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The Art of Low Risk Profits

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Imagine, a 477% gain a week, possible?

The $90 minimum on this trade would have reached $424.53

And $180 bucks would have landed you $850!

And to put this in perspective we have had about
30 of these BARN-BUSTERS in the last 6 weeks alone.

Its All Here Go Read The Step By Step Instructions.

A simple scan brought it on the radar…

We used the hourly chart and the daily to decide that
this had enormous upside with extremely low risk…(DSST!)

Here’s what the daily chart looked like when it came up on the radar…

We always move to the hourly to make sure we get the low-risk feel we need to justify the risk. Here’s what the hourly chart looked like…

So far “All Systems Go!”  If you go read the DSST Article Here you will see that both these time frames are in 100% compliance of the DSST method for a “Green Light!”

Next we needed to make sure the option chain wasn’t going to ream us a new one, so we went to the out of the money calls to see what was offered…

We were able to get a .90 cent fill!  This trade is a prime example of why I would rather look through 50 stocks that have crossed over rather than apply tons of filters to my scans.
You miss these IF you filter too much.  In my search and scan course I cover the importance of going lite on your filtering and instead sorting your results by performance and volume and % change.
Anyway about 6 days later we were ready to exit…
Our .90 cent option was worth over $5.00!

I’ve made this real easy for you to learn.  I’ve laid out the step by step instructions in the link below.  If you want to learn the art of swing trading LOW RISK setups, use that link below to get started today.

The Art and Craft of Dead Simple Swing Trades.

Stop Loss Metrics

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Let’s talk about your stop. There’s 2 STOPS to consider, the most important being your stop loss.  It’s important because it defines your risk.  But again there are 2 stops…

  1. Stop Loss (Protective Stop)
  2. Moving Stop

In this article lets master your STOP LOSS shall we?

Ideally we set a stop loss based on swing structure because we know swing structure will “hold true” if the trend stays intact, AND such a stop isn’t likely to kick us out of the trade!

HOWEVER, if such a stop adds too much risk to the trade you have to adjust RISK.

There two ways to adjust your risk…

  1. Move your stop OR
  2. Allocate less to the trade.

Let’s get into an example trade so you can see what I mean. I’m going to use options for my example, which will lead to more questions I’m sure that I’ll actually address in a later article.

Take a look at the following image.  On the left is offered a solid Dead Simple Swing Trading entry right near the recent swing low.

Price jumps up past our green 21 EMA right after near perfect swing compliance and our RED is UP! A perfect DSST Trade as discussed here. 

Entry at $125 and a STOP at $116. ($7 dollars in risk.)

On the right would be an example of a late trade where using the swing low as a stop might be more risky than were willing to take, let’s examine both.

AGAIN, using a swing low in an uptrend for your stop is ideal because if swing structure stays “Bullishly Intact” this should provide almost a barrier between your entry and your stop.  Many times this area becomes strong support, again ideal!

On the right let’s pretend that this is what’s offered, its much further away from the prior swing low, its more prone to retrace because it’s a little extended. The question becomes, are you willing to let price move down against you that much

Either entry CAN be fine but you must examine and establish RISK.

ALWAYS REMEMBER: Risk is the only thing you have complete control over.  It’s how you’ll make your money – never forget it.

As a pre-cursor: When it comes to determining risk with options we use DELTA to figure risk.  If the DELTA on an option is .50, it means every $1.00 move on the chart is a .50 cent move on your premium. (Up or down.)

Let’s go over the options on both.

Here we have the following metrics.
1. Entry $123
2. Stop Loss $116
3, Option Premium $2.70
4. Delta .35
5. STOP $7
6. 90% Loss

So if we reach our stop, that’s a $7.00 move against us, if my Delta is .35 that means my premium will go down .35 x $7 = $2.45

A $2.45 hit on $2.70 leaves me with .25 cents…

My $270 is now worth just $25 a LOSS of 90%+
My $2,700 would shrink to $250

NOT GOOD!

Let’s look at B…

Here we have the following metrics.
1. Entry $130
2. Stop Loss $116
3. Option Premium $3.60
4. Delta .45
5. STOP $14
6. 100% Loss

So if we reach our stop, that’s a $14.00 move, if my Delta is .45 that means my premium will go down by – .45 x $14 = $6.30

That’s a 100% loss! It will take my premium to nearly ZERO, it will hold some value as it still has time left but its basically a 100% loss

As you can see BOTH are BIG losses, but consider this…

YES, if I put up $1,000 today and my stop got hit tomorrow and I was down 90% or 100% that would BLOW!

But, if I had only $50, or $100 allocated to the trade, all the sudden it’s not so bad now right? This is all relative as well.

See how we can manage risk by allocating less?

See how it doesn’t really matter what % loss is at stake if we determine in advance and allocate properly?

Now, you can never go BELOW a single contract with options, so in these examples $270 and $360 are the bare bones bottom we can get in for.

FYI: Every options contract has a 100 shares in it, and the minimum you can buy is ONE contract, so if the premium is $3 that = $300 for a single contract. ($3 x 100=$300)

So if we want to allocate less MONEY to a trade and we can’t achieve that at $3, we would need to focus on lower priced stocks like $24 to $50.  These will offer options at $.50 cents to $1.00 and therefore allow you to go all the way down to $50 per trade! (.50 x 100 = $50)

Now, because we CAN’T allocate less on B, we do have the option of simply moving our stop up higher.

What if we moved our STOP to $125, right below the low of the current long candlestick?

Its not perfect but it is the next best LOGICAL place that price “ought NOT” move below, IF the uptrend stays intact.

Always be considering trend and price thresholds – lines in the sand if you will.  Its very logical to assume that if the trend up is strong this candles low will not be violated.

HOWEVER, sometimes you just got to tighten up the stop NO MATTER WHAT!

In this case under the low if this candle just makes a lil sense.

Here you go…

NOW we have the following metrics…

  • Here we have the following metrics
    Entry $130
    2. Stop $125
    3. Option Premium $3.60
    4. Delta .45
    5. STOP $5
    6. 63% Loss

So if we reach our stop, that’s a $5 move, if my Delta is .45 that means my premium will go down by – .45 x $5 = $2.25

My $360 is down $2.25 to $$135. 

About a 63% loss

Personally I’m OK with risking $225 bucks for the potential gain at hand, but as you can see RISK can work for you or it can work against you.

NEVER just take blind risk always figure it out, make adjustments to how much you allocate, where you place your stop etc., and see if you can’t make it more favorable for YOU!

Lets recap…

1.Entry $123
2. Stop Loss $116
3, Option Premium $2.70
4. Delta .35
5. STOP $7
6. 90% Loss

  1. Entry $130
    2. Stop Loss $116
    3. Option Premium $3.60
    4. Delta .45
    5. STOP $14
    6. 100% Loss

1. Entry $130
2. Stop Loss $125
3. Option Premium $3.60
4. Delta .45
5. STOP $5
6. 63% Loss

Ass you can see you have OPTION when it comes to risk.  You can adjust risk by allocating more or less to the trade as well as moving your stop.  Swing structure placemnt of a stop is ideal, but doesn’t always work

Explore your STOP options!

See how I find my Dead Simple Swing Trades here.

Dead Simple Swing Trading

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I Always Come Back To This One Method

I can attribute my largest and most consistent gains to this very method of trading, It always work and never fails although I’ve been known to still screw it up once in a while, as you will too.

But when it comes to reliability, consistency, and accuracy over time…

Nothing Compares

That’s why I’d like to give this to you as a gift!  FREE

Today I want to show you a method of trading that can be used to scalp a fortune from just about any market in the world!

  • If you like Forex, you’ll love this!
  • If you trade, Options or Stocks, this will next level your game!
  • Like Futures?  – This is for you!

This ONE Simple method of cutting risk and increasing overall gains works on anything because it’s PRICE BASED!

Learn this one system and you can DOMINATE any market – Guaranteed!

** There is a catch! You do have to be able to follow some basic instructions.

I mean if you can’t send a text message, OR you have difficulty firing off an email…

This may not be for you.

But if you’ve been blessed with even basic motor skills, I’ve got good news!

You’re about to make a killing in the markets! (And I’m giving this to you FREELY!)

I have to be really careful here with claims, so I’m not about to make any.

Instead I thought I’d just share this with YOU, and if YOU have the desire to make a difference in your life, you can use it as you please.

Fair enough? Great!

Would you like to learn something that can have a huge impact on your financial wherewithal now, and for many years to come?

Want to dominate the rest of 2016 and grow an account beyond your greatest  expectations in 2017?

This IS The Method That Will Do Just That!

If you like it and it works for you, you can use it freely to make a killing in the markets, for as long as you wish!

Let’s begin…

Two Words… Swing Structure

You can’t even begin to talk about a reliable trading method if you don’t bring up “swing structure”- it’s the cornerstone of forecasting where price might move to next.

It’s the ONLY LOGICAL analysis of price movement based on the length and angle of the impulse and corrective price waves!

And don’t worry its very simple and very easy to understand. (I’ll sum it up for you in a single image!) And once you get this you will be able to forecast right along with smartest financial forecasters on the planet.

Don’t worry this has nothing to do with Elliot Wave – remember I promised this was easy, AND IT IS.

When it comes to swing structure just remember……

A down trend consists of an impulse move down, followed by a smaller corrective move up until that impulse move down stops taking out prior swing lows. (A Failed Lower Low!)

Likewise an uptrend consists of impulse moves up followed by corrective moves down until the impulse moves up stop taking out prior swing highs. (A Failed Higher High!)

And if highs and lows are not being taken out in any direction we are channeling sideways.

The image below shows a down trend, then a failure of the impulse move down to take out the prior low, followed by an uptrend.  That uptrend was identified initially when the impulse wave took out a prior high.

Take a look at this text book REVERSAL…

If we follow swing structure carefully we can see above how the trend down came to a halt when the new swing low failed to go lower. (A) Then the next swing high went HIGHER than the prior swing high, (B) and so begins the new uptrend.

This is how price moves – in swings.  A trend down is defined by lower swing lows and lower swing highs.  A trend up is defined by higher swing lows and higher swing highs.

The transition between the two looks like the image above!

This “swing Structure” is the core to the life changing method I’m about to share with you.

If the image and explanation above seemed confusing, take some time to re-review , trust me it’s worth it.

In my 13 years of trading I’ve come to really rely on swing structure to give me the ability to forecast price direction and timing.

I decided to take this TRUTH, this FACT, this SIMPLICITY, and turn it into a kind of automated options short-term trading method. (That’s also very effective on Forex and Futures as well!)

It’s AMAZING… $150 here, $175 there, and at a half-dozen or so EVERY two weeks, you’re looking at $900-$1500 every couple weeks. (Mix in a couple of 700%+ trades here and there and you have something you can get profitable with immediately AND grow and SCALE!!)

It’s All about Simplicity

In order to take this ALREADY RELIABLE price leading method and turn it into a “system” we needed a way to define a low risk entry, as well as properly manage our highly leveraged risk!

I decided to incorporate, along with pure raw swing structure, a couple of trend defining Moving Averages, as well as a few breakout and reversal patterns that have also demonstrated Ageless Accuracy in Times Past.

Here’s where it gets interesting…

And there’s nothing magic about this, it’s just basic math – you’re going to simply go after highly “likely to move fast” setups, and you’re going to join the FUN with some pre-defined low risk!

You’re going to make a killing because your $50 and $100’s in risk has the potential to grow by 2, 10 and even 30 times!

The accuracy is there to hit some big gains, you just gotta stick to the basic “Patterns of TRUTH” this method reveals!

You’re outcome is never certain, but 10-30X gains are not uncommon!

Take a look at this recent trade that netted $2,200 in just a few days. Price went from $120 to $150 and the $2.70 CALL option went to a crazy $22 dollars!!

Not all your trades are this big, but they do come frequently enough. The key here is even with a $2.70 option we still risked only $135 during the entire trade.

Imagine even TWO trades a month where you put up $135 bucks to make $2,200

Life Changing!

You will always know EXACTLY what’s at risk, at all times.

Big winners like this give you much larger room for error as you learn to master this!

Let’s walk through this trade so I can show you how the method works.  There are just two rules for LONG entry…

Simple Easy Rules

Rule #1 – Swing Structure Must Be Compliant In Trade Direction.

Rule #2 – Enter Long When Price Closes Above Green EMA

Easy right?

Here’s what that might look like on a chart…

On The Chart:
Green = 21 Day Exponential Moving Average
Red = 200 Day Forward Weighted Moving Average.
** Bollinger Bands 20, 2.0 (I’ll explain how I use Bollinger Bands later, it’s not critical for success.)

Here’s the trigger entry explained on video…

Watch the Video

Trade Walk-Through #1, SIVB 814%

In the image below we enter long on SIVB because swing structure was compliant LONG.

We have higher swing highs and higher swing lows, (as indicated by the red dots and lines) and the current swing low did not go below the last swing low, AND price moved up and through our GREEN 21 EMA, plus our 200 FWMA is up… ENTER LONG!

Then, in less than one week the $130 strike CALL option went from $2.70 to $22.00 and we made an absolute killing. AND, we only risked $135 bucks TOTAL!  We risked just $135 because we bought one contract for $270 and set a stop at 50% of our option value.

Couple things to note here. First off, this trade setup came to us by way of a daily chart.

What I’ll show you in a moment is that very often you will find price making the kind of move we want, but you won’t see your complete setup.  Just fast moving price action, which is great, but it’s not good enough!

For stocks I like to scan DAILY charts for range, meaning I look for nice BIG moves relative to the underlying price, if my setup hasn’t appeared in the past and doesn’t appear now on the daily, I look at the 15min., and the hourly charts.

You must HUNT DOWN your setup on the right time frame.  This is KEY!

Once you find it, you’ll spend your time there!  Your targets can come from the daily chart but your triggers may be on the 15 min, OR the hourly for the purposes of defining risk and setting a stop.

More on this in a minute.

Trade Walk-Through #2, UNH – 587%

In this trade we were stopped out once, but that didn’t have much of a negative impact on the trade, we still walked away with over 500% Return as you’ll see!

In this example I only used 3 dots because only 3 swings are actually required for swing structure compliance – a swing low, a swing high and a higher swing low.. (Long)

This trade lasted just 3 days and our $2.40 CALL Option blew up to $8.25! Not even a $10 move on the stock and we managed to make $825 on $120 in TOTAL RISK!

Now I want to point something out, because our stop was set to 50% of our investment of $240.00 we were actually only risking $120.00 to make $825.00

So in Actuality We Walked Away with Over 500%.

It’s really all about how much is at risk when it comes to your return.  With a typical CALL or PUT option my stop usually results in a 50% loss so allocate accordingly.  If you want to keep risk LOW like me, look for $1-$2 dollar contracts where $100-$200 total positions are limited to $50 to $100 in risk.

Make sense?

You can easily make a killing with this all day long risking just $50 a trade.

Time Frames

Now as I hinted to you a moment ago the real “Magic” that is offered comes by way of YOU lining up the right time frame with the right price action.

Remember: Price moves up and down in a series of IMPULSE and CORRECTIVE waves.

Remember the Swing Structure image above? (You should print that out.)

It’s a fundamental TRUTH that you can count on. It’s what makes this so powerful a system!

Your job is to simply match up the movement with the time frame. This is where most traders get all goofy and give up.

The Good News is Its Dead Simple!

Take the daily chart on GATX for example…

Rules for entry were violated on the daily chart and did not allow for the low risk and high reward we need in a trade. (see how the swing low before the arrow went lower than the prior swing low?

We had the initial set-up spot on, but there were swing structure violations that did NOT allow low risk entry.

But look what the 1 hour chart revealed…

Notice how perfect the entry is? (Several times in fact on this time frame.)

See how we meet the guidelines of the 2 rules required for entry? (just on a different time frame.)

See how we first found the “Movement” required for the big dollars, and then we matched up the time frame to meet our minimum requirements?

This trade product $1,320 on a $36 investment…

That’s Over 3,500% in 23 Days!

Now once you find your setup and you have identified the time frame that holds compliance, you want to ask yourself 3 simple questions…

When You Find Your Set-Up Ask These 3 Questions…

This question filter is designed to really sharpen your skills AND keep you IN the trades with the best possibility to perform! You’re going to ask yourself the following questions and you’re going to begin make some quick observations…

  1. What Are You Coming off of? – Was price channeling? Is it in an uptrend and how can this impact my initial move? Does this have larger breakout potential? Anything provide clues about future potential or risk?
  2. What Recent Pattern Can You Compare It To? (Risk purposes only!) – Focus on prior impulse waves, their size and reach! If you have impulse waves with smaller corrective patterns inside them, ignore them and focus your attention on the larger impulse. (Sometimes swing structure on smaller time frames show up on the bigger ones – I cover this a little in the video below.)
  3. What Price Risk Is There? – Relative to recent past – Look at prior pushes up and retracements and see if there’s usually any heat on your stop? (23% 50%, 61.8% More?)

Here’s a quick video on the 3 questions filter…

3 Questions Overview Video

Here’s kind of how this plays out going forward….

At this point it’s all about successful trades vs. failures and how much you win vs. how much you lose.

It becomes a game of simply managing these metrics.

I don’t want to dive too deep here right now, but when you step back and look at 20-50 trades there will be those you win on, those you lose on, and the amount you win on your winners vs. the amount you lose on your losers.

That’s why having the ability to WIN BIG on a bucnh is so important.

It TIPS the Potential for Success in
Your Favor BIG TIME!

ANYTIME you can take $50-$100 and turn it into $1,800 to $3,500 you’re on to something good, this gives you a nice wide margin for error!

Think about it, with that potential, even just 2 in 10 winners would make you extremely profitable!

In other words you can screw up a lot and still make a killing!

It Kind of turns it into CASINO ODDS where YOUR the House!

Now you just need to find the setups!

If you want to see more just fill out the form and I’ll shoot you some videos I just made!

 

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The Art of Low Risk Profits

Imagine, a 477% gain a week, possible? The $90 minimum on this trade would have reached $424.53 And $180 bucks would have landed you $850! And to...

Stop Loss Metrics