Buy This One Stock in 2021

Jeff Bishop: How To Fix Your Most Common Trading Mistake

Jeff Bishop is going to focus on what those Most Common Trading Mistake are and how to button them up.

It’s no secret, more people have picked up day trading over the last few months.

New accounts at brokers from TD Ameritrade and Robinhood have exploded.

Unfortunately, most of them don’t have a clue about what they’re doing.

I’ve heard from numerous traders that lost their shirts trading Hertz (HTZ) after the company declared bankruptcy.

HTZ Hourly Chart

Yes, the chart looks lucrative…but it’s a trap set up to catch retail money.

I don’t want anyone, paying member or not, to fall prey to these shenanigans.

You see, there are certain steps you can take that put in you a position to win…

And others which will almost certainly cause you to lose.

Today, we’re going to focus on what those mistakes are…

And how to button them up.

Chasing momentum for the sake of it

Hertz (HTZ) is a great example of a trade that no one had any business in. The company declared bankruptcy, which should have been the end of it.

Yet, research shows that Robinhood traders gobbled up these shares, hoping to catch part of the pop that occurred afterward.

A lot of trading can be done without knowing much about the company. Ignoring basic fundamentals, even with a runaway market, still leads to disastrous outcomes.

When companies go bankrupt, rarely do shareholders get anything. That means the real value to Hertz shares should be $0. $6 is what they were trading before investors got real scared they would go bankrupt.

Guess how these traders got sucked in?

Professional traders would buy up the stock premarket, putting it on watchlists for retail to see. When the market opened, retail investors would hop on board, hoping to catch a piece of the action.

Happening over and over, pros worked like cat burglars in the night, while retail was left holding the bag.

Anyone can avoid this with some basic research.

Here are some red flags for trading any stock that should make you think twice about trading it:

  • They’re under investigation for fraud or other malfeasance
  • The company is looking at or likely to declare bankruptcy
  • Stocks that are trading below $1
  • Note: That doesn’t mean you can’t or shouldn’t trade penny stocks. But it is NOT the same thing as trading large caps.
  • Company’s primary headquarters is in a foreign country with lax accounting standards
  • There are zero revenues for the company yet (outside of biotechs)

None of these are necessarily disqualifiers for trading the stock. But, you NEED to understand what you’re getting into before you trade the stock.

Poor understanding of options

When I first started trading options, I made all the mistakes out there. Plowing headfirst, I didn’t appreciate the intricacies of assignment and really selling options.

So, let me start by offering some material to help you get the basics out of the way.

Here is a link to a pretty comprehensive Options Guide for Beginners.

If you don’t understand all the concepts in this video – you should!

Here is a link for a great video I put together that goes over what you need to know before you trade options.

If you walk away from this article with one concept it should be this – selling options contains more risk than buying options.

Buying options limits you to losing the total amount you invested. As the buyer, you hold the right to exercise the option.

Selling options gives someone else that right.

If you sell a put, they have the right to put shares to you (IE force you to buy them). The value of the shares you could receive could far exceed the cost of the options, meaning you could lose more than you invested.

The same thing happens with calls. When you sell a call, if you don’t already own the shares, you have to borrow those shares (sell short) to give them to the option holder.

In both cases, you could end up in positions that could cost you far more than you initially laid out, even if you own offsetting long options, such as in spreads.

A good example is Nikola (NKLA). Available shares to borrow to sell short became so scarce, that call options were being executed far out of the money. With borrowing costs as high as $1.00 per share per day, traders that got exercised could end up owing $100 per day per contract!

Keep learning no matter what

I don’t care if you’ve been trading for 10 minutes or 10 years. Every trader needs to brush up on their core skills and knowledge.

A great place to start is with my Total Alpha Bootcamp.

Here, you’ll get access to a handful of my training videos that cover everything from my money-pattern to maximizing profits.

There’s no better time than now to get on top of your game.

Click here to sign up for my Total Alpha Bootcamp.

Source: | Original Link

Jeff Bishop Total Alpha Yielded $250k In Profits Last Week [Details Inside]

As the major index ETFs bumped into their 200-period simple moving average on the hourly chart, Jeff Bishop Total Alpha closed out his bearish trades and locked in his profits. By the end of the week, Jeff finished up a whopping $207,154.71!

Before I share with you my trading plan for next week, I want to take a quick moment to stress to you how important it is to have a gameplan.

You see, early in the week, I was on the ropes.

Before the market’s selloff late Tuesday, bulls remained in full control.

And by lunchtime Tuesday… I was down $60,000 on the year!

It’s easy to get rattled when things aren’t going your way…

But I had full confidence in my trading plan.

I could have thrown in the towel…

Given up on my bearish thesis.

Instead, I stuck to my guns…

By the close of business Tuesday… I was up $75,000 ytd.

As the major index ETFs bumped into their 200-period simple moving average on the hourly chart, I closed out my bearish trades and locked in my profits.

By the end of the week, I finished up a whopping $207,154.71!

Talk about a Masterclass in trading!

Moving on.

As I survey the landscape for this upcoming week, I see tons of opportunities.

So, you can understand why I’m excited.

While the rocky market scared a lot of bulls last week, I think we’ve got room to run, and here’s why.

Gravitational line support

In case you hadn’t read my previous post, I look at the 200-period simple moving average as a place of support and resistance in my trading. I even know of some institutional traders that use this technical indicator.

As traders, getting one signal is like seeing a dark sky. It’s only one sign it might rain. But when you get the wind howling, and thunder and lightning, odds are pretty good that it will at least drizzle.

When I saw the SPY ETF which tracks the S&P 500 hit the gravitational line, I raised an eyebrow.

SPY Hourly Chart

But when I saw it on the DIA Dow Jones ETF and the IWM Russell 2000 ETF, I covered most of my short positions.

DIA Hourly Chart

IWM Hourly Chart

With each of these charts, the lows corresponded with an oversold signal from the Relative Strength Index (RSI) at the top of the charts.

You’re probably wondering, did I catch all of the move?

Nope, and nor did I expect to. Instead, I relied on scaling out of my trades. While I didn’t capture every tick, I got enough to make a tidy profit.

Turning to this week’s market action, notice how most of the charts recaptured (closed back above) the 30-period simple moving average (red line). That is a short-term signal of strength.

When I combine that with the rapid ascent off the bottom, my analysis reads the market as bullish. None of the major indexes broke down below key support levels. Until they do, the market remains bullish.

What they did accomplish is scaring the bulls a little bit. That takes some of the sentiment out of stocks and makes it easier to push them higher.

Now, coming into this week I still have a slightly bearish bias. However, here’s how I have my Total Alpha portfolio setup:

  • My short-term trades are bullish. I’m playing these through long call options as well as put credit spreads.
  • However, long-term trades remain bearish. These are mainly call credit spreads.

Day to day, I’m taking light positions. However, once we hit extremes in the markets – levels we haven’t seen in weeks – I plan to take on larger trades. However, I always leave room for scaling into positions when I can.

Oil and gold – two bullish sectors

A few weeks ago oil hit negative $41 a barrel. Today, it’s trading just shy of $30 a barrel. Above $20 a barrel, most drillers can at least break even.

Looking at the chart itself, oil has all the hallmarks of a market that wants to continue running.

DBO Hourly Chart

Note: Oil ETPs have been knocked out of sorts because of negative crude oil. While the best charts use oil futures, I’ve used the DBO as a proxy since it shows approximately the same information for the timeframe I’m looking at.

Again, we see the importance of the gravitational line. Oil found resistance for a couple of weeks. After making a consolidation pattern, it appears to be breaking out above those levels. That could give it the energy (pun intended) to recapture another 30% or more from current prices.

On the other end of risk is the gold safety play. Despite stocks rallying hard, gold continues to make bullish move after bullish move.

GLD Hourly Chart

Again, we see the gravitational line acting as support. This time, the bullish consolidation pattern lasted for over a month. Now, it appears gold wants to make its next leg higher.

While it can make explosive moves, I found it best to use put credit spreads on this trade and collect premium along the way.

Taking on individual stocks

Since the bottom formed in March, we’ve seen stocks separate into the haves and have nots. Companies like Netflix, Amazon, and Shopify continue to make all-time highs, while Delta Airlines, Boeing, and Avis Car Rental are a fraction of the market cap they once were.

So, how do I know which stocks are which and how to play them?

With the very same techniques, I teach in my Options Masterclass. This course is designed to take you from key option concepts to my newly revealed stock lifecycle analysis.

These are the same concepts and skills I use to trade this very market.

Click here to learn more about my Options Masterclass.

Source: | Original Link