I’m out here in sunny Orlando for the RagingBull Traders Summit, and I’ve stayed on the sidelines for the most part today… because I want to give my undivided attention to my followers.
While I have been talking to traders here and showing them my tips and tricks, I was able to sneak out for a little bit to check up on the markets. Boy, it’s been out of control this morning as coronavirus fears continue to rise.
You’re probably wondering, “Kyle, how do I position myself for a market selloff?”
The thing is… when the market is as crazy as this, it’s not the time to pile into stocks and options. Rather, it’s when you should remain patient and wait until the markets calm down before making a move.
So how do you brace yourself and still find money-making opportunities when stocks are getting destroyed?
How To Create A Bulletproof Watchlist For This Environment
If you look at any stocks making a move, on any given day, you’ll probably realize there’s a catalyst that sparked it… whether the stock is selling off or running higher.
For example, with stocks selling off today due to concerns of the coronavirus spreading into various countries… gold stocks are popping. Why? Well, there’s a catalyst on the table… and traders are looking for ways to protect their portfolios right now.
So what exactly are catalysts?
They’re the fundamental reason why prices move. They could be earnings, news releases, data releases or product announcements.
The best traders are forward-looking and understand how catalysts work… and I want to show you exactly how to use them to your advantage. For the most part, all of my winning trades have catalysts… and I’ll do is time them to perfection.
However, spotting the catalyst and placing your trade isn’t the only thing you need to do in order to hunt down explosive opportunities in the market. In fact, I have a simple ruleset:
- Eliminate emotions from trading
- Silence the noise and trust the process
- Develop a trading plan (this helps with staying in between your guidelines, and removes emotion and noise)
- Time your entry and exit by identifying catalysts
Especially in this market environment, I find following a rules-based strategy can allow you to prepare yourself and hunt down money-making opportunities.
Let me show you how it all works.
Remember the insane move Beyond Meat (BYND) had?
The stock skyrocketed from $78 to over $130 in just a few short weeks!
If you go back and review that move… you’ll figure out BYND had multiple catalysts on the table, and all you had to do was time your entry around the catalysts.
You see, McDonald’s announced it was testing its Beyond Meat burger at locations in Canada. This news was announced a few months prior… and the test started a few months ago and ended in early January.
If you know anything about Beyond Meat, so many people love their vegan patties… and it was likely the tests went well and McDonald’s would expand its relationship with the company. Not only that, but BYND had an upcoming earnings release and call on Feb. 27, 2020.
Here’s what happened…
After the initial tests, McDonald’s announced it would test its Beyond Meat burger at more stores.
What do you think traders had on their minds with an upcoming earnings announcement?
Well, McDonald’s was expanding its Beyond Meat burger, and that would mean more revenues and earnings for the fake meat company… so instead of waiting more than a month for the catalyst to happen, forward-looking traders hopped into the name.
They probably thought, “I gotta get into this stock before the move happens.”
Well, if you know the story beforehand… the trade becomes extraordinarily easy… and you could have taken part in this move.
It’s really not rocket science… and I actually traded BYND options and took part in this move.
Not only that, but my clients crushed the trade!
If you think about it, all you really have to do is find a catalyst, plan accordingly, and put it on a watchlist. Thereafter, you could put it on your watchlist and execute whenever you see fit. It’s a wacky market for sure, but I am confident my strategy could uncover explosive opportunities in the market very soon.