Boost Your Revenue - Altering Your Trading Plans To Match Market Conditions

When I first began trading back in the '90's, I was very fortunate. I had started trading at a time when the market was headed almost straight up. My first strategy was writing covered calls which blended having a rising market in such a way that I almost never lost.

The perspective of time has allowed me to learn that no market, good or bad lasts forever. The one constant is change. Under such circumstances, I learned to 'roll with the flow', adjusting my strategies to complement market conditions.

Medium Term Trades

I explained earlier, my favorite medium term strategy has long been the covered call. This strategy enabled me to manage my fiscal affairs. By setting up trades created specifically to 'mature' at a predetermined date 30, 60 or 90 days out into the future, it gave me money I could count on to help overcome any slow periods of daily cash flow.

As the premium began to dry up, I found writing covered calls a lot more challenging. I began to look specifically for those stocks which were volatile, which may be used to temporarily replace covered calls as my medium term technique of choice.

Stock Movement

Let's look for a stock which moves frequently. I have my Chart Navigator system supply this by automatically calculating the average daily range of stock for the last month or so. I will then look only at the stocks which have no less than a dollar and fifty cents or more movement each day.

You have to have some idea of WHICH way they're most likely to move. We also narrow this search of high volatility stock to only those stocks which move within a somewhat predictable range, much like a 'channeling' stock.

Given these facts, let's look for some more characteristics. First, notice that the stock has remained close to or within this range for several months. Additionally, each 'oscillation takes upto a month, moving from the top of the channel to the bottom.

Bottom line, this stock is moving a lot, but going basically sideways. Now, let's trade this one medium term. If we can do that frequently, then perhaps we can stop worrying about the availability of covered call trades!

The Trade

Before you trade a stock, it is usually a good idea to know which way it's going. This is the obstacle! Trade it BOTH up AND down. Those are the only two ways it's likely to go (remember the high daily movement).

We know we can't acquire the stock And short the stock (at least not in the same account), so why not buy a put And a call?! In such a case we might consider buying the thirty five dollar put and the thirty five dollar call. Typically referred to as a 'long straddle', the position enables us to profit no matter WHICH way the stock moves.

Now, are you ready to adjust your strategy to match market conditions? If you're just a little hesitant or perplexed at all, employ the assistance of an investment professional. They can be easily located online by doing a search for: reverse mergers, company going public, or reverse merger shell. Sooner or later, it will become easier for you to 'go with the flow' as well.

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