Note: The following is a guest post from Jack Loftis of ETFSwingTrader. Enjoy!
Last month, I explained why there is no need to master the “psychology of trading” IF you have a trading system that generates consistent profits with minimal drawdowns.
After publishing that article, many traders told me they wanted to try my ETF trading system with a 90% win rate, but they felt their trading accounts were too small to successfully follow the method.
Fortunately, there is a simple solution because my ETF trading strategy is designed to easily work for trading ETF options as well.
Continue reading to learn why profiting from options trading can be much easier than you think!
Is Options Trading Complex? Only If You Want It To Be!
Imagine if I told you that, in order to successfully trade options, you do NOT need to know about things such as:
- “The Greeks”
- How to construct a spread
- How to construct an iron candor
- Determining the implied volatility through dividing by the square root of some calendar spread’s first derivative (this one makes my head hurt)
Indeed, options trading can be quite complex…but only if you want it to be!
For example, if you simply knew whether a stock or ETF will be higher or lower five days from now (nothing more), could you find a way to simply buy a call or a put and make money on it?
Of course you could!
Just like my friend Deron, the founder of Morpheus Trading, I believe a winning trading strategy should be easy to learn and apply in the real world.
Not An Options Guru
I have never been one of those guys who claims you can get rich from trading options (but there are many out there).
People take course after course, then lose dollar after dollar on the “incredible money making opportunities provided by options.”
I hear such war stories all the time when chatting with subscribers of my service.
Yet, I still don’t want to be that guy.
I don’t want to teach anyone how to trade options; I am not an options guru.
When Size Matters
As you may recall from my previous post, I have a finely-tuned trading strategy that consistently wins 8-9 of every 10 ETF swing trades.
I prefer trading ETFs because they are comprised of groups of individual stocks.
As such, ETFs act like statistical entities and their movements have predictable characteristics.
Because of this, I have been supporting myself by making large bets on small movements of ETFs — bets that are successful nearly 90% of the time.
With a $1 million account, you too could trade this way and make a living.
But what if you have a much smaller account, say in the range of $5,000 to $30,000?
Since my ETF trading strategy is based on small price movements, it would probably not be realistic to expect to earn a living from trading ETFs with an account of that size.
Rather, the only way to significantly grow a small account with my ETF trading methodology is through some kind of options strategy.
Applying ETF Trades To Options
For the past nine years, I have been publicly posting around 10 ETF trades per month, with an average win rate around 90%.
About half of these trades have been appropriate for an options trade version.
Since the first week of 2017, I’ve scored a 20% average gain on all my option trades, with 17 winning options trades in a row (no losing options trades yet this year).
And here’s the best part…
All I do is buy calls or puts, based on the normal ETF setups I am trading in my large account.
Like I said, no complex knowledge of options is needed.
And since you would be a fool to think I can predict perfectly when an ETF is going to reverse direction, I build these option trades progressively.
This greatly improves the win rate.
Again, I am no options guru and I don’t want to teach anyone how to trade options.
But if you are at least used to the volatility of options trades, and know that 9 out of 10 times the underlying ETF will move in the direction of the option over the next few days, do you think you could make money?
When you sign up for my service, you will receive an explanation about every ETF trade setup I share with you.
I also provide you with both a relatively aggressive and relatively conservative equivalent options trade version (when appropriate).
If you want to see my results for yourself, here is a list of my actual options trades in a $30,000 account, as well as trades I have executed this year in much smaller accounts.
These are trades that made the money to keep taking my wife out to dinner (so she lets me keep on trading).
For just 30 bucks, you can test drive my service for a month and see if its right for you too.
As always, please feel free to personally contact me by email or phone with any questions or comments.
Cheers,
Jack Loftis, PhD | founder
PS – Join nearly 13,000 followers of my StockTwits feed to see the thousands of trade ideas I have publicly shared over the years.
I liked this article, but a 90% win rate sounds too good to be true. What’s the catch?
It is true. The way Jack does this is through a style of trading known as “reversion to mean” or “reversion to trend.” It is possible for anyone to do this, but it’s a style that is not for everyone.
At Morpheus, we typically hold onto stocks for several weeks to months. As such, we shoot for stock gains of 20% to 30% or more, but this strategy yields around a 60% win rate.
By contrast, Jack’s trades are typically only 1 to 3 day holding periods. As such, he is able to attain a very high win rate, but with small gains per trade (as he mentioned).
That is the “trick.”
If interested in trying Jack’s service, I can at least tell you that it’s not BS, and would not be a waste of your time.
You may or may not end up liking the strategy (it’s not for everyone), but is certainly valid and should at least be tried.