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Raise Your Profits – Altering Your Current Trading Strategies To Match Market Conditions
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June 4th, 2011Uncategorized
When I initially began trading back during the ’90′s, I was really fortunate. I had started trading during a period when the market was headed practically straight up. My initial strategy was writing covered calls which blended with a rising market in such a way that I almost never lost.
The perspective of time allowed me to discover that no market, good or bad can last forever. The only real constant is change. Under such factors, I learned to ‘roll with the flow’, adjusting my methods to match market conditions.
Medium Term Trades
I explained earlier, my preferred medium term strategy has long been the covered call. This technique enabled me to control my fiscal affairs. By setting up trades designed specifically to ‘mature’ on a predetermined date 30, 60 or ninety days out into the future, it gave me cash I could count on to help eliminate any slow periods of daily cash flow.
While the premium began to dry up, I discovered writing covered calls more and more challenging. I began to look particularly for those stocks which had been volatile, that could be employed to temporarily take the place of covered calls as my medium term strategy of choice.
Stock Movement
Let’s search for a stock which moves frequently. I have my Chart Navigator system provide this by quickly calculating the average daily range of stock for the past month or so. I will take a look only at the stocks which have at least a dollar and fifty cents or more movement each day.
You have to have some concept of WHICH way they’re most likely to move. We also narrow this search of high volatility stock to merely those stocks which move within a somewhat predictable range, a lot 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, every ‘oscillation takes about a month, moving from the top of the channel towards the bottom.
Bottom line, this stock is moving a lot, but going basically sideways. So now, let’s trade this one medium term. If we can do this regularly, then maybe we can stop stressing regarding the availability of covered call trades!
The Trade
Before you trade a stock, it’s usually an excellent idea to know which way it’s going. This is the challenge! Trade it BOTH up AND down. These are the only two ways it is likely to go (keep in mind the high day-to-day movement).
We know we can’t purchase the stock As well as short the stock (at least not in the same account), so why not buy a put And a call?! In such a case we might consider buying the thirty five dollar put along with the thirty five dollar call. Typically referred to as a ‘long straddle’, the position permits us to profit no matter WHICH way the stock moves.
Now, isn’t it time to adjust your technique to match market conditions? If you’re a little hesitant or perplexed in any way, employ the assistance of an investment professional. They may be quickly located on the internet by doing a search for: reverse mergers , company going public , reverse merger shell . Sooner or later, it’ll grow to be easier for you to ‘go with the flow’ as well.
Related Reading:
Tags: call, channeling stock, Medium, range, slow periods, stock movement, Strategy, term trades, trade, writing covered calls
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14 responses to “Raise Your Profits – Altering Your Current Trading Strategies To Match Market Conditions” 
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Looking forward to reading more. Great post.Really looking forward to read more. Keep writing.
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Jacqueline Gordon December 7th, 2011 at 12:00
“Wow, great article post.Really thank you! Really Great.”
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Andrea Bell December 7th, 2011 at 21:48
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Samuel Marshall January 5th, 2012 at 10:25
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“Appreciate you sharing, great blog.Really looking forward to read more. Fantastic.”
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Thank you for your article post.Much thanks again. Really Cool.
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