Free Online Trading Classroom Admission
Bob invites you to attend one of his Free Online Live Trading Classes. If you are serious about your success in the markets, you won't want to miss these exciting free events. Check out the description of just one of Bob's latest webshops:
"Short Term Trading Mini - Lab"
Description: Come join Bob and other traders for a 45-60 minute ACTUAL trading session. Watch Bob as he guides you through how to trade for short term profits on a daily basis! This is all about trading; REAL trading, not just learning the academics, so have your trading tools ready to try your hand. Since this is most likely new to you, We'd strongly recommend that you PAPER trade what Bob does in the lab until you understand the trades completely! If you're an experienced trader and know what you're doing, then prepare to have a great time with Bob and the other traders! Since this involves practice trading under actual market conditions, we'd recommend that you come prepared with the following tools of your choosing: 1. A Direct Access Trading Platform 2. A comprehensive stock charting program 3. A hand-held calculator 4. Paper, and 5. Pencil Show up with these tools and prepare to make trading FUN as well as profitable! See you in the lab!!
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Staying Abreast Of Market Conditions
By Bob Eldridge
November 3, 2005
During the last 15 years of trading daily in the market, I've noticed only one constant ... change! My beginning days as a trader were characterized by my never-ending search for that perfect strategy; the one way of trading which worked every time, on every stock and under every conceivable set of circumstances. Guess what? That 'magic strategy' simply doesn't exist ... never has and never will! It's an illusion we form when watching others trade or teach about trading. We are taking a 'snapshot' of a trader's (or teacher's) daily activity and artificially expanding it to fill an entire trading career! That approach is neither smart nor accurate. Well, if there's no 'magic' strategy that works all the time, how does a professional trader cope with changes in the broader markets and the variances in applying the same strategy to different stocks? How can we as new, aspiring traders ensure that the majority of our trades will work for us?
Patience and Faith
This may sound a bit ... uh... corny, but having faith in a tried and tested system of trading and then having the patience to allow that system to work for you is probably the best place to start. The stock market has been around about as long as this country has had an organized economic system in place ... and that's a very long time! During all those years, folks like us have been buying low and selling high over and over again; sometimes on a daily basis, sometimes over longer periods of time. With that as a given, have faith that what has worked in the past will most likely work in the future, in spite of us if not because of us! The fact that YOU are at the helm of the trade neither increases nor decreases the likelihood that any given trade will work. That means that if you expect your trades to work, then emulate what other traders before you have done, learning from both their successes as well as their mistakes. As you progress in your trading career, learn from your own mistakes as well. Experience what works, learn to understand WHY it works, then repeat it over and over.
I learned by watching and doing that the 'system' had been working for others for a long time, so it was BOUND to work for me ... and it DID! That is to say, it did for a while. During that time however, I learned that while I 'knew' each covered call would work out profitably for me, I still had to have the patience to allow it to work! Nothing works immediately ... all good, sound strategies can take some time and we have to be willing to allow the trade that time it requires to 'do its job'.
To Know The Future, Look To The Past
This is a truism in just about all arenas of life. The stock market is no different. It will change ... it's up to us to first recognize those changes, quantify them, qualify them and then understand how those changes will or can impact our trading strategies. When I first began trading covered calls, I had NO idea that the market would not be going up forever! Imagine the shock to my confidence when I first began to notice in the late 1990's that it was getting harder and harder to find stocks on which to write profitable covered calls! Stocks had slowed in their rise, so the $9 stock and $10 call 'deals' became difficult to find. And when I did manage to find one, the stock invariably went DOWN when I was tied up in the deal for a month or so.
The rising stock market had hit a plateau ... just as it had done so very many times in the past! I had naively assumed that the markets would continue upward indefinitely and that my 'magic' strategy would last forever! Had I taken the time to investigate the market's history a bit more, I would have discovered not fewer than 12-15 times that the market would have spit covered calls back in my face ... check these month/year periods out for yourself; 10/29, 6/30, 9/37, 1/39, 5/46, 1/53, 7/56, 9/59, 4/62, 4/66, 1/69, 2/73, 8/76, 5/81and 9/87 to name only 15. Stopping the counting in 1987, there are almost 20 more years of similar up and down behavior. And moving beyond today's date, there will surely be many more!!
So the net effect on my covered call trading was twofold; first, the trades became hard to find and second, when I did find them, they didn't work as well as they had in the past. Take those two items as a SIGN of when to consider changing strategies. Apply this to YOUR idea of the 'perfect' strategy, whatever that might be. Evaluate the effects of broader market undulations on your strategy NOW, before it happens so you can be prepared in advance.
Prepare For The Future ... Now!
The stock market is a wonderful place to be, full of opportunity for profit and fun trades to do, but there are more things to consider than just that. This is ESPECIALLY true if you want to make a living doing this. As I've already pointed out, the market does not work the way most folks envision ... never has ... never will. The academics you've had may have covered the basics, but the train stops there! In the REAL world of trading, stock prices rise and fall, sometimes in harmony with what you've been taught and other times violating every principle known to man! You'll probably not see it coming but you have to be prepared to do something about it. Option premium will ebb and flow, rarely in perfect harmony with the underlying stock price! You have to prepare yourself to make good business decisions sometimes in spite of the market's activities. All of this demands that you and I as traders be able to do something which is really quite simple to do in order to prepare for the changes we know will come; always know NOW which strategies are currently working! Elegant in it's simplicity, this allows us to know which strategy to move to if and when our current 'favorite' stops working for us!. Take a moment to scan the Real Time Markets trading platform I use daily in the Short Term Trading Lab:
Note the ticker symbols in the far left column. They are what we are trading in the lab at any given time. Move to the Notes column to the right. Note that all the trades are Get In - Get Out (GIGO) until you come to ELX. That one is a 'tombstone Up'. Our current daily strategy is Get In - Get Out and it is working quite nicely for us. But to prepare for when a change in the market might make a strategy change necessary, we are 'paper trading' some of our other favorite short term strategies, tombstones in this case. You might notice that we 'entered' that trade, going long at $19.21 and were stopped out at $18.80. So that trade didn't work. Is that important to know? Only if you want to keep up with what strategies are currently working for you and which ones to go to when your current favorite short term strategy stops being profitable!
Of course any ONE trade is not indicative of what other trades in the same strategy will or will not do. But if, as in our experience above, you find that MOST of your trades in a particular strategy are or are not successful, that information can be invaluable when your current strategy stops working! The worst thing you could do in short term trading is to 'strategy hop' in an effort to find a new strategy to which to move when your current trades stop working!
Stay ahead of the game. KNOW which strategies are working so you'll know where to go when you need a safe haven in stormy market waters!
Can We Help You? If you would like to know more about our daily on-line trading labs, or feel you might want to start trading with us in one of these labs, please feel free to call us at 1-800-743-0360 for more information.
Make it a great day!
Bob
If you think that I might be of help to you in sharpening your trading skills, please give me a call at my support line, toll free:
1-800-743-0360!
The Bob Eldridge Trading Lab
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Bob Eldridge is an experienced trader who trades for a living everyday! He is a PIONEER in guided and structured ON-LINE TRADING! His 'straightforward' approach to consistent daily cash flow combined with his sincere desire to help you succeed offers the opportunity of a lifetime, that would otherwise be UNAVAILABLE!! Join him as he begins his day, preparing to trade and structuring those trades so you can follow along, learning the skill set needed to profit in the market! Bob guides you through the obstacles and dangers of trading daily, effectively profiting from short term trades (1-5 days) as well as utilizing Medium Term (30-90 days) and Long Term (over 90 days) accounts to lend stability and growth to your trading business model.
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