In my webinars (and elsewhere), many of you have asked why I’m not trading this market, considering I like to profit when stocks are going down.
First of all, I’ve been in Israel for three weeks and just got home yesterday. I wanted to enjoy my time with my family and disconnect from the markets for a short while.
For some, taking three weeks off of work is not an option…
But it’s just one of the many perks of being a successful trader.
Check out my view for the past few weeks:
Market environment right now is not my cup of tea! Glad to be on sidelines and enjoying views like this while waiting for the ideal setups to strike!! pic.twitter.com/n8Djs3bDca
— Mark Croock (@thehonestcroock) May 6, 2022
If you’re like me, who likes to make money when stocks are crashing, you might be wondering if it’s a great time to be a put trader.
It can be…
But for my specific strategy, I’m still not seeing the plays I’m looking for in this market.
For many of the stocks I watch, the best of the bearish price action has already come and gone. If you’re buying puts here — you’re late to the party.
This is how I feel looking at every single potential short setup at the moment…
There aren’t that many plays for my strategy right now because most of the volatile momentum stocks have already been completely decimated.
I try to buy puts on charts peaking to the upside, rather than chase the downside on already beaten-down stocks, four months into a historic bear market.
Want to be alerted to hot trade ideas before anywhere else?
Check out the alert for DWAC on October 21st:
This is a tool you’ll want in your trading toolbox.
And there just aren’t very many stocks hitting new highs or blasting into blow-off tops in this environment.
Bottom line: If I start buying puts down here, I risk getting my face ripped off in a sharp reversal to the upside.
So if you’ve been wondering why I haven’t been sending many trading alerts, here’s why…
At the end of last year, I made a promise to myself to trade less in 2022.
When looking back over some of my worst trades, trying to find areas to improve, I noticed that several of the plays were examples of overtrading.
The setups weren’t ideal, I mistimed my entries, and I even allowed FOMO to creep into my trading mindset a few times.
But, let’s be honest. Sometimes, it’s extremely difficult to find solid trade ideas.
During certain periods (like this one), I’ll scour the market for days on end — with no solid setups to show for it.
It’s during these times when I often find myself tempted to trade patterns I should leave alone.
But not this year, not through this rollercoaster price action…
I’m sticking to my guns and not trading ANY setups that don’t check my boxes.
And I suggest you do the same.
Because if you aren’t careful, you could find yourself chasing a play just because other traders are talking about it.
For short-biased options traders, if a stock has four red days in a row (without a bounce) and then you buy puts, that’s chasing.
To avoid this costly error, I’m committing to trading this bear market differently.
I’m constantly reminding myself that overtrading is a mistake and that I must be patient.
Trade less = trade better.
Waiting for Ideal Setups
Another reason I haven’t been trading much is that I’m waiting patiently for ideal setups.
I may sound like a broken record with this particular piece of advice, but it’s for a good reason…
If I had a penny for every time a little bit of patience could have turned a trade around for me, I’d be even richer than I already am.
As a newbie trader with no discipline, I’d often enter trades without an excellent setup. And I paid for it with brutal losses.
I’m WAY more disciplined these days. But I’m a human being, so I still occasionally make mistakes.
EXAMPLE: When I allowed my emotions to cloud my better judgment in a Tesla Inc. (NASDAQ: TSLA) trade last month…
I often find that I could have avoided these errors had I simply been more patient with my timing.
EXAMPLE: When I mistimed my entry into AMC Entertainment Holdings Inc. (NYSE: AMC) puts, causing me to lose $60,000 when better timing could’ve made me a small fortune…
Repeat after me — we won’t let FOMO (or lack of discipline) get the best of us in the bear market.
Instead, we’ll sit on the sidelines, patiently waiting for the best plays like Zen masters.
It’s this sort of discipline that separates the world-class traders — like Tim Sykes — from the 90% who fail.
If you wanna learn to trade like the best, from the best, there’s no better place to start than Sykes’ Trading Challenge.
Plus, Sykes is the one who taught me to only trade the best setups…
Patience is a virtue for any trader but it’s also a muscle you must exercise. That’s what I’m doing in this market.
Practice waiting for ideal setups and perfect chart patterns.
It’s not easy, but you’ll be a better trader if you do.