We all go through hot streaks in our trading just as we do a string of losses.
Losses have a way of sapping our self-confidence.
Wins make us arrogant.
Too much of either should be avoided.
When I notice a bunch of wins or losses in a row, I start to wonder why.
I ask myself:
Am I taking the correct setups?
Are the market conditions favorable?
Do I have more trades on then I would normally?
Funny enough, whether we get on a winning or losing streak, we tend to increase our trading.
Losing streaks cause us to seek revenge while winning streaks get us cocky.
Sometimes I force myself to carry a maximum number of positions at any given time.
That keeps me not just from overtrading, but losing my place, which happens more often than you might think.
Never get bored
Slow markets happen and they suck. They’re the worst thing for active traders.
We stare at the charts for hours on end until we see things that aren’t there.
Eventually, we start clicking the mouse for the sake of it, ending up with trades we have no business in.
Next to my desk, I keep a handful of study materials. Some go over basic concepts like Fibonacci Retracements, while others contain various ideas I want to explore.
That doesn’t include the errands I run and shuttling the kids back and forth.
The point is, I always have something to keep me busy.
When I don’t find something worthwhile, I don’t force it. I simply minimize the screens and work on something else.
In fact, I sometimes try to forecast when I expect slower markets precisely and pull study material beforehand. If I’m right, then I don’t need to spend every minute on the charts. If I’m wrong, I can keep the information for another time.
It also helps to talk to and chat with other traders.
Trading itself can be a lonely business. Having a chat room or even a friend to bounce ideas off can do wonders.
Watch out for FOMO
Markets love to pull in traders like you and me right at the last possible second before pulling out the rug.
When stocks like Stich Fix (SFIX) jump over 40% premarket, you feel like you missed the bus.
It’s even worse when you aren’t heavily invested in the market and everything is flying.
Over the years, I realized that no matter how well I did, I always felt like I could have done better.
I would compare myself to other traders even when we didn’t trade similar styles.
That’s a great way to get yourself into trades after the fact.
While I mentioned that I enjoy talking with other traders, I focus on making the right decisions for my accounts.
I actually set triggers where after too many losing trades in a row, I reset my accounts and start over.
This does two things for me.
First, it ensures I pay myself something.
Second, it resets me psychologically.
There’s something about the caution and trade selection when you have a smaller account instead of a larger one.
I find I tend to wait for better setups when I can only take a few trades, avoiding getting involved in ones that are marginal.
And especially after a bad beat, getting a few wins under your belt can really boost your confidence.
Author:Nathan Bear
Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.
Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.
And in the next few moments I’ll explain which stocks I’m trading, how I’m trading them, and which patterns I’m relying on to pull out profits in this market.
What are proxy trades?
Proxy trades refer to trades that I take that are similar but not exactly the same or even a derivative of the item I want to trade.
For example, a gold miner would be a proxy for gold prices.
Utilities might be a proxy for treasury prices (since bonds and utilities tend to trade together).
There isn’t a stock or ETF that directly deals with Bitcoin.
So, I use similar stocks that trade in sympathy with the cryptocurrency.
Marathon Patent Group (MARA)
MARA is as close as I get to a Bitcoin play.
The company mines cryptocurrencies, including Bitcoin.
As the price of Bitcoin rises, so does the value of Mara.
It’s kind of like a gold miner is to gold.
The following chart compares the two since the start of the year.
Bitcoin (green) vs MARA (red) percentage change daily chart
While not an exact match, you can see how they tend to peak and bottom in a similar fashion.
Much as the gold miners do, when Bitcoin starts to ramp up, the price of MARA gets supercharged.
What’s really cool is unlike most momentum stock names out there that cost hundreds of dollars per share, MARA shares run under $10.
Plus, I can trade options on the name as well.
With lower-priced stocks, I can buy options that are in-the-money for cheaper than a stock that is hundreds of dollars.
That lets me lower the extrinsic value that I potentially lose over time, letting me get a purer play on the stock.
My favorite way to trade this is to purchase call options that are a dollar or two in-the-money and out 1-2 weeks.
Riot Blockchain (RIOT)
Similar to MARA, Riot Blockchain mines Bitcoins while also containing two services in their portfolio: Tesspay Smart Contracts and Veraday cryptocurrency and accounting services.
If you’re not familiar with them, mining companies solve complex computations that unlock Bitcoins.
These computations mainly require power and computers.
The more you do, the more coins you unlock.
But the more coins you unlock, the harder the next set is.
Still, it’s a lucrative practice if you can get your energy costs and computer supply cheap enough.
I know a lot of high school kids that did this for fun.
In the chart below, you can see how Bitcoin and Riot traded fairly closely to one another, with the only difference being the percentage change.
Bitcoin (green) vs RIOT (red) percentage change daily chart
Part of why shares of these companies moved so dramatically was they were essentially penny stocks to start the year.
When you go from that to some commercial interest, shares can shoot up quickly.
Like MARA, RIOT trades under $10 a share.
However, MARA only has options that expire on monthly cycles.
RIOT contains options that expire every week.
So, depending on the timeframe I want to trade on, I’m typically more inclined to trade RIOT. That way, I can narrow down my expirations and get a better bang for my buck.
Other alternatives
While I have not personally traded any of these other alternatives, I wanted to list them out here for you.
Grayscale Bitcoin Trust (GBTC)
As far as I can tell, this is about as close as you can get currently to a pure Bitcoin exposure. You can into this trust that charges a 2% annual fee.
Unfortunately, this is an over the counter product and doesn’t have any options available.
Bitcoin Futures
Bitcoin futures work similarly to other futures contracts with various expirations. The only reason I don’t trade these because with the leverage and the current price of bitcoin, it’s too rich for my blood.
I’d rather not be exposed to 5 Bitcoins and wake up one morning to find the cryptocurrency down $1,000.
Trading the stocks
Most of us, including myself, aren’t able to see into the future.
Instead, I trade off strategic analysis and chart patterns.
And the most incredible thing – I use the same chart patterns and skills to trade cryptocurrencies the same as I do stocks!
That’s why you need to join me Wednesday at 2 P.M. where I reveal my Unbreakable Pattern.
You can learn some of the very same techniques I used to turn $38,000 into over $2,000,000.
Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.
Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.
I don’t know about you, but I had a LOT of fun last week.
Heck, I could barely sleep Friday thinking about all the great trading, dreaming about what lies ahead.
So, before the sun even rose Saturday morning, I flicked on the screens and scanned through a slew of stocks and nailed it down to three setups that look attractive right now.
Looking at the three charts that I pulled, I can’t help but get excited about what’s in store.
Once you see them, I think you’ll realize how explosive these opportunities are.
With some of the monster moves in these stocks the last few weeks, these chart patterns could really pop off.
–Well-defined uptrend – As I noted before, the longer-term trend in the stock remains bullish. Once shares found a bottom, they resumed their uptrend.
–Chart consolidation pattern – Chart patterns help me define my setups. They identify areas where price trades sideways, gathering strength before making the next leg higher. When you connect the highs and lows of the candlesticks (solid orange lines), they form a triangle shape where price trades in a narrowing channel.
–Active squeeze – Trading options often means fighting time decay. So, an indicator that tells me when to enter a trade reduces the associated costs and increases my potential profit.
78-minute charts divide the trading day into five bars. While not as fast-moving as 5 or 10-minute charts, setups 78-minute charts tend to need 1-1.5 weeks to complete.
And, given that Peloton has weekly option expirations, I would look to the expirations for this Friday on the 11th or the following one on the 18th.
In order for me to take this week’s expiration, I would need to be in this trade within the first few hours of Monday morning.
C.H. Robinson (CHRW) – 10% Short Float
Normally, I stick with momentum and tech stocks. But with the rotation into small caps and industrial companies, I decided to start expanding my watchlist.
C.H. Robinson popped up because it has a 14% short float.
While that’s not exceptionally high, it is noteworthy for a stock with such a heavy float.
Stocks with high short float lend themselves to short-squeeze – explosive moves when traders who are short the stock are forced to close out the trade and buy back the stock which drives prices higher, forces more to close their trade and creates a buying frenzy.
CHRW 195-Minute Chart
Like the previous TPS pattern, this one’s long-term trend remains bullish. However, the short-term might look a little sloppy.
Netflix (NFLX) – 2.4% Short Float
I really love this last chart because of the timeframe it uses.
People don’t believe me when I tell them that one setup works on any type of chart.
So it’s really cool to be able to show them a 78-minute chart TPS setup and then go to a weekly chart like this.
NFLX Weekly Chart
Many of the big tech names exhibit similar setups. However, I like Netflix the best because of the risk/reward.
When I want to stop out of a trade, I look to exit when a pattern breaks or the squeeze fires (red dots at the bottom turn green).
With this chart pattern range, if I get in here, the lows are much closer to me than the highs.
And my target is often past the highs.
This means my reward is much greater than my risk. When that occurs, I increase the number of expected profits I generate from the trade.
Why Patterns Make the Difference
Making these setups work means I need to find the spot BEFORE the explosive move.
Folks who don’t think this is possible don’t know chart patterns.
Using the right pattern at the right time can lead to massive windfalls.
Although Nathan Bear has made options trades that resulted in over 1,000% profit, he’s “only made a few” he says wryly! Nathan is one of the best options traders there is. Period. His unique approach incorporating his adaptive 3-step “TPS” trading strategy, has so far brought Nate well over $2 million in realized trading profits.
Nate is a down to earth trader who now imparts his simple trading methods and relaxed approach to his trading subscribers to help give them the keys to trading success.
