (including stop-loss and stop limit orders) beginning February 26, 2016. That’s on the heels of similar announcements from NASDAQ and BATS.

That means that the three of the biggest exchanges in the country now no longer allow investors to place stop orders on their trades.

While some brokerage houses are likely to keep them intact to attract retail investors, they will be executed internally rather than on the major exchanges.

Stops were designed to help investors limit their downside risk and protect their profits. They allowed investors to go about their lives with a failsafe in place in the event they were not in front of their trading screens to manage their positions – which, for individual investors like you, is most of the time.

So what are you – the average retail investor – to do?  How are you supposed to protect your capital and your profits? Let me offer you a few considerations that will help you (and the capital in your account) survive this move by the major exchanges.

Let’s get started…

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How to “See” Your Trades Like a Master Trader

It’s no secret that I like to zero in on the top 250 stocks in the market. And I’ve even shown you how to whittle those down to the 10 best stocks to trade at any given time.

But even then, that’s a lot of data to digest. So you have to employ the best methods to assess which stocks are going to move the way you want them to – that is, profitably.

There’s no shortage of stock charts out in the wild. These days, anyone can go on Yahoo! Finance or Stockcharts.com and pull up highly customizable charts for pretty much any stock trading on domestic markets.

There’s so much information available it can be completely overwhelming, even if you’ve been trading for a while.

Today, I’m going to share with you my favorite type of stock chart, and give you everything you need to start seeing your trades like a pro.

Let’s get started…

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The One Investing Lesson They Don’t Want You to Learn

In trading and investing, as with any business you’re in, you want to turn a profit. When things are going great and profits are coming in, the business is thriving. When things take a turn for the worse, your winners come less frequently, and your profits become smaller.

That’s when things can get really ugly.

But just like in any business – or any part of your life, really – it is how you deal with losses that matters. Your ability to manage your losses is what truly speaks to the profitability of your trading business.

Unfortunately, many investors never learn this… because they don’t want you to learn it.

When I say “they,” I am talking about anyone who benefits when you lose money. That includes market makers, day traders, the big banks, sophisticated trading firms, or anyone on the other side of your trades.

Today, I’m going to show you the best way to deal with losses.

But to do that, you’re going to have to change your whole mindset…

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Make Sure You Know This “Delta Accelerator”

You should know by now that there are several factors that affect the price of an option – not just the price movement of the underlying asset.

The variables that exist that account for the fluctuations of options price movement are known as the options “Greeks,” and we’ve covered many of these – Theta, a measurement of options time decay; Delta, how an option’s price will move with price movements in the underlying; and Vega, how sensitive an option is to the Implied Volatility associated with the underlying.

I’ve told you that Delta is the single most important factor in determining an option’s price. Today’s “Greek” shares a special relationship with the Delta, measuring the rate of change in the most important component in an option’s price.

I like to call it the “Delta Accelerator.”

Here’s what I’m talking about…

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Target Big Price Moves Easily With This Strategy

On Tuesday, I gave you an in-depth look at Delta, a major component of options pricing that can tell you how much your option will move in relation to moves in the stock price.

But there are a few more “Greeks” you’ll need to get to know if you want to be a successful options trader.

If you’ve been with me for a while, then you know that volatility has a huge impact on options pricing, but we haven’t really covered the mechanics of how that happens, or what it means for your money.

Understanding today’s lesson is crucial – I’m going to show you how to find stocks with a chance to make big moves… and how to identify potentially lucrative options plays to profit on those moves.

We’re going to explore in detail the Greek that measures changes of an option’s value based on how much the Implied Volatility (IV) on the underlying security changes.

Let’s take a look…

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This One Number Will Tell You How Much Your Option Will Move

In the past few months, I’ve show you how I determine which stocks to trade options on, and how to select which options have the best chance at giving you a 100% return.

As I told you, finding a stock that’s going to make a move is key. Stocks that trade in a sideways are fine for non-directional trades, but I’m a directional trader. I like to predict which way a stock will move, and by how much, and target my options accordingly.

As important as it is to find a stock that moves, it’s even more important to make sure that your option is going to move when the stock does.

So how can you find out ahead of time if your options are going to make a move in price? There’s only one number you need to know.

Let me show you what I mean…


The True Measure of Any Trader’s Success

One question the students in my seminars or trainings always ask each other is, “What’s your winning percentage?”

But out of all the statistics to measure performance, winning percentage doesn’t always tell the true measure of a trader.

I’ll show you what I’m talking about…

Trader A has a winning percentage on his trades of 70%, while Trader B has a 40% wining percentage on her trades. Which trader do you think is more successful?

I’m guessing most of you picked Trader A.

But what if I told you that Trader A has a return on his money of -25% and Trader B has a positive return of 30%? Trader A wins better than 50% of the time but loses money overall, while and Trader B wins less than 50% of the time but her trades are far more profitable.

Does that change your vote? I would hope so!

You see, a trader can win a large percentage of his or her trades, but what good does that do when the small number of losses outweigh the large number of winners?

So what’s the true measure of a trader’s success?

On Tuesday, I told that two of the most important things you can do as a trader is to build a plan for every trader, and to stick with that plan through the end of the trade.

But before you can build an effective trade plan, you have to make sure you have one thing in place.

Let me show you what I’m talking about…

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Why Your Trading Plan Is Pure Gold

There is an old adage that traders are told to live by that goes, “Plan your trade and trade your plan.”

There should be a follow-up to that one that says, “Stick to your plan no matter what.”

You would think that last adage is implied in the first one, but beginning traders always seem to get something in their head that makes them change their original plan. Even more experienced traders veer from time to time

I can speak from my early days of trading experience when I say changing your plan mid-trade ALWAYS ends up reinforcing one lesson: that you should have stuck with your original trade plan all along.

Every master trader has learned, probably the hard way, to build a simple, effective trade plan and stick to it no matter what. It’s pure gold.

Today, I’m going to show you how to do just that using a Case Study straight from Money Calendar…

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