Date: 11/5/2021
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.
You all know I’m a professional trader with over 20 years of market experience.
I’ve developed several trading systems that have proven themselves to be consistently profitable. Year after and year and in all market environments.
Bragging about income and net worth dollar amounts is just vulgar. Real traders don’t do it.
So I’ll just say that my subscribers and I aren’t pinching pennies.
Despite that, most people I meet don’t really know what I do. So when I’m traveling or even just going for groceries, I end up getting a lot of ‘hot stock tips’ from random people.
Maybe it’s my Uber driver, a fellow passenger on the plane, or even some guy working at the mall.
Now maybe they know more than me.
I never claimed to be the most intelligent person in the world.
If I hear about a potential stock, you bet I’ll look it up and check out the chart. All I need to do is type in a ticker. I’m in front of the computer a lot anyway.
So what should you do with a stock tip when you get one?
Here’s a simple process to help you filter potential trades from the garbage.
First, understand that although market sentiment matters, when most non-professionals are talking up a ticker, the big move is over.
This is usually a better time to exit trades or go short than to start a long position.
Big money and smart traders are in before the pop, not after it.
Stock tips given by the bartender at your local pub are most likely sincere but based on a misunderstanding of market dynamics.
Those you hear from celebrities, analysts, or online chat rooms are likely to be less well-intentioned.
They likely hold sizable positions and are just trying to increase buying pressure so they can take their profits and run.
Don’t say I didn’t warn you.
Second, you must put any recommendation through your personal rule set before placing an options trade.
Every proficient trader will have some set of rules to dictate whether a bullish trade is likely to win. First, decide if the ticker meets your personal criteria.
An example might be:
Are the general market and stock sector bullish?
Are the critical moving averages appropriately aligned?
Do the technical signals indicate that it’s oversold?
Does it appear to be ready to break out from its current range?
Some of you may have more or fewer criteria for trading, or you may use entirely different ones.
That’s irrelevant.
What’s essential is that you put in the work to identify potential trading set-ups.
It’s incredible just how much nonsense and disinformation exists online. Don’t get me wrong, there are some great YouTube channels with good information, but 99% of it is completely bogus.
We live in an age of information overload…finding trading advice isn’t difficult.
What’s most crucial is building a filter that separates the wheat from the chaff – a system that saves you from losing your money chasing ill-advised trades.
So build your rules and follow them.
It’s the only path that will truly boost your profits.
Cheers,
Chris Hood
P.S. If you aren’t on the mailing list for my colleague Dr. Kent Moor’s Classified Intelligence Brief, you’re missing out on some excellent market analysis. His unique combination of trading expertise and many years of experience with the CIA provide insights you won’t get anywhere else. Click here to sign up for his weekly articles.
