Own Nothing Below The June Lows
That's what I've learned.
And that's where risk management comes in.
You can have any thesis you want. You can come up with any trade idea you'd like.
But if/when the market proves that thesis to be invalid, it's up to us to get out and move on.
Most adults are too mentally weak to be able to do that.
They would rather lose money, and potentially ruin their lives, instead of just admitting defeat and moving on to fight (trade) another day.
I observe this sort of behavior constantly. And it's not pretty.
I've been stubborn myself in the past, so trust me I get it.
See: My Worst Trade Ever
But I don't make that mistake any more.
I have learned that we're not here to be right. The only reason we're here is to make money.
This week on our Live Conference Call I laid out some of my favorite trades, and what risk management procedures we need to take in case some things go against us.
If you have any questions at all about any trade or investment thesis we've discussed, PLEASE make sure to email me. I'm happy to chat about it.
But as a general rule, in this particular market environment, and specifically referring to Stocks (and Crypto), is that we DO NOT want to own ANYTHING that is below its Q2 lows. In most cases it's their June lows, but for some others it's May.
If I look at a stock that is below its Q2 lows, I won't buy it.
If I see a Crypto Currency that's below its Q2 lows, I won't buy it.
Here's are a few examples of what I mean:
You can find the entire list of stocks we want to own here in our Trade Ideas list, or even easier to sort in our NEW Rangefinder App.
If you don't have the app hooked up yet, just email us and we'll set you up.
There are a lot of ways to manage risk.
Position sizing is one of my favorites. Responsible position sizing is a super power. Here's how I approach this. And this calculator is built into the Rangefinder App just to make life more convenient. It's pretty great.
Having multiple strategies that are not correlated with one another is another great risk management technique.
I have one portfolio in particular that all it does is collect income. Every day. That's always the goal: collect income from the options market. So it doesn't matter if S&Ps go up, down or sideways. We implement the same strategy every single day.
I have another portfolio where I put on the trade ideas we talk about here every day in equities.
And based on the ridiculous performance out of Kimmy's Swing Trader Pro over the past month, I'm in the process of opening a new account just for Day Trades & Swing Trades.
I've always been a terrible Day Trader, but with Kimmy's guidance, I'm back baby! I was in the room with her all morning yesterday. She was 3 for 3. I'll be sharing more about this new account shortly.
But today, I just wanted to reiterate something that we were discussing in our team meeting this morning.
And it's those June lows.
We're seeing more and more Crypto Currencies breaking down below support, particularly some of the Altcoins.
And remember, we treat the Altcoins like growth stocks around here.
So is that a sign that stocks are next?
If it is, then I want nothing to do with those types of stocks, or crypto currencies for that matter.
We're sticking with the winners.
Avoid the losers. Stick with winners.
That's a great rule for both investing and in life.
How are you feeling?
What are you doing to manage risk?
How are you putting more risk on?
Please feel free to chime in.
We love to hear from you!
Live Mid-Month Conference Call
If you still haven't gone through it, make sure to watch this week's Live Conference Call.
It was a big one.
We had a lot to talk about.
I have some fresh trades we want to put on this week. Some key risk management procedures in case things go against us.
And in general how we want to approach the 4th quarter.
Premium Members can watch the video replay and download the slides here.
If you can't access it for any reason, just email us and we'll get you in.
See you in there!
- JC