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Boost Your Earnings - Alter Your Current Trading Techniques To Match Market Conditions

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

The perspective of time has allowed me to discover that no market, good or bad will last forever. The one constant is change. Under such circumstances, I learned to 'go with the flow', adjusting my methods to suit market conditions.

Medium Term Trades

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

When the premium began to dry up, I found writing covered calls a lot more challenging. I began to look especially for those stocks which had been volatile, that may be employed to temporarily substitute 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 instantly calculating the average daily range of stock for the past month or so. I will take a look only at the stocks which have no less than a dollar and fifty cents or more movement every day.

You've got 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 in a somewhat predictable range, a lot like a 'channeling' stock.

Given this information, let's look for some more characteristics. For starters, notice that the stock has remained close to or within this range for a number of 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 whole lot, but going basically sideways. So now, let's trade this one medium term. If we can do this frequently, then maybe we can stop stressing about the availability of covered call trades!

The Trade

Before you trade a stock, it is usually a great idea to know which way it is going. That is the obstacle! Trade it BOTH up AND down. These are the only two ways it's likely to go (keep in mind the high daily movement).

We know we can't acquire the stock And short the stock (at least not within the exact same account), so why wouldn't you buy a put And a call?! In such a case we might think about purchasing the thirty five dollar put as well as the thirty five dollar call. Usually referred to as a 'long straddle', the position enables us to profit no matter WHICH way the stock moves.

Now, isn't it time to adjust your technique to match market conditions? If you're a bit hesitant or perplexed at all, employ the help of an investment professional. They can be quickly located on the web by doing a search for: reverse mergers, company going public, or reverse merger shell. Sooner or later, it will grow to be easier for you to 'go with the flow' too.

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