Share This letter with Friends on Twitter, Facebook and Other Social Networking Sites:
Picking A Strategy -- By: Bill Kraft
Copyright 2009, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor |
I recently wrote a little about picking a stock and mentioned a few
of the myriad ways in which an investor or trader might go about
selecting a candidate. In my own trading life, as I review stocks, I
find that the process becomes much more one of elimination than
selection. As I look at a chart, for example, I can see that good old
XYZ may have just reached up to a resistance and is turning down. A
quick fundamental review may show that earnings have dipped due to some
new competition, debt is considerably higher than other stocks in the
sector, and a potentially large lawsuit has just been commenced against
the company. If all this is occurring in a bull market, XYZ is not a
buy for me; it is eliminated as a potential bullish addition to my
portfolio since I know there are other better candidates out there.
Does that mean that as a trader I am not interested in the stock?
Definitely not. Though I have quickly rejected it as a buy I may give
further consideration to XYZ as a bearish candidate. I may look at a
different strategy that looks like it might have a greater chance of
success with XYZ. Does it fit my parameters to short the stock, or to
buy puts, or maybe put on a bear put debit spread or a bear call credit
spread? I can see how those strategies might be a better choice given
the information I have about XYZ and it's price performance.
A majority of investors and retail traders may pass right over XYZ
since their bias is bullish and they are only looking for stocks to
buy. Those investors may only really consider one strategy; buy the
stock first and sell it later. In so doing they easily may miss the
apparent opportunity the XYZ scenario offers to an investor armed with
more than one strategy. There are many ways to making money in the
markets, and the utilization of various strategies can add income
streams and profits to the trader or investor who gains understanding.
How we invest or trade is a personal decision. The decision is
influenced by how much time we have, how much cash we have to invest,
our age, our family situation, our risk tolerance, our interest and a
variety of other factors. No matter who you may be, if you have the
interest to read this article, there is almost certainly a strategy that
will fit your situation and comfort level. I devoted my new book to
this subject. "Smart Investors Money Machine" is designed for investors
as well as traders. In "Smart Investors Money Machine" , I have tried to
consider a wide variety of investors and traders using examples of a
young single person, a growing family, and a couple reaching retirement
to show numerous ways each might select a strategy that fits them and
their lifestyle and at the same time will provide them with more
income. The book isn't limited to option strategies though it does
discuss some. The scope of "Smart Investors Money Machine" encompasses
a variety of strategies from buy and hold to dividend capture to writing
covered calls, to specific sectors that offer exceptionally high yields
and includes a basic primer on bond investing and annuities, and even
explains a little about reverse mortgages. With each strategy, I not
only describe the strategy but also show how people in differing times
and stations of life might use it to bring in more income to lighten
their daily load.
The point is there are lots of ways to create streams of income.
Some of them require a lot of time and some very little time. Some are
very risky and offer higher potential rewards while others are
accompanied by a lesser risk but offer a lesser potential reward. There
are plenty of ways to do it and some of those ways are likely to fit
your specific circumstances. In my view, it is definitely worth the
trouble to explore the possibilities and see what you like and what can
work for you.
Almost assuredly there are strategies for you. What I often see is
people trying to be traders rather than investors when they have neither
the time, the knowledge, the capital, nor the risk tolerance to really
be traders. My advice to them universally is it is great to be a
trader, but first you need to acquire the knowledge. In the meantime,
there is no reason why they shouldn't be generating additional income
using other strategies that may be less complex, less time consuming,
require less attention (in some cases even no attention), and still add
a stream or streams of income.
The strategies we utilize are critically important to our success
and choosing what strategy we will employ may be as important, and
sometimes even more important than the specific XYZ we select.
Good Trading!
Bill Kraft
Success Trading Group -- by the Success Trading Group Team
Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.
Trade Quality
Stocks Over and Over Again
Over 320 winning trades and only 9 losses!
Register Now
and Get $50 off our Normal Website Rate
Option Trader -- by Bill Kraft
Our Option Trading Service is for conservative traders that understand leverage principles and enjoy the challenge of options trading. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on always minimizing our losses!
The Option Trader service utilizes standard trading in Puts and Calls as well as strategies using Leaps, Straddles, Credit Spreads, Calendar Spreads, and Naked Puts. But no matter how sophisticated a strategy may be, we ALWAYS know our downside potential on every trade.
Here's a look at a trade Bill is currently working on:
Direxion Daily Financial Bull 3X Shares (FAS)
This past week, Option Trader closed a debit spread on FAS
for a before commission gain of 76% in just under three months.
Thereafter, a new debit spread was entered using slightly different
strikes. For those with an interest in financials, FAS is an interesting
vehicle.
Good Trading!
Bill Kraft
Try our Option Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
Achieve returns with us like
16.48% return in 5 days!
Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
United States Natural Gas (UNG)
Trend Trader opened and quickly closed a one day trade to
grab a 2.4% return before the small commission. Since exiting, UNG has
been drifting down toward an uptrend line. I'm continuing to watch to
see how the share price behaves as it deals with the trend line.
Good Trading!
Bill Kraft
Try our Trend Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
The Talbots Inc. (TLB)
TLB has made a very strong move over the last couple of
trading days and has gone a little too far too fast for me to enter, but
it looks like it definitely is worth continued watching perhaps to catch
an entry on an upturn from a dip.
Good Trading!
Bill Kraft
Try our Under $10 Trader Real-Time Alert Service!
Dividend Investor -- by the Dividend Investor Team
Our Dividend Investor service focuses solely on the "best of the best" dividend paying stocks. We attempt to buy these stocks for their powerful dividend producing income; and we will also buy these with a purpose to make capital gains as the stock increases in value. Our Dividend Investor service is a perfect fit for an IRA account.
Register Now
and Get $50 off our Normal Website Rate
