Well, I decided to cash in the rest of my stocks, gain or loss (mostly losses) cuz the market is taking another plunge today. I pretty much lost all profits I made this year in the last 2 weeks. :'( I'm right back to where I was at Christmas time.
I don't think I'm gonna trade stocks anymore. I'm gonna focus mainly on options. I just started paper-trading them, and I'm up over 150% on the RYL June $55 put option. I'm gonna take Market Essentials with BetterTrades in a few weeks, and they are awesome with teaching option trading. Some of their students make millions per year.
Good luck to everyone on this board!
Leaira
best of luck to you. hope to see you back in the future.
I am not out of the market. However I did sell all my stocks with large gains heading into the May thru summer bad stock market period. I will now take the present stock market decline to compare earnings reports with a eye on buying the big revenue growers with good earning around the 50dma.
I believe while cash is king for now one should also prepare for the next move up by buying the best opportunities during this decline.
Best of luck to you Leira. I'm sure you'll recover in no time.
About BetterTrades.com. Have you ever taken any of the classes/workshop offered?
I was just looking at their site and they have a bunch of free online classes... I'd like to try one to see what it's worth.
Good luck Leaira. Don't forget you won the contest. You had success. I don't think many people are making money in this market currently. I wish you well and hope you come back to us.
Livana,
Yes, I have taken several of the online free classes. The best ones are those taught by Markay Latimer. Her style is "trend-trading". She buys options (not stocks themselves, but options) when the chart suggests that the stock is beginning a new trend. Next to Markay, I would recommend Darlene Nelson who trades LEAPS options. You can stay in those longer than short-term ones and not lose much time value.
Good luck!
Leaira
hi,
wow! i am interested to know why you are not going to trade stocks anymore?
you were doing so well and would do so again . what about short trading or staying in cash until the market goes long again? why options? just curious.
thanks for your input here at 3sof,
maxi
Because, as they teach you in Better Trades (and I've found out for myself), you can make at least the same profit (sometimes a lot more) with options with a lot less money at risk than if you were trading the stocks themselves.
Example (right from the free online classes):
Let's buy 1000 shares of Boeing (BA) in early February. Price was $71. We put $71,000 at risk. Most people don't have this much capital to trade with, and even if they did, you never want to put all your money onto one stock. No more than 8%. Hold the stock until early May at $88. We've made a profit of 17 points, or $17,000 on the stock. That's a 24% return.
Now, instead, let's buy 10 contracts of Boeing. Since a contract is 100 shares, we would be controlling the same 1000 shares of stock. Buying in-the-money $70 calls may have cost around $2.50 per share (or $250 per contract) for one with a long expiration date. We've put $2500 at risk instead of $71,000. In May, when the stock was at $88, the contracts would have been worth about $18.00 per share, or $1800 per contract. The intrinsic value is the stock price minus the strike price. Now we have a profit of $15,500 (a little less than 17,000), but don't forget we only started with $2500. That's a 620% return!
Would you rather make 620% return, or just 24%?
Leaira
Good luck Leaira, I trade options and for sure the gain potential is very good, but as with everything still with risk. Your Boeing example comes from the 'perfect trade' type of example, often times options can move strangely against a stock price movement or insanely ahead of it there is a lot of behind the scenes mathmatics that complicate the deal (the Greeks etc). Also choosing the right option (in the money, near the money, out the money, which strike price, which expiration date etc) also dramatically affects potential return.
Also if you buy $71K of Boeing you are not risking $71K you will be risking whatever your stop loss is + slippage and commissions (and that can be as little or as much as you want it to be).
Anyways good luck and I will look at Better Trades site as haven't come across it before.
Sorry to hear you've decided to cash out of all your stocks, Leaira.
I don't yet do much trading but I still get 3sof emails once in a while and check up on the message boards now and then. When you won the stock picking contest your interview really encouraged and motivated me to spend more time studying the market and technical analysis. So thank you. :)
Best of luck with options. Hopefully after a successful stint you'll be back trading stocks too.
Aussie - you should have mentioned our mutual friend "Serven", an options-trading guru and a legend in his own mind, who started an options trading website/service just over a year ago. By August his portfolio was down 80%. By September the site was gone. By October the domain name was available for purchase. Options trading is a tough business. The premiums and time decay are tough opponents to beat. I've traded options from time to time, but I much prefer stocks.
Quote from: Lucas Scott on May 25, 2006, 03:23:56 AM
Aussie - you should have mentioned our mutual friend "Serven", an options-trading guru and a legend in his own mind, who started an options trading website/service just over a year ago. By August his portfolio was down 80%. By September the site was gone. By October the domain name was available for purchase. Options trading is a tough business. The premiums and time decay are tough opponents to beat. I've traded options from time to time, but I much prefer stocks.
Far out, I had sort of erased that from my mind. Thanks for the reminder, it was an amazing display of someone ('legend in his own mind') imploding before our very eyes. Yes options played incorrectly = bigger propensity for ruin than equities.
That's interesting.. Sounds like Serven should take whatever money he has left and enroll in the Better Trades trading school. If you follow the instructors carefully, do exactly what they tell you, and don't break their rules, then you won't end up like that. The instructors are consistently profitable with options, and they make much more money than they ever could with stocks, as far as how much money they are willing to put into any trade. On www.bettertrades.tv, you can find a sales seminar (like they put on infomercials) and that's the best place to enroll.
Since I cashed out of all my stocks Monday, the last 2 trading days have been the first 2 in two weeks that I haven't lost any money!
Aussie: On the Boeing example, if you buy the stock, you are still risking $71k cuz the company could report bad news overnight and lose 40-50% the next day. A stop won't help you there. In that case, a protective put would. Puts act as insurance for stocks that you own.
Leaira
Quote from: Leaira on May 25, 2006, 07:00:22 AM
Aussie: On the Boeing example, if you buy the stock, you are still risking $71k cuz the company could report bad news overnight and lose 40-50% the next day. A stop won't help you there. In that case, a protective put would. Puts act as insurance for stocks that you own.
Leaira
Yep, that is a married PUT and I have used them before and no doubt will again.
I must say that I am very leery ;) about all this!
Have been for a while.
When something is to good to be true it generally is.
Good Luck!
uc.
I was skeptical at first. But I have been taking the free online classes and talking in the Better Trades chat room (also free) to many other students, and most of them are making good money. I'm impressed by the people I talk to that started this past winter after not knowing anything at all about the stock market, and they doubled or tripled their money since then.
Leaira
Hi Leira,
I just want to wish you all the best with Option trading. Thanks for pointing out the site. I will check out option trading as you recommended.
BTW, can you tell me your experience level in trading stocks? I am a newbie in stock so jumping into option trading without knowing anything about it is quite a change. What is your advise?
Thanks in advance,
R.
check out profitstrategies.com for option articles, strategies, etc., which might be based on www.optionetics.com since Tom Gentile started there I think. If you sign up for newsletter which is free at profistrategies, then they'll send you free passes to their AIM workshop.(well at least they did to me.) I will be checking it out next week in Irvine, CA.
Quote from: catrader on May 25, 2006, 02:40:40 PM
check out profitstrategies.com for option articles, strategies, etc., which might be based on www.optionetics.com since Tom Gentile started there I think. If you sign up for newsletter which is free at profistrategies, then they'll send you free passes to their AIM workshop.(well at least they did to me.) I will be checking it out next week in Irvine, CA.
Thx for the info Cat
Quote from: rurouni on May 25, 2006, 01:34:14 PM
BTW, can you tell me your experience level in trading stocks? I am a newbie in stock so jumping into option trading without knowing anything about it is quite a change. What is your advise?
R.
I've only been trading for about a year now. I have very limited experience. I have a strategy that works OK in a bull market, but terrible in a bear market. If you're new to trading, you must paper-trade before using real money. That will let you see where you went wrong and correct your mistakes for next time without putting any money at risk. I'm definitely not the right person to ask for advice about trading! But I'll try my best to answer.
Good luck!
Leaira
Quote from: Leaira on May 25, 2006, 05:15:44 PM
If you're new to trading, you must paper-trade before using real money. That will let you see where you went wrong and correct your mistakes for next time without putting any money at risk.
Leaira
Leaira,
First up, congratulations to you on winning the recent stock contest edition 4. I also wish you the best in your "options" endeavors. But don't forget to come back when the market gives some confirmed bullish signals. The Fed does have a lot to do with it so stay tuned to what they r saying.
I beg to differ on the "paper trading" advice you give (and for that matter, that most folsk give to newbies). In strictly my opinion, all paper trading does is to get your feet wet into how to place buy and sell orders, and how to understand the basics of "placing a trade"...but it compeltely leaves you unprepared and surprised at what actually you are faced with when playing with real money..."EMOTION".
To be a successful trader, one has gotta keep his/her emotions in check and paper trading only leaves you thinking you are ready for the real thing, when you are not.
Where paper trading might work better is for investors that buy and hold for the longer term...all they need to do for the most part is place a trade, based on fundamental analysis and wait for the benjamins to fly around. they don;t go through the emotional struggles that a swing or day trader goes through.
The solution then?? start of with very little real money and get your feet wet in the real world, in the real markets....through real trading, not paper-based. in that way, you will understand much better what the "emotion factor" means, and at the same time, you dont risk losing a lotta money. but of course, emotion also has a direct relation to how much you have at stake...trading with $500.00 is not the same as having $10,000.00 at stake, as each of those amounts have a different emotional effect on your mind even when the % loss (or profit) is the same.
I say that because of personal experience. Take it for it's worth to you. Good luck! ;)
Quote from: Leaira on May 25, 2006, 05:15:44 PM
Quote from: rurouni on May 25, 2006, 01:34:14 PM
BTW, can you tell me your experience level in trading stocks? I am a newbie in stock so jumping into option trading without knowing anything about it is quite a change. What is your advise?
R.
I've only been trading for about a year now. I have very limited experience. I have a strategy that works OK in a bull market, but terrible in a bear market. If you're new to trading, you must paper-trade before using real money. That will let you see where you went wrong and correct your mistakes for next time without putting any money at risk. I'm definitely not the right person to ask for advice about trading! But I'll try my best to answer.
Good luck!
Leaira
Thanks for the advise Leaira but I don't believe in paper trading. At least not for me because I don't have the discipline for it. I tend to get careless when I paper trade and also paper trading does not account for the emotional factor of trading like VIC mentioned. I do get emotional when I am trading (e.g. bailing out too soon) >:D
Quote from: vic666 on May 25, 2006, 10:26:56 PM
The solution then?? start of with very little real money and get your feet wet in the real world, in the real markets....through real trading, not paper-based. in that way, you will understand much better what the "emotion factor" means, and at the same time, you dont risk losing a lotta money. but of course, emotion also has a direct relation to how much you have at stake...trading with $500.00 is not the same as having $10,000.00 at stake, as each of those amounts have a different emotional effect on your mind even when the % loss (or profit) is the same.
May I also add that another way to keep your emotion in check is by strictly adhering to your stop loss.
I made some trade last year and almost every trade that I made was a loss. Of course, adhering or even putting a stop loss wasn't even part of my investment plan.
I am still reading and educating myself. I think I will test the water again soon. >:D
I strongly believe in paper trading. Any good trading mentor or instructor will tell you not to even think of funding any of your trades until you are consistently profitable on paper and you have a good trading plan. It is a good way to test your trading strategies without putting any money at risk. In fact, this is what a lot of high school seniors are doing these days in their economics classes. The teacher gives them assignments where they have to paper trade stocks for a few months and see who does the best. That's how I got started in the market.
Leaira
Leira: Please be careful with options,,I have been with Better Trades since they started. they are a great company but like all they make things look too easy. I have made more money on stocks, ie covered calls then options. I still play them but with caution. About your losses on stocks, did you not get out when they were down 7-8%? That is the worst mistake we all make when starting..I know you have the capability..just be careful
You must be either following Ryan Litchfield or Bob Eldridge. They trade stocks more than options. Bob only uses options to repair a stock trade that went against him. But Markay Latimer and Darlene Nelson trade exclusively options, with Darlene focusing on LEAPS. Most students that make thousands on single trades do so with options. It doesn't seem possible with stocks. Hundreds, yes.. but not thousands. At least not with the strategies taught, unless you put a lot of money into one trade, which they also discourage. I personally prefer Markay's trend-trading strategies that she uses on options. I may also try LEAPS for a little longer-term trades too.
Leaira
Quote from: usedcasting on May 25, 2006, 08:28:50 AM
I must say that I am very leery ;) about all this!
Have been for a while.
When something is to good to be true it generally is.
Good Luck!
uc.
Wow Leaira, you really seem to have done some homework on Bettertrades, great stuff.
Just thought I would reiterate, be careful.
uc. :)
I would be careful with this site. Seems like all of the other trading software sites. http://www.ripoffreport.com/reports/ripoff176565.htm
I found that report too. It seem likes they are making a lot of money just off of their software. Don't get too hooked by a sales pitch. Just because they tell you it will work, it doesn't always.