If you are looking to diversify your portfolio I suggest you try the Iron Condor set up in the Russell 2000 (RUT). This setup will produce 40% or better annual gains and can be managed with little time and effort.
Below is a screenshot of the Russell 2000 Index options page, on the Thinkorswim platform.
Notice the two orange squares. The green and red boxes inside are my debit spread position on each side creating an Iron Condor. What you want to look at here is the DELTA. Outlined green in the image below.
This trade is about to expire so the delta is worthless @ .01 on both sides.
When you search for this trade you are looking for a DELTA of .08 - .11.
When you find this trade you then analyze it in using the Analyzer tab on the Thinkorswim platform as seen in the image below. This image shows the Call side @ 99.81% chance of expiring worthless (it expires tomorrow). When you analyze a set up you are looking for an 85% chance or better of the option expiring worthless. You do this on both sides, evident in the two images.
CALL side above
PUT side below
I will post my next Iron Condor trade next week. I will highlight everything just like the above images so you will be able to see what to look for at the initial stage of the setup.
I highly recommend you learn in simulation for six months minimum.
Great trading everyone.
If you are getting stopped out all the time then remove your stop and cover the swing.
What do I mean by cover the swing? Just what it implies. You should remove your stop and "ADD" to your position instead of stopping out. This is called building a position.
NO STOPS! Quit paying your broker and start paying yourself.
Just try it in a demo account for six months. You owe it to yourself. Before you give up completely you must try this.
My last warning about using stops...I have watched them ruin traders, make them cry and quit...and that is a fact. Hell, they just about made me cry several times back in the day.
Below is a screenshot of a 20 year Monthly chart of the USD/JPY. I am long 1,000 units or 1 micro lot. One micro lot = 1,000 units = $0.01 US dollar. This is in a LIVE ACCOUNT.
The red bubble represents my target and the green bubble represents my second entry long. Remember, this is a monthly chart. Let that sink in a bit then ask yourself one question from here. Which bubble does the market hit first? The red bubble sitting on top of price or the green bubble way down at the "5 YEAR LOW"?
If you guessed the red bubble you would be right about 96.7% of the time...cha ching!
Getting the message yet? Where is my stop?...let's go further.
The only place the market can go, if it does not go up and hit my target, is straight down to the green bubble...what do we do then?...panic and stop ourselves out?
That is one option that most traders seem to take but I say absolutely NOT...
Hmmm...what if...we try a "Different" approach?
Remove our stop and add to our position at each one of the grey squares (in the above chart).
Now we are covering the entire swing of a 20 year market low with only $1,000 plus margin which is10 lots x40 = $400 for a total of $1,400 to cover the entire swing and hold on to this baby until she turns back around and goes up.
Awesome...let's just see what happens.
I can't show you on this trade because I just entered it last week but if you go here you can see my Account Summary Report from Thinkorswim for 2017 and updated 2018.
I used the same trade model explained above to produce the gains you see in my portfolio.
I hope this helps or inspires some traders to think outside of the box a bit...especially if those pesky stops are killing your bottom line, or even worse your spirit.
Don't let those stops get in the way of your financial goals. I promise you you do not need them.
Fire up that demo account and get to work...I will see you at the end of the year...right here with my Annual Account Summary Report in hand. :)
Great Trading everyone,
When you look at trading from a macro stance, you will quickly see that the power of consistent trading, coupled with compounding returns will have an enormous impact on your Annual Performance Report.
I am excluding taxes from this equation as this is meant to inspire some trader minds. We can discuss real tax cost and cuts (Trading in your IRA Account) in another post.
Let's jump right in.
If you can produce a 50% return in a years time and do this for ten years in a row, then you are in an elite category. Let me explain if I may.
Before I begin I should side note that if you can put up these numbers for ten years then you can probably get a job at any financial firm you chose. But that is another post altogether.
Let's say you start your first year with just $1,000. I know that is a very little amount and that is the point. This will show the enormous power of consistent trading along with a compounding trade account. In 5 years that $1K account with a 50% ROI is now $7K and in ten years it is $57K.
That's right...1K into 57K in just 10 years. Let's break it down.
I hope this inspires you to think longer term when analyzing your trading results. This can help you to think outside the box in terms of different positions and strategies. It does not need to be all about an Hourly chart. Back up a bit from those micro views. Slow down your process.
Please comment below or share if you like.
Great Trading Everyone :)