Cash is King

Date: 6/24/2022
Author: Chris Hood

Be sure to check out new episodes of my video podcast each week, where my ace pupil Brian Jones and I talk the ins and outs of options trading- and give you insights and strategy that you can immediately put to work for you in the markets.

I wish I had better news about the market, but trading is tough right now.

Believe me, if you’re having trouble turning a profit or have had a string of losses that have you feeling like giving up, you aren’t alone.

I’ve been trading for over two decades now, and I don’t think I’ve ever seen anything quite so turbulent.

First, it’s a bear market.

Bear markets are always challenging, especially for new retail traders.

It took quite some time before I could turn a consistent profit on the short side.

And it’s not just any bear market, but an EXTREMELY volatile one with some of the wildest chop I’ve ever experienced.

Huge drops, fake rallies, and rangebound turbulence.

Definitely not for the faint of heart.

I’ve even had to switch primarily to day trading because picking any direction on any stock for more than 24 hours seems near impossible.

Honestly, I don’t like to day trade.

But this market is forcing me to do it, even if it is a bit out of my comfort zone. I’ve never shied away from a challenge; believe me, this one is taking me for a wild ride.

Those who subscribe to my Alpha Hunters service probably notice that I’m not sending out many trades.

I’m doing this to protect you.

Take a moment to watch the webinars and planning sessions. You’ll see that I’m just not comfortable holding trades overnight.

I’d never give you a trade I haven’t placed myself.

So I’m going to give some critical advice to all of you who don’t have the time, energy, or capital to sit in front of your screens all day.

Stay in cash and ride out the storm.

When you have no edge in the market, you’re just gambling with your money.

We often discuss taking positions in various tickers via credit spreads, long calls, or stock shares. However, never forget – CASH IS A POSITION. In fact, it’s the safest one of all.

Declining to make trades when you don’t feel comfortable doing so or have an edge in the market is always an option.

Right now, that might be the best thing to do.

Never forget that markets are cyclical. Bulls hold the reins for a while, then pass the lead on to the bears. And sometimes they battle, roiling the indices like sharks after bloody chum.

Ignore the doomsday prophets that say the market is crashing to zero.

Those predictions are simply the ravings of lunatics who have no understanding of finance or salesmen who want to sell you their newest product.

Hold on to your money.

Watch, study, and learn. If you must stay active, keep your positions small, or switch entirely to paper trading.

The only reason this insanity doesn’t scare me is that I’ve seen it before.

Only working through a crisis can prepare you for the next one…and there will be more.

Billionaire investors and traders know this. They sit on the sidelines with money in hand, waiting to snap up great stocks or make amazing trades when the tides begin to turn.

Market meltdowns make fortunes.

But only for those with the capital to take advantage of the rebound.

Cheers,
Chris Hood