How To Chaotically Profit 10% in 30 Days without the Rollercoaster
The rebounds of stocks are setups for large scale sell off sinkers. Index options are flat lining your heart beat. Amidst the ups and downs there is a level playing field.
THE MARKET OPEN
It’s four A.M. A man is sitting upright in his chair. His eyes look blood shot and he can’t seem to find his basis. His hair needs to be combed. The brown strands are clumps of brown bands now. His shirt looks like it could use a wash. There is a mustard stain from a 7 hour old hot dog meal.
What’s keeping him up?
He’s purchased two long positions at a price he knew would be good. Everything seems to have broken through the floor of support.
Nothing makes sense.
All fundamentals were showing a breakout pattern. He saw the signal line crossing the MACD, he saw a beautiful Bollinger band cigar and he even referenced harmonics! He looked at all his charts.
1 day chart — long term breakout confirmed!
4 hour — long term breakout confirmed!
1 hour — daily breakout confirmed!
30 minute — short term daily confirmed!
1, 5, 15 minute — super short term pattern confirmed!
Then the market opened and a massive sell offs occurred. The entire index plummeted and broke through all known signs of logic.
His loss? Over $7,000 on a $50,000 account.
W-T-F!!!!
DOES THIS STORY SOUND FAMALIAR?
This is a true story. This isn’t fiction. This is my story. I know you’re thinking, “What’s the point of reading this. I thought it was about how I can make money?”
I know you’re reading this story to earn money not hear about some loser scenario.
Trust me. I get it. Remember all wins emerge from loss.
The point I will teach you is it is still possible to profit in a loss scenario. I actually made money the next day.
How’s that for irony?
Do I have your interest?
Remember a lot of people tell you about happy days. Few tell you grim reality. You must stomach some gut wrenching activities before you have free and clear profit.
The point I will teach you is it is still possible to profit in a loss scenario. I actually made money the next day.
Many pull out too early. Early pull outs are like a premature finish. No one is satisfied — including the person who got off.
HOW TURNING A PROFIT HAPPENS IN LARGE PULL BACKS
Up until this point I earned about 12% though the past 30 days. There was a strong run on profit. The loss I detailed above essentially wiped out my profits. My truth illustrates why you should not engage in speculative trading if you have no risk tolerance.
Don’t play a risk game if you don’t like taking chances.
You’re always taking a chance in the stock market.
The result of the sell off meant I had a small pull back in principal. I always view things in quarters (not weeks or months). Having a good month allows me to weather a bad month. Seldom do I have two bad months in a row. Two bad months in a row can set the stage for a strong third month.
I have never experienced 3 bad months in a row. Statistically speaking it is tough to imagine a rough quarter to an experienced trader. You make money going up and down if you know what you’re doing.
Tuesday’s dramatic sell off allowed me to stay within a 2–3% range of negative equity for the month. That’s not too much to stomach. The profit I built up from the months before meant I only saw profit diminished.
Most people panic in large equity decreases because they don’t view things in quarters. They take their profit instantly and then spend it. This means their principal is always exposed. This is a fool’s strategy and I believe it’s the major reason why 95% of people lose at this game.
That’s just my opinion.
The driver for massive sell offs are emotional. Most of the time it is news events causing massive buys or massive sells.
News events always cause impulsive erratic behaviors in the market. News events usually break technical strategies temporarily.
In my case the Pzier Vaccine announcement was watered down by: 1) the threat of impending lock downs, 2) record breaking COVID surges, & 3) a news article saying 12 million people would be up a creek after Christmas when their benefits cut off.
Most people panic in large equity decreases because they don’t view things in quarters. They take their profit instantly and then spend it. This means their principal is always exposed.
These publications outweighed the happy feelings of a possible vaccine.
When news events trigger emotional impulses these impulses cause sell offs to run into “oversold categories”. There is a metric called “RSI” — you should look it up. It’s an indicator that shows over bought and over sold categories.
Scaling into a trade after a dramatic sell off is vital to turning a profit. This is essential after a loss. Remember this is a long term thing not a get rich quick scheme to double your money by Friday.
Trading should not be used to pay your weekly bills.
Another thing you should know. During the last 20 years it was very seldom to discover futures indices sliding more than 3.0% from their daily open. It is even rarer to find it in excess of 5.0%.
I ran an analysis going back to 2000. I did this on both the ES and NQ. I discovered the following facts:
The event that happened this past Tuesday fell into the 6.29% likelihood category.
Crazy right?
THE BEAUTY OF PUT OPTIONS
This is a very misunderstood item in trading. Few understand you can collect upfront premium income for agreeing to purchase a futures contract at an agreed upon date in the future.
I know that is kind of mouthy.
I’ll explain in common sense language.
ILLUSTRATIVE EXAMPLE
I will be using round numbers for illustrative purposes. Exact quotations vary on your broker and the trading of the index.
You can agree to buy the ESZ.CME for a strike price of say 3550 next Friday on 11/27/2020. Someone will pay you some income today for the right to have you purchase their futures contract next Friday.
Most of the time, these contracts expire worthless. Somewhere to the tune of 80% of the time these contracts will not be exercised. This is sometimes called “crash insurance”.
What this means is you can collect anywhere from $500 — $1,500 (depends on the market pricing) up front for the right to buy a contract for $3,500.
So you get paid today not tomorrow.
You can also buy at discount the right to sell something for an agreed upon strike price in the future. Yes you don’t have to own it to have the right to sell it. This is called buying a Long Put. For example you can pay maybe $1,000 for the right to sell something at 3570 next Friday on 11/27/2020.
What this means is if the future climbs to 3625 next Friday you get to sell it at full price and pocket the profit difference.
FOCUS ON THE STRATEGY LESSON
The lesson is, “During a massive sell off fueled by emotional knee jerking…use Puts.”
Most of the time, these contracts expire worthless. Somewhere to the tune of 80% of the time these contracts will not be exercised. This is sometimes called “crash insurance”.
You can collect Premium Income up front for realizing institutional investors (over 80% of the market) will come in and stabilize the trading pattern. Then you can buy your next rally at a discount and profit without outlaying the full price.
You still need to know trading patterns, matrices and other fundamentals; however, I’m hoping I opened you up to a very nifty strategy to turn a profit in a massive loss. I ended positive…so you can too.
Study a bit more. This is a short article. Now you need to go read a book.
To your knowledge success!
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About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM), Master Financial Planner (MFP) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license examination. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 8.0mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com.
Disclaimer: This information is not meant to be a form of investment advice or financial advice. Do not apply this situation to your own personal circumstance. Various risks include: business risk, investment risk, political risk, and other risks. This information is for informational and educational purposes only. Please do not reach out to the author for any investment strategies or philosophies. Please consult your own financial advisor or legal advisor for your own circumstance. Not a recommendation or endorsement of any kind.
