Decision Time: Are You In or Out?

Team, we have a serious decision to make right here and right now.

The charts are telling us that a few investors are speaking loudly. That means most investors are sitting on the sidelines just waiting for something tangible to spur them into action. Those few investors who ARE in the market are speaking loudly.

And I don’t need to tell you they are a wild bunch. They are trading up, down, and sideways because they’re following all the news headlines ans speculation that goes with them. And so the market is bouncing up and down like a rubber ball.

Why I Love Option Trading

As early as I can remember, I have had an intense interest in every aspect of money.

* How to earn it.
* How to save it.
* How to grow it.

My interest in money has led me down some interesting paths. I’ve bought bank-owned homes and flipped them for profit. I’ve worked overseas for a big Fortune 500 company. And I’ve even been the owner/operator of a couple retail stores.

Here’s the craziest part. To this day, I haven’t found anything quite as easy, exciting, and lucrative as option trading.

Is Now a Good Time to Trade?

With the markets swinging as much as 1,000 points in a single day, quite a few readers are wondering whether or not it’s a good time to trade.

Gerard asks: “What should one do during this wild market? Sit back and wait for the market to calm down before we do any option trades?”

Wayne asks a similar question: “How can I make money on options in this volatile market, and do you give some symbols from time to time?”

Right now the market has been horizontally channeling (although in the last two days we have broken down through the channel’s horizontal support.) Horizontally channeling is much different than a converging channel.

I Want to Answer Your Questions

It’s a big week here in the U.S. America has elected a new President, and a new direction for the nation has been set.

Now that the election is behind us, the markets are letting off steam as all the pent-up fears and expectations are being released. Traders and investors are even now adjusting their strategies based on the outcome of the election.

The real reason for this post, however, is not to make predictions or talk about the new President. Rather, the reason for this post is to find out what’s on your mind.

You see, for the past year, this blog has been trucking along at a steady pace. And I’ve been writing pretty much whatever has been on my mind. But then I thought, “Why not find out what YOU want me to write about?”

So here’s what I want to know from you:

Is It All Just a Scam?

The more I study the markets, the more I wonder what kind of shenanigans are going on behind the scenes.

Here’s an example:

Before Labor Day, analysts were saying that Fannie Mae and Freddie Mac were rock solid. They were also promoting the idea that the financial underpinnings of the world economy were stable and sound.

Unfortunately, investors believed the analysts. They started buying up stocks based on analysts’ opinions, which ultimately raised the price of these stocks.

Looking back, we can see that investor confidence was unfounded; it was based on opinions and not facts.

Consolidation Pattern? More About the Current “Bottom”

Has the market reached a bottom yet or not? It seems that’s the question on most people’s minds. It’s a question bugging me for sure. I’m just interested, of course. Whatever lemons market throws at me, I can make lemonade out of. That’s the beauty of being an option trader with a tool chest of various strategies that can profit whether the market is going up, down, horizontal or is just a choppy mess.

Back to my curiosity. It seems we were in a consolidation pattern; a converging channel. This could be a bottom. A consolidation, of course, is a chart pattern that tells us investors are uncertain and therefore simply sitting back on their hands in a wait and see mode. Out of any consolidation we could see a breakout up… or a breakout down. It really depends. We may have seen a breakout down yesterday, but I’m not too sure.

Here are some edited thoughts I shared with Trading Trainer members earlier this week. I’ve thrown in a couple charts to make it easier for you to see what I’m talking about.

OTM Near-Term Vertical Debit Spreads

As we mentioned a week ago, the market has been extremely volatile. And extreme volatility exposes open positions to increased risk.

The catch?

If you open and close too many positions in a single week, you will be tagged as a pattern day trader, and forced to comply with a set of complex and onerous rules.

To reduce our exposure, increase our probability of making a profitable trade, and avoid being flagged as a pattern day trader, we’ve been using out-of-the-money near-term vertical debit spreads. What this means is that we’ve been leaving our positions open overnight instead of closing them intraday.

The Bull & the Bear: Where’s the Market Heading?

Last week, most major indexes experienced their worst week in history. The fear was almost palpable as people worried about banks, the economy… and even their retirement funds.

Naturally, after yesterday’s record up day, the average guy on the street is hoping for the best. With all the big down days, people want to believe the markets will now get better.

So, today, the question everybody wants to know is, Have we found a bottom yet? Has the market turned the corner? Well, let’s take an in-depth look at last Friday (10/10/08) and Monday’s (10/13/08) trading day to see what we can learn…

Amazing $100 Million Challenge

Russell Brunson is an online entrepreneur. He’s not even 30 yet, but he’s got an amazing online business.

What’s more, Russell has been a mentor of mine, and has been responsible for much of Trading Trainer’s online growth the last couple years. The touch he has with online businesses, in my experience, is golden.

The reason I’m writing you today is Russell has just launched a brand new FREE contest for anybody who wants to market a business online. It’s called the $100 Million Challenge because Russell’s goal is to help the contestants earn an extra $100 million combined. When I heard Russell was doing this, I knew I needed to blog about it.

Now, you may wonder, “Why would A.J. share something like this on an option trading blog?”

Well, I decided to share this with you because I owe a lot of my success to Russell… and I thought there may be a few of my readers who could benefit from marketing their businesses better online. This contest is a great motivator.

Orlando Intensive Moved to March 2009

I’ve got a very important and time-sensitive update for you today. That is, the Orlando Intensive has been moved from November 2008 to March 2009.

Why?

Because I’m an idiot. Basically, we scheduled the November Intensive early in 2008 and forgot to check the dates to see if there were any scheduling conflicts.

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