You can look at publications, search through Yahoo Finance, subscribe to an expensive Newsletter, watch CNBC or Bloomberg, and get the recommendations from a financial firm. You can look for upgrades and downgrades, but don’t you think that there must be an easier way? don’t you think that there should be an insider’s list of real winners somewhere that the big guys have access to that you would never have? “The game is rigged!” they often say, somewhere out there has the edge, and trading being a zero-some game, edge they have makes you the loser.
Not necessarily. I have found listening to ex-floor traders, and even well-known traders that make a fortune teaching others their tricks, that we can also have our hedge, that they could not have access to. They don’t even try. My hedge, for many years was the Elliott wave (EW), but to be perfectly honest, EW theory is hard to transform into practice, due to the great deal of ambiguities among Elliott patterns. I have found that my methodology for EW forecasting has grown to be unique and fairly accurate, but to transform this in to profits you need: 1. A very liquid stock or index. 2. A perfect set up where there is no ambiguity in the pattern to follow. 3. A working knowledge of other technical analysis (T.A.) methodology to confirm the reversal after a completed EW pattern.
Right at about 2005, after many years of frustration, trying to get my trading into a positive momentum, I resigned myself to abandon the EW (at least for a time) and focus on stocks that were obvious winners, and thus worked out my PCCRC strategies. One of my approaches was to look for stocks jumping >10% from previous day closes. I found that almost every day you have a stock spiking up >10% or declining more than 10%. Finding these can be accomplished easily, providing that the platform you are using can alert you of these jumpers any time during the trading day, or at the closing. The TOS platform provides me with such an alert. Not only can I have a front page report of the big performers of the day, I can find also the largest decliners as well. Both these groups may vary from 0 to at least several candidates from day to day. This is what I got today:
Not always, but sometimes we have winners and losers too.
This is hardly the complete story of my trading but it is the first step. Next, I have to decide the options strategy, the time to expiration of the options selected, and of course the rational behind the selection of one (or more) of the candidates in the list. No every trade is going to turn into a winner, in fact we have to be ready to lose all the capital on each trade but our hedge is in using a strategy that makes my winners large and my losers as small as possible. Here is were the retail investor has a hedge over the floor traders and the big institutional traders. We can be selective and we can make small best in many candidates. As many as one a day.
But I am not one for vigilantly looking at 20 days day after day, I would rather enter a trade and let it work for several months and only take a glance at it in case I have a big winner, like my AMZN trade recently which I entered on Sep 16th, 2009 when the stock was $90. Today it is almost $121.
My approach was the selection of AMZN because of the jump of almost 10%. The rest is a matter of finding the rational for the jump and think if the jump is justified. Eventually, there should be follow through.
There are times when market conditions hurt even the most bullish of stocks, as we saw in Oct-Nov 2008. This is why you need both bullish and bearish trades, the leverage of options would compensate you for your loss in bullish trades through the leverage in your bearish trades, should another market collapse occurs unexpectedly.
Please join my e-mail group and one of my webinars. For just a token amount to help me pay for the cost of broadcasting my webinars, you can get a wealth of information that will, at least, help you find your hedge.
Why would I give away my secrets? because I want to you Pay it Forward!!
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