Happy Friday, Evolvers!
The markets are closing out an extremely choppy week on a positive note with the S&P 500 ETF Trust (NYSEARCA: SPY) up 1.9% at the time of writing.
The head-spinning volatility showed no signs of slowing down yet as a big week for corporate earnings delivered questionable results…
Snapchat Inc. (NASDAQ: SNAP) has plummeted more than 30% since reporting dismal Q3 earnings yesterday after the bell, while Tesla Inc. (NASDAQ: TSLA) dropped 8% following its earnings print on Wednesday.
All of this rollercoaster price action makes me feel like we’re nearing an important inflection point in the major indexes. As the market attempts to bottom, the risk of taking the lows out again looms large in the background.
At these levels, we could see a face-ripping reversal to the upside or a demoralizing crash to new lows.
Bottom line: Traders should be prepared for a big move in either direction.
Speaking of that … If you’re trying to find a trading strategy that works consistently in an up-and-down market, my buddy Tim Bohen has a gift for you…
Bohen is revealing his secret Crash-Proof Moonshots strategy next Wednesday, October 26 at 8 p.m. Eastern. Don’t miss this special one-time event … sign up FOR FREE by clicking right here!
But now, it’s time for our Friday Q&A. Keep reading to see the answers to your questions…
“When did you start trading? How long did it take before you felt truly confident as a trader?”
I started trading twelve years ago, back in 2010.
I’ve always had an interest in money and finance, so when it came time to choose a career path, I became a general accountant…
That said, I hated my job. I constantly daydreamed about getting out of my cubicle and achieving personal and financial freedom.
BOHEN: “5 Red-Day Moonshots For The Next Meltdown”
This has nothing to do with shorting crashing stocks…
So I know what I’m saying sounds like it shouldn’t be possible…
But these are hidden moves that have soared as high as 102%, 172%, 217%.… on days most other stocks sell off.
It’s all going down during my SHOCKING Red-Day Moonshots event with Tim Sykes.
But I didn’t know how to make that happen until I discovered a Tim Sykes video online. It blew my mind.
Soon enough, I was enrolled in Sykes’ Pennystocking Silver service, and then later his Trading Challenge.
Even then, I had a long way to go. I spent hours transcribing Sykes’ webinars, learning the art of trading from a seasoned veteran.
From there, I was able to start developing a game plan that worked for my specific personality…
When reflecting on my career, I think developing a repeatable strategy (that I could use over and over again) was the most important step towards true confidence.
It’s been a while, but I’d say it was around the $500,000 profit level that I started to feel very confident as a trader.
I didn’t just use my strategy on a handful of trades and suddenly decide I was the next Warren Buffett…
I applied my game plan to hundreds of different setups and won on the majority of them.
After proving consistency, confidence should come naturally.
But you’ve gotta take things one step at a time. Trade small in the beginning, study hard, and work on finding a strategy that you can replicate time and time again.
“As a short-biased trader, do you find it easier to trade in such a bearish environment?”
I think a common misconception about my strategy is that it performs better during market downturns, which I don’t find to be entirely true…
Sure, when stocks are crashing there are some serious put-buying opportunities out there.
But my strategy isn’t about blindly shorting random stocks.
I look for very specific setups … Usually, overextended momentum stocks.
When charts get overheated enough, it’s pretty much a guarantee that the stock will crater 30-50% in the near term.
There are very few trade opportunities with such a high probability of success, which is why I’m so discerning with my trades.
Notice that I haven’t been buying puts on beaten-down tech stocks. The risk-reward relationship is terrible in those setups.
So, to answer your question … I think my put-buying strategy is better suited to bull markets, as strange as that may sound…
You see, right now, there aren’t any crazy momentum stocks to short. A lot of the fluff has been taken out of the market already.
That’s why I’ve been focusing on the major indexes — as well as certain charts I’m very familiar with — until the market reaches a more stable resting place.
Have a great weekend, Evolvers!
Take the weekend to study hard and build your watchlist for next week.
And If you haven’t yet, don’t forget to sign up for Tim Bohen’s Crash-Proof Moonshots event next Wednesday, October 26 at 8 p.m. Eastern by clicking right here!