Making money in the markets isn’t about buying, holding and praying that things work out. The best investors know how to maximize the profits they earn by taking advantage of the factors they can actually control. No one can force the market to rise, but we can identify value and emerging momentum to increase the potential for finding good stocks, ETFs and long-term options.
The trick is that most investors use a one-size-fits-all strategy that just won’t work when stocks are flat or bearish, or when the unexpected happens. At Strategic Trader, we focus on exploiting each unique opportunity with the optimal strategy for that particular situation.
All too often, investors overestimate the potential for bear markets and get too optimistic when stocks hit new highs. We use these inherent weaknesses of investor psychology in our favor to be greedy when stocks are cheap and are about to rise, and we sell option premium to overconfident buyers when the market is too expensive and is not likely to move higher.
Investors often move in herds, and it’s easy to get trampled when the “big money” suddenly shifts direction. We show you how and when to change your investing strategy to match market conditions and maximize your profits by following 5 main principles:
- When other traders are too greedy or divided, we focus on selling option premium and collecting steady income
Did you know that the vast majority of options expire worthless? That doesn’t mean you can’t make money as an option buyer, but it definitely puts the odds of success in favor of option sellers. Why not play the role of the “House” and collect option premium while you wait for a better entry opportunity in a stock or ETF? That is what we do, and it makes otherwise flat markets some of the best times to profit.
For an option buyer, flat markets like those we observed in 2011, 2015 and even 2018 can be annoying, but option sellers understand that they can earn profits from time-value erosion while other traders struggle. In addition to collecting premium, selling puts allows us to buy stocks at cheaper prices, and we also sell options in order to hedge our portfolio and reduce the risk of a correction when the market is at or near new highs
- Our focus is always on the trend, not just prices
The fundamental strength of a company is rarely found in the latest earnings report or the latest story online. When we started implementing our investment strategy, we needed a tool that could help us evaluate the hidden trends in the financial statements. However, nothing like that existed, so we built it.
By focusing on the quality of a company’s earnings, cash flow, collections and sales trends, we can avoid paying too much for the latest “fad stock” and find the undervalued gems that are beginning (or continuing) to breakout.
- We don’t avoid bear markets –we look forward to them
True bear markets are rare, but they can be traumatic for unprepared investors. Our investment approach includes evaluating the risks of shrinking earnings, rising interest rates, flat yield curves, disruptions in international trade and volatility in currency markets to take advantage of market drops when they happen. We use our proprietary screening process to locate the worst stocks that we can find to short — or trade options against — so we can build our capital and be prepared for the next rally.
You wouldn’t use a screwdriver to tighten a bolt, so why are you still using the same old trading techniques when the market is changing every day? Our advice is not to get married to any one trading strategy. Instead, use the right tool for the right market. If trading a leveraged or inverse ETF to profit from a bad market is the right move, that’s what we’ll do. You can even follow or mirror most of our trading strategies in an IRA or retirement account!
- We repair bad trades when they happen
No matter how much we prepare to put the odds in our favor, we know there is no way to fully eliminate risk in investing. An unexpected negative analyst report, a surprising news story about a troubled peer stock or a bearish economic shock can hurt even the best stocks.
But when this happens, we know the strategies that can improve — and sometimes completely repair — a trade that’s gone bad. If the fundamentals and technicals still look good, we use the factors we can control, like selling option premium, to fight our way back to break-even and profitability. You wouldn’t throw away a new Mercedes if it got a flat tire. Knowing how to fix the blowout in a trade is just as important.
In fact, sometimes a disappointing trade can help to identify a stock that can be traded in the other direction. Because we maintain a longer-term focus at Strategic Trader, we can be patient and proactive in our trade management.
- Secret formulas don’t exist, but education is a must
We don’t have any black-box systems or voodoo formulas hiding behind the scenes at Strategic Trader. The best investors work together to maximize opportunities in the market. Each week, we show you exactly how we found the stocks we are recommending, how we determined the strategy that should be used and why we timed the trades the way we did. When we are wrong, we show you what happened and what we can do to fix the strategy.
Individual investors have a lot of advantages in the financial markets. Perhaps the most important is your agility to move in and out of trades quickly. You are nimble and can take advantage of opportunities that the big traders just can’t without moving the market. We can show you how to utilize this edge: avoiding the worst mistakes and pinpointing the right trades.
Whether you are a new or experienced trader, we have great educational material available for you. As a member of Strategic Trader, you’ll have exclusive access to our instructional videos, technical analysis courses, special reports, live weekly webinars and much, much more. You can even ask questions during our webinars and get answers directly from John and Wade about any of our current positions.