Discover TOP 5 Trading Tips To Get In Control Of Your Trading in 20 minutes or less...
Jun 01, 2020
Trading is just like a box of chocolates. Whenever you take your next trade, you never know what will actually happen next. If that's your fucking trading strategy, let's address this shit right now. I mean fuck this. Okay, here's the deal guys. Okay, Forrest Gump style of trading simply does not work. It is time to get in control of your trading guys, and in this video we're going to cover five specific things that you could do in order to stay in control of your trading process. So those five things will help you do substantially better. Before you take your next trade, make sure you go for these five things I'm going to describe in this video, and if you want to take even a more detailed look because there's actually more than five, make sure you click the links below, take advantage over the courses that we have recorded for you guys.
Now thing number one, you absolutely have to get full clarity. Why are you taking the trade? And it needs to be something better like, "Well, I heard it on the news. I heard it from a friend. I saw it on Facebook. Well, I buy Apple products, therefore, Hey, why shouldn't I just buy some Apple calls?" That's not a good reason to be getting into a trade. None of these reasons are. The only way you should be getting into the trade is by having a clear understanding why, and you need to come up with at least five, six reasons that you can perfectly write down on the piece of paper. "I'm getting into this trade because of the chart. The chart points to so many different things that are bullish. Therefore, I'm buying calls." You need to have full clarity on why you're taking the trade. In other words, it's not like you wake up in the morning and say, "Woo, I feel kind of lucky today. Let's get in and some of these trades, Oh, this one looks good. Hey, why not this one? Why not just do it right now? I heard that's the best time to get in is when the market opens up. That's where you make the most money."
So none of that, guys, makes sense. You need to do your calculations ahead of time. They need to be very precise. If you're not sure how to do them, guys, again, we can help you with that, but have full clarity why you're getting into the trade. Number one reason I find out that traders jump out of actually good trades is because they have no clear understanding why the hell they got into the trade in the first place. So make sure your why is solid and it does not simply consist of just one reason. In our charts and divergences course we specifically show you a simple way. We have a checklist of at least five or six things when you go through the chart that point out whether the next move in this particular stock is going to be higher or lower. So this checklist is going to make things really easy for you.
Now point number two, and it may sound redundant, but these are actually very two different things is, why now? So the first one was why, and the second one is why now? Why do you want to get into this trade right now, at 9:30, as soon as the market opens? Why do you want to maybe wait until 10:45? Why do you maybe want to wait until 3:30 in the afternoon, 30 minutes before the market close? You need to have a solid answer as far as to why now, why today? Why not tomorrow? Why not on Thursday instead of Tuesday?
See, understand this. The most important thing when we consider our trading options is the valuation of timing. If you proper value the timing on your options contracts, it could result in some huge returns, but if your timing is off and your trade could be overall directionally good, you could still break even or even lose money, and I know it sounds crazy. "What do you mean Leonardo? You mean I think this stock is going to go higher. I'm going to buy calls and I can still lose money?" Yes, absolutely, because you're not answering this question in very, very specific terms and it is absolutely required when trading options because it's quite different than trading stocks. With stocks, you can sit in that forever. I mean if that's your timeframe, and you could be okay with options.
They're going to expire this week, they're going to expire next week, they're going to expire in a month, two, 60 days, 90 days. Most frequent questions that they get from traders is like, "Well, Leonardo, which options should I buy? Should I buy this week, next week? Should I buy the ones that expire in two months?" And guys, the answer to this is it should be based on your calculations. When is that you're actually expecting the move to come? If you're expecting the move to absolutely happen this week and you've done your calculations and everything points to a breakout lower, higher in the stock this week, then why the hell would you be buying options that expire in two months? If you're not sure of when the actual move is coming, but you know it's going to happen over the course of the next 60 days, then it makes sense to buy the contracts that expire in 60 days. You should not be like, "Well, let me just give me a little extra time, just in case I don't time this shit right, let me just give myself a little extra time."
Just think what you're saying to yourself. You're really saying you don't know what fuck is going on, and if you don't know what the fuck is going to, you shouldn't be taking the trade in the first place. So you shouldn't be like, "Well, let me just give it some more time just to be on the safe side." I mean guys, that's not how money's made in trading. So you have to be very specific. Why now? Well, because the chart clears and certain details on the chart will really help you identify why now. From the general speaking terms, you should be considering catalysts, and typically one catalyst is great, but if you have multiple catalysts that could propel the stock higher or lower, then the more the merrier, right? Because if one catalyst maybe does not get the appropriate attention or maybe one catalyst, the reaction is just not as strong as you're expecting the move to be, then it's good if you've got multiple catalysts going on.
So if you're not sure what are the catalysts that are upcoming today, tomorrow, next week, you need to do further investigation before getting into the trades. So you have to understand why now, because if there is no catalyst this week and the stock is trading in between $200 and $205 for the whole week, there is no point of getting into trade now. So be very specific. You may like the stock, you may have investigated the [inaudible 00:07:27], you may have a few reasons why you think it's a good trade, but if you don't have a specific catalyst that could develop the move in the stock that you're expecting ... and it needs to be a rather substantial move in relation to how much the options are being priced at. So why now is a totally different question from why.
The third very crucial point to consider before getting into your next trade is do some very thorough calculations on how much of a move are you expecting. If you're expecting the stock to go higher, by how much?Are you expecting to move from 135 to 137? Are you expecting to move from 135 to 142? That makes a huge difference, and that ultimately prepares you to answer the question of when you're actually going to be taking your profits. So if your target is hit as 137, you need to have that answer ready upfront. Are you getting out with the entire position? Are you keeping some contracts? Is this just the target level based on your calculations at which it makes sense to take maybe one third of your position off the table and keep the other 65% of the trade on? What is that level that you're targeting, and it could be multiple levels.
A lot of times when we show the trades on our 13 Market Moves Analysis daily subscription, we show specific levels and we may comment and say, "Look, when the stock gets to this level of 145, it is wise to sell half of the position, keep the other half of the position on until the stock reaches 147.50." So you need to be very specific about the magnitude of the move and if you're just getting in thinking, "Well, I think this thing is going to go higher or I think this thing is going lower," if you just have a general idea, you should not be taking the trade, because again, the way you make money with options, you have to be very specific on the magnitude of the move, and it's understanding the magnitude of the move which is actually going to allow you to select the right strike price.
We've posted the video maybe a few weeks back. So if you're curious about how to select the strike prices, it goes into a lot of details, I think it's about 40 minutes. At the very end of this video, we'll put a link to that video as well. Guys, so the magnitude of the move is crucial because it prepares you to essentially answer a very important question about the strike price. I've talked before in multiple videos that if you actually get the trade right, the direction of the trade right, but you get the strike price wrong, then it could actually result in a bad trade. So your calculations when you are figuring your trade out should be very exact, very precise, like 147.33, and how would you come up with a number like that? You cannot come up with a number like that if you're just watching the news, if you're looking at something on Facebook or whatever the other sources. I mean you certainly can't do that if you are listening to Bloomberg or any general media out there.
The only way I know how to do this is looking at the chart, studying multiple timeframes on the chart, and that's how you can get very, very precise like that about your exit points, about the magnitude of the move studying the history, what the stock has done in the past as far as the magnitude of the moves. All of this comes into play when you're actually trying to answer this third most important question, is what is the magnitude of the move to the up side or the downside? So it has to be very specific, guys.
Point number four, how long are you actually planning to stay in the trade? How long? Are you just getting into the trade this morning knowing that in the next 30 minutes you're going to be out? If that's your plan of action, that's fine, but you need to understand that and you need to be able to execute on that. What if the trade doesn't go as planned in the next 30 minutes? What are you going to do then? Are you going to increase your timeframe to another 15 minutes? Are you going to increase that timeframe to another two hours? And you're going to wait, let's say until 11:30 to get out of your trade. So these time limits, they need to be very, very specific, guys. Understand when you're getting a trade, so let's say a trader could be looking at a trade, could be calculating the catalyst and the move based off the charge to come in this week, but he's buying next week's expiration because the trader is not 100% certain whether the move's actually going to come in this Friday or the move is actually going to take place next Monday.
So in this case it would make sense to stay in the trade longer and calculate buying the options that expire the following week, if that actual move in the stock that you calculate could either fluctuate 50%, maybe it will happen Friday, 50% maybe it will happen on Monday. So know that the earliest you will be getting out of the trade is Friday and the latest you're probably going to be getting out of this trade and it's [[ by this big and move in the stock to the upside or downside, whatever your calculation might be on Monday or Tuesday, but understand that sometimes the trades will go instantly your direction. In majority of the cases they're not. So how long are you willing to stay in the trade? Because there is such thing as opportunity costs. So in other words, if you're looking to buy options that expire, let's say in three months and you're committed to staying in this trade for the entire three months, do you realize how many other trades you could actually be missing?
So if you're 100% solid in your strategy, you're like, "Hey, I'm going to stay in this trade for three months, no matter what," guys, I don't know many traders are going to actually do that, but understand what if the trade goes immediately your way tomorrow? Are you still going to be in it for three months? Clearly not. Collect the profits, move on to the next trade. Now it all has to do with calculating your profit targets and all that, but that's a whole nother subject for another video, guys. So understand the timeframe. Are you going to be in this trade for 30 minutes? Are you going to be in this trade overnight? Are you going to swing trade it for 72 hours? Are you going to be 100% fully committed?
Maybe you got a full time job and you can't monitor your trades and therefore it makes sense to go 90 days until expiration so you don't experience this huge flack striations as some of the weekly options give us on certain weeks. So answer that question. How long are you going to stay in this trade? Because a lot of traders, what happens is this very bad circumstance. When you get into the trade, you've got all your calculations down, everything looks good, and you're buying options, let's say that expire in a month, and then you keep looking at your screen every day for about a week. The trade is not doing anything. At this point, the options have dropped in value and you're just tired of waiting. You're tired of waiting and waiting and waiting, and at some point every trader goes for this. You're like, "Oh my God, look at this trade right here." You're like, "Oh wow, that's a good looking trade there." So what do you do? You liquidate your position in order to get into this other trade.
Well, typically that happens in majority of the cases when that's initial trade where you've committed to stay in for a month, now a week has gone by and nothing is happening, nothing is happening. So guess what does happen in 90% ss? As soon as you're going to get out of that trade, you're going to jump into this new one that look good. The grass was looking greener on the other side, and as soon as you get that, what do you do? You're actually locking the loss on this trade that you've calculated to stay in for for a month. So what you're really doing, you're not executing on the fourth point, which was if you commit to a certain time to stay in the trade, you need to follow through on this commitment, and just jumping out of the certain trades because something else looks better all of a sudden is not a good strategy, and oftentimes you know what happens. As soon as you're out of that trade, boom, it starts going your way and the trade that you thought was going to be a better trade, that keeps losing you money. So don't do it. Make sure, make a commitment to your timeframe and execute on it.
And the fifth one guys, this is really advanced stuff right here. It took me a few years to actually come to this conclusion of how actually crucial and important this is. So for those of you guys that have been trading for a while and trying to go to the next level, this is what actually helps me nail some of my best exits and entries. You really have to set specific time limits throughout the day. In other words, if you've been a part of our group in the chat room, you know sometimes I send very specific messages saying, "Hey, if this move does not happen by 11:45, cut the trade," or, "If this thing happens by 2:30 PM, then go ahead and add a lot more to the position."
So these time limits of when we expect ... and this is especially important guys, if you're day trading or swing trading, not swing trading where you're keeping your positions for like a week or two weeks, but your swing trading meaning you're getting into the trade today, you're getting out tomorrow or you're staying in the trade for the course of maybe 72 hours to 96 hours. So that is incredibly crucial, because if you get into the trade and some things are just pausing and they're not happening and they're not happening and they're not happening, your options are losing money. Your account is going down in value. So action needs to be taken because if your calculations are good, it should not be taking this damn long for you to realize some kind of profit on your trade. It may not be your target profit, but the trade needs to start going in a direction that you're calculating it to go within the first few hours that you're pulling the trigger on the trade.
So if this doesn't happen and it just keeps fighting and sitting there, you either need to cut down the size of your position, you need to take some action, and so if you don't set these time limits, and clearly it's difficult to set the time limits if you don't know specific events throughout the day, and when I say specific events, I don't mean necessarily, "Oh, we're waiting for a federal reserve announcement," or something like that. Those are just a given, right? That's just basics, but on a regular day when there's no federal reserve announcements, where there's no economic data that's coming out, it's actually in our 13 markets moves formula that we specifically identify certain moves that have a high probability of repeating the reversals around certain critical moments throughout the day.
For example, most of the reversals, the bearish reversals, they're going to happen at about 10-10:30 in the morning. So when the market initially looks like it's going to the morning, it's going higher, if it's in the green, then the reversal comes in about let's say 10.25, and that's important to understand that hold on, if this reversal doesn't take place within this time frame, that gives you more green light for a much more bullish move for the rest of the day. So understanding these pivotal critical moments, literally 2:15, 3:45, 11:05, all of these particular timeframes throughout the day you should be seriously considering before you're putting the trade on. If something does not happen up to a particular moment in time that day, you need to take action.
o it is very important, guys, that you start utilizing this because you don't want your trade to just be sitting there. You don't want to just be hoping that all of a sudden something happens. If you thought that a major catalyst was coming and it's not coming for whatever reason, you need to change something, and it's a lot easier to just get out of the trade and get back in, if you're day trading, if certain things don't take place for a number of hours, if you're swing trading and we're targeting a break lower in the stock and it looks like on Monday it just tries to break lower and it bounces, it breaks lower and it bounces. If that break lower does not come on the second day, I'm out. I'm not staying in this trade. So just make sure that if you are interested in how to implement these things, guys, 13 Markets Moves Formula is your answer if you're trying to upgrade your trading skills so that you can upgrade your lifestyle so that you can trade fearlessly and enjoy doing it. Guys, click the link below. Don't trade another day without utilizing the 13 Market Moves Formula. With that said, I wish everybody great trading tomorrow, and I'll catch you on the next trade.