Boost Your Profit Margins - Alter Your Current Trading Strategies To Match Market Conditions
When I initially began trading back during the '90's, I was extremely fortunate. I had started trading at a time when the market was headed almost straight up. My first strategy was writing covered calls which blended with a rising market in such a way that I virtually never lost.
The perspective of time allowed me to understand that no market, good or bad will last forever. The only real constant is change. Under such conditions, I learned to 'roll with the flow', adjusting my strategies to match market conditions.
Medium Term Trades
As I explained earlier, my favored medium term technique has long been the covered call. This technique enabled me to handle my fiscal affairs. By setting up trades created specifically to 'mature' at a predetermined date 30, 60 or 90 days out into the future, it gave me cash I could count on to help eliminate any slow periods of day-to-day cash flow.
While the premium began to dry up, I found writing covered calls increasingly more difficult. I began to look specifically for those stocks which were volatile, which could be employed to temporarily take the place of covered calls as my medium term strategy of choice.
Stock Movement
Let's look for a stock which moves frequently. I have my Chart Navigator system provide this by automatically calculating the average daily range of stock for the last month or so. I will then look only at the stocks which have at least a dollar and fifty cents or more movement every day.
You have got to have some concept of WHICH way they're most likely to move. We additionally narrow this search of high volatility stock to only those stocks which move within a somewhat predictable range, much like a 'channeling' stock.
Given these facts, let's look for a few more characteristics. For starters, notice that the stock has stayed close to or within this range for quite a few months. Additionally, each 'oscillation takes upto a month, moving from the top of the channel to the bottom.
Bottom line, this stock is moving a lot, but going basically sideways. Now, let's trade this one medium term. If we can do that regularly, then maybe we can stop being concerned regarding the availability of covered call trades!
The Trade
Before you trade a stock, it is generally a good idea to know which way it's going. That's the challenge! Trade it BOTH up AND down. These are the only two ways it is likely to go (bear in mind the high daily movement).
We know we can't purchase the stock And short the stock (at least not in the same account), so why not buy a put And a call?! In this case we might think about acquiring the thirty five dollar put along with the thirty five dollar call. Usually referred to as a 'long straddle', the position permits us to profit no matter WHICH way the stock moves.
Now, are you ready to adjust your strategy to match market conditions? If you're a little hesitant or perplexed in any way, employ the help of an investment professional. They may be conveniently located on the web by doing a search for: reverse mergers, company going public, or reverse merger shell. At some point, it will become easier for you to 'go with the flow' as well.
Boost Your Profit Margins - Alter Your Current Trading Strategies To Match Market Conditions
When I first began trading back in the '90s, I was very fortunate. I had begun trading at a time when the market was headed almost straight up.
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