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WEEKLY RUNDOWN
Hey, traders, Lance Ippolito here. Welcome to this edition of the Weekly Rundown, where we'll share some of our top trading ideas — and our biggest winners — from the New Money Crew!
Welp, some big news came late Thursday night or early Friday morning, depending on your sleep schedule.
President Donald Trump tweeted that he and Melania have contracted COVID-19. Markets immediately took a dive… so I was up early gobbling up some tech names, Square Inc. (NYSE: SQ) and Apple Inc. (Nasdaq: AAPL), specifically.
But the big question is: Will this change anything with the election?
In a word, no.
It's short-term headline news amid a bull market. There was a lot of dip buying after the initial crash in futures, which was mostly algos selling the news.
We will probably gap up Monday if there are no crazy headlines over the weekend.
And now, back to our regularly scheduled New Money Crew Weekly Rundown…
Why Trading Options Is a Game-Changer
I discussed trading options in a post over on Booker Wealth. As we all know, owning a stock is owning a piece of a company. We generally buy stocks when we think they'll rise in value over time — more of a long game...
But trading options, also known as derivatives, is a different game altogether.
An options contract gives you the right to buy or sell a stock at a specific strike price by an expiration date. Prices are linked directly to the price of the stock they represent.
Options offer a dependable hedge — and massive profits if you know what you're doing. And if that's the case, the pros outweigh the cons. The most money you can lose on an options contract is the amount you paid to buy it, and you don't need a huge bankroll.
Now here's the advantage: Let's say you want to buy 10 shares of Apple at $100 a share. That will cost you $1,000. If you don't have a big bankroll, that can tie up a big chunk of your portfolio.
But if you want to buy one call option contract, which will represent 100 shares of stock, a $1 call option on one contract is going to cost you $100. Now you're controlling 100 shares of Apple stock.
Let's say the stock goes up $5 a share in the next week. And let's say you bought the 10 shares outright, so you just made $50 on those 10 shares.
BUT, if you bought the $1 call option and Apple rose $5 a share, that call may go from $1 to $2 — so you just doubled your money in a week.
AND you only risked $100 instead of $1,000 that would have been tied up had you bought the stock outright.
So if you want to be an advanced or even a professional trader, you have to start digging into options.
If you want to learn more about trading options, be sure and check out Weekly Blitz Alerts, which couldn't be easier to follow. We send out two weekly trade alerts that tell you exactly what to do and when, and at what prices.
We walk you through every step and give you the analysis behind why it's a good play.
Click here to start trading options like a pro.
BIG Wins
We had a couple of big-money trades — in the aforementioned Weekly Blitz Alerts service — closed out this week on Xerox Holdings Corp. (NYSE: XRX), and we closed half of our position after locking in a 55% gain on Axalta Coating Systems Ltd. (NYSE: AXTA).
- +50% on XRX (October 16 $18 CALL).
- +55.56% on AXTA (October 16 $24 CALL).
- Closed half of our contracts and still have the other half open.
If you have a big score you'd like to share with your fellow New Money Crew readers, email us at wptestimonial@gmail.com!
Catch a 'Free Ride' for Biotech Conference Season
October is the biggest month of the year for biotech stocks as companies from all over the world take center stage during "conference season" and announce their most exciting data and biggest achievements.
We will hear about medical breakthroughs, clinical trial results, new drug applications, mergers and acquisitions — CEOs could even leak big future projects!
And these big announcements create a unique — and profitable — trading window.
One thing to remember is that no one goes to one of these conferences to announce bad news. And good news generally pushes stock prices higher.
While we can't prove that companies wait specifically for conference season to release key data, it certainly seems that way!
There are 21 biotech and medical conferences this month, and 14 more on the books for November in the U.S. alone.
Join the Free Riders Club to take advantage of these "catalyst events," including what is considered the biggest and most lucrative biotech conference of the year…
Click here for more information on Free Riders Club!
How to Judge Your Trading Success — or Lack Thereof
Most people likely judge their trades as successes or failures with the most obvious measure: Whether they made money or not.
But misjudging successes is a huge mistake a lot people, particularly newer traders, make all the time. Josh Martinez over at Live Trade Profit shared some excellent thoughts this week on how he measures success and failure.
In short, Josh judges based on his last 10 closed trades. Success, Josh says, is a formula, not a fantasy. No one, not even people considered the best traders in history, wins all of their trades — that is a fantasy.
Conditions change suddenly… some politician says something markets don't like… some CEO gets caught with their pants down… things happen!
Trades are going to get away from you and oftentimes it's not even because you made a mistake. So we know we'll have some losing trades and, hopefully, we'll have some winning trades.
So how do you judge true success?
Josh says the metric to go by if you're using a particular system or strategy is to be net profitable in your last 10 trades, even if it's just a dollar. Josh likes a 70% to 30% win-loss rate. So for every 10 trades he makes, he expects to win seven and lose three.
Think of trading like running a business: You have overhead costs you need to factor into your bottom line, like taxes. And losses on trades are just the cost of doing business on Wall Street — part of your overhead.
That said, if you lose two trades, don't panic and bail on your system!
On the flip side, if you're losing money after your last 10 trades, you might need to hit pause and reset. And if you won nine of 10 trades but lost money on the whole, then you have a risk management issue that needs to be addressed.
Be consistent, or your results will be inconsistent.
Signing Off
If you're looking for more compelling trade ideas and stock market musings to read and help you prepare for what lies ahead, here's what other experts at WealthPress are saying:
Lance Ippolito
New Money Crew |
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Disclaimer & Disclosures: The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.
Past performance is no guarantee of future results. There is a high degree of risk involved in trading. For our full disclaimer, visit here.
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