Stop getting chopped to pieces
How to avoid market chop and trade profitably
At the end of day Thursday, the Indexes snuck in a new all-time high.
Yesterday, a big flush downward.
If you’re a bullish short-term trader, flushes like that can feel horrendous. I know I’ve been shaken out from good trade ideas because of a nasty-feeling correction.
There are a couple things that help me endure the market chop:
First, I make sure to keep an eye on the bigger picture.
I know that’s sort of vague advice, but here’s what I specifically mean:
Track both the daily AND WEEKLY charts on my main screens.
The daily chart is the main information driver. It tells me the pricing action from the past six months, average volume, the volatility, the “yellow brick road,” and the “River.”
(All of which I specifically teach inside my trading course, linked in the footer of this email.)
That’s all fine and good, but it only gives me a picture of the past six months. Not exactly a bigger picture.
For that I use the weekly chart.
I can think of one trade I took on last year where I was ignoring the weekly chart and it kicked me in the teeth. The daily chart had looked fine (a little sideways action that looked poised for a move higher). But after a big drop, I remembered to look at the weekly chart too.
It was an abominable mess!
What an easily avoidable mistake.
I would have never hopped into that trade if I had been paying attention to the bigger picture. Luckily it’s a small price to pay for the lesson to be burned into my skull now.
Anyway, that’s just one way I avoid chop.
The other?
Using a patient trading strategy that almost always (98% of the time) works out profitably.
I’ll go ahead and tell you right now: it’s collecting premium.
Which is just a fancy-ish term for selling options.
In my case, it’s almost always selling Puts.
It’s a simple strategy, and I’ve tailored my own system so that it brings in around 1.5% or more each week (on average). Which is over 100% per year, meaning I target doubling my account value each year when I trade the way I do.
I realize that’s not the seck-see 10x returns that a lot of other options teachers tout.
But they’re dealing with their own problem of hoping their wins profitably cover the losses.
Me?
I use a strategy that almost never loses (as long as I stay patient).
Admittedly, I had trouble handling the psychology of trading in a way where I win some, lose some, and hope to be profitable. That’s just not a trading style for me.
But winning 98% of the time?
Yeah, I looooooovve that ... even if it means giving up the “seck-see” 10x trades.
Besides, it doesn’t take long to 10x an account (just a few years) when bringing in 1.5% per week.
If you’re curious about my system, start by subscribing and going through the complimentary “Options 101” mini course (30 minutes). Tap the link here”
— Ricky Ketchum