Investing Money Stocks/Options/Crypto
Everyone is invested in the stock market through their retirement account or a traditional brokerage account. Strategies on how to maximize the return on these accounts can vary from the ultra simplistic to the extremely customized and complex. Here are five alternative strategies on how to invest in the market arranged in increasing complexity.
Strategy 1:
Buy and Hold an ETF that tracks one of the Index Funds and leave it until retirement. The following ETFs are arranged in the degree of volatility from highest to lowest.
- QQQ – Nasdaq 100 – Invesco QQQ Trust, 0.20% Expense Ratio
- SPY – S&P 500 – SPDR S&P 500 ETF Trust, 0.09% Expense Ratio
- RSP – S&P500 – Invesco S&P 500 Equal Weight ETF, 0.2% Expense Ratio
- DIA – Dow Jones Industrial Average – SPDR Dow Jones Industrial Average ETF, 0.17% Expense Ratio
Strategy 2:
Buy and Hold a leveraged ETF that tracks one of the Index Funds and gradually reduce the leverage towards retirement.
- Nasdaq 100
- QQQ – 1x leverage tracking the Nasdaq 100
- QLD – 2x leverage tracking the Nasdaq 100
- TQQQ – 3x leverage tracking the Nasdaq 100
- S&P 500
- SPY – 1x leverage tracking the S&P 500
- SSO – 2x leverage tracking the S&P 500
- UPRO – 3x leverage tracking the S&P 500
- Dow Jones Industrial Average
- DIA – 1x leverage tracking the Nasdaq 100
- DDM – 2x leverage tracking the Nasdaq 100
- UDOW – 3x leverage tracking the Nasdaq 100
Strategy 3:
Buy and hold until retirement a diversified index ETF. The following are heavily diversified allowing the investor to purchase one single ETF and gain exposure to the entire global market with one purchase.
The Simplest portfolio of these ETFs would consist of one Total World Market EFT. This means as long as the global economy does well, the investor would make money. Alternatively to only expose the portfolio to the US market choosing one EFT from the category of Total US Market would work. Any combination of ETFs from these categories would create a well diversified portfolio.
- Total US Market
- VTI – 0.03% Vanguard Total Stock Market Index Fund ETF Shares
- SWTSX – 0.03% Schwab Total Stock Market Index Fund
- VTSMX – 0.14% Vanguard Total Stock Market Index Fund Investor Shares
- Total World Market
- VT – 0.09% Vanguard Total World Stock Index Fund ETF Shares
- VTWSX – 0.17% Vanguard Total World Stock Index Investor Shares
- VMVFX – 0.23% Vanguard Global Minimum Volatility Fund Investor Share
- Total World Market Without USA
- VEU – 0.09% Vanguard FTSE All-World ex-US Index Fund ETF Shares
- VGTSX – 0.17% Vanguard Total International Stock Index Fund Investor Shares
- Emerging Markets
- VWO – 0.12% Vanguard FTSE Emerging Markets Index Fund ETF Shares
- Developed Markets
- VEA – 0.05% Vanguard FTSE Developed Markets Index Fund ETF Shares
Strategy 4:
Follow Warren Buffet and buy stock in Berkshire Hathaway (BRK-B)
Strategy 5:
Actively managing a portfolio using technical analysis to time the market and maximize return. The entirety of this remaining section is devoted to providing a starting point of information on how to actively manage your stock investment portfolio.
Knowing Your Investment Style
The best starting point is to find your starting point, and in doing this you find what type of trader you are and what investments are most pertinent to you. There are three different trading styles with each varying based on their investment time horizons. These strategies are buy and hold, swing trade, and day trading. No matter which trading strategy is chosen, the methodology of investment remains the same.
Buy-and-hold strategy: The longest time horizon investment strategy is the buy-and-hold, which involves holding an investment for months to years. This strategy is good for investors that want to ride out the short term market fluctuations and capture their gains on the overall market direction.
Swing trading strategy: The time horizon for a typical swing trade it’s days to weeks. Moving in and out of an investment to capture the bulk of an individual investments movement no matter the current market trend. Swing trading requires more management and research on individual investments to maximize gains.
Day trading strategy: An investment that opens and closes within the same calendar day is considered a day trade. This investment strategy is the most time intensive and looks to maximize gains within the daily movement of an investment. Requires a cash balance of $25,000 due to Pattern Day Trader rules.
Some Good Ideas
Trade journal: Recording in a personal trade journal is considered a best practice as it identifies your own strengths and weaknesses. This also forces you to identify your trade set up, entry points, and exit points along with holding you accountable for your actions. Websites such as tradervue.com allow you to import your trades from most brokers and automatically analyze each trade to provide you statistical benchmarks on your performance. Based on these performance metrics you can better understand your personal performance and where you need to improve.
Risk Management: The most important aspect of any investment portfolio is the investor’s ability to implement good risk management policies. Good risk management policies will provide consistent results over the long term. The aspects that should be monitored for consistent improvement are as follows.
- Aiming for a high profit to loss ratio
- Higher average gain and lower average loss
- Consistent risk to reward ratio
- Smoothing out maximum drawdowns
- Improving overall accuracy
Risk management questions to consider prior to any investment.
- Where is the ideal entry point
- Where is the stop loss located
- Is the Profit to Loss ratio acceptable
- Is the dollars at risk acceptable
- How long will I be in this trade, consider the corresponding timeframes
- Does this investment have a history of gaps
- Did you check the; Moving Averages, MACD, RSI, Bollinger Bands, Stostastics, Fibonacci Numbers, Trading Pattern and any indicator the strategy is based on
Trade Size Determination:
Equation Method:
Risk / (Entry Price – Stop Loss Price)
Risk = How much money are you willing to lose on this trade
Entry Price = the price per share you are going to buy in at.
Stop Loss Price = is the price per share you are forced to sell at to ensure you do not exceed the risk amount
Fixed Fractional Risk Management Method:
Number of contracts to be purchased = fixed percentage of account value to be risked on all trades (total account value / trade risk)
Fixed 10% Percentage Method:
Never place more than 10% of total account value in a single trade
Know the Overall Market Strength and Direction
The directional trend of the market and the strength the market has in that direction are important to know prior to searching for trades. The following two formulas are guidelines that give a quick reference to this.
Advance vs. Declines
This will tell how many stocks are moving upwards in contrast to down. Subtract the number of stocks declining from the number of stocks advancing. Also do this for stocks making new 52-week highs to lows. Finviz.com has this figure on their homepage.
To measure just the significant moves in stocks try the 4% Rule. This measures only the stocks that are moving greater than 4% in either direction during a given day. This indicates if just a few large stocks that are having a good day are lifting the entire market or if all stocks are advancing as a whole.
Stocks Rising greater than 4% Bullish Breakouts
0-300 = Normal
300-500 = Increased buying pressure
500-750 = High buying pressure
750+ Extreme buying. Broad based market thrust
Stocks dropping greater than 4% Bearish Breakdowns
0-300 = Normal
300-500 = Increased selling pressure
500-750 = High selling pressure
750+ Extreme selling. Broad based market thrust
A ratio of Breakouts to Breakdowns being above 2 indicates a bullish thrust. A ratio of Breakouts to Breakdowns being below .5 is a bearish thrust. Using the Screener from Finviz.com quickly derives this number.
Investing Websites and Books
General Knowledge Growth
- Investopedia.com – Wikipedia for investments
- Stockcharts.com – Tools and educational material with a list of indicators and how to use them1
Daily Trading Tools
- tradingview.com – Free Online Charting Software
- money.cnn.com/data/premarket/ – Premarket direction
- finviz.com/screener.ashx – Stock screener
- barchart.com/options/call-spreads/bull-call – Options screener
- goodcalculators.com/black-scholes-calculator/ – Options calculator
- optionsprofitcalculator.com/ – Options calculator
Trade Journal Tracking
- tradervue.com – Download transactions and check performance
Technical Analysis Patterns
- Encyclopedia of Chart Patterns by Thomas N. Bulkowski – provides a review of many charting patterns and their probable outcomes
Research / Economic Calendars
- finance.yahoo.com – Endless data, market news, historical prices
- marketwatch.com – Market news
- CNBC.com – Market news
- fxstreet.com/economic-calendar – Calendar view of when economic new will be released that will move the market
- profitf.com/tools/economic-calendar – Calendar view of when economic new will be released that will move the market
- Paid scrolling news services provide faster news dissemination for active traders
Charting Indicators
Trading Plan: A trading plan incorporates the best practices that adhere to the overall strategy, risk management policies and are supported by the charting indicators. Each trade consists of three price points and the rationale that justifies each. The first price is where you are going to buy followed by where you plan to sell for a profit or alternatively where you are going to place your stop loss. Each of these price points should include a rationale as to why you think they are in a good location supported by the indicators and chart setup that was utilized.
Price: Nearly all charting indicators analyze historical price movements in an attempt to produce insights as to the future direction of the investment. All indicators and chart pattern setups are based on historical price movements.
Bollinger Bands:
What are they – Volatility bands placed above and below a moving average
Settings – Traditionally set at 20 Simple Moving Average (SMA) with bands set at 2 Standard Deviations (SD), alternative settings are 50 SMA and 2.1 SD or 10 SMA and 1.9 SD
How to use them – Most often prices stay within 2 standard deviations of a 20 simple moving average. A price is unlikely to open outside of nor press against either volatility band without returning to within the bands. The bands act as resistance points.
Chart Patterns used with Bollinger Bands
W-Bottoms – Price falls and closes below the lower band then the price rises up to or slightly past the middle SMA then falls to but not below the lower band. Breakout confirmation will be the price rising above the high of the SMA approach. Second breakout will be a rise above the original price fall.
M-Tops – Exact opposite of W-Bottom
Moving Averages:
What are they – SMA Simple Moving Averages add the closing price for the specified time period and divide by that time period. EMA Exponential Moving Averages add up the closing price for the specified time frame and provide a weight favoring the more recent time periods.
Settings – Short term time horizons of 15 minutes and less the 9EMA, 20 EMA, and 50 EMA are key levels to focus one. Longer term daily time frames the 20 EMA, 50 EMA, and 200 SMA are key levels to focus on.
How to Use Them – SMA and EMA act as support and resistance levels that can provide guidance where to enter or exit a trade. They also act as long term price trend indicators, if the moving average is sloping upwards the price trend is rising, if the moving average is sloping down the price trend is on the decline.
Moving Average Crossover:
A bullish crossover (Golden Cross) occurs when the shorter moving average crosses above the longer moving average. A bearish crossover (Dead Cross) occurs when the shorter moving average crosses below the longer moving average. A 5-day EMA and 35-day EMA would be deemed a short-term time frame. A 50-day SMA and 200-day SMA would be deemed medium-term, perhaps even long-term time frame.
Volume:
What is it – Number of shares being traded during a given time period.
Settings – On or Off
How to Use Them – Stocks trading higher on volume that is 50% preferably 100% more in normal volume, the price will likely continue rising. Stocks that trade higher on lower than normal volume might experience exhaustion where the number of buyers are few and when they stop trading the price higher the stock will fall, potentially sharply.
Stochastics:
What are they – This is a momentum indicator showing the speed of price change. The momentum in price fluctuations changes prior to the price changing thus indicating the future reversal points by identifying overbought and oversold levels.
Settings – 14
How to Use Them – When the stochastic is above 80 this is the overbought area and when it is below 20 this is the oversold area, indicating a potential reversal in price in the coming future.
Fibonacci Retracement:
What is it – Provides areas of support and resistance where price might retrace to
Settings – You pick two significant price points on the price chart. The first being at the base or break out point and the other high at the top or reversal point.
How to Use Them – If you want to see how far a price might fall after topping out at a large climb. Select the starting point where the price rose from or at the base then select the end point where the price has stopped rising or near the perceived top. The 23.6%, 38.2%, 50%, 61.8% and 78.6% levels will be areas of support or potential reversal points when the price falls to them.
Swing Points:
What are they – These are areas of prior price consolidation or breakdown. Trendlines can be drawn connecting these areas to produce forward looking price predictions.
Settings – You have to draw them
How to Use Them – Look at the price charts on multiple time frames drawing lines that could be argued that channel the price into a specific direction (Support and Resistance Lines). Areas that the price has a difficult time to overcome indicates a resistance line and once it is overcome that line now becomes an area of price support in the future.
MACD:
What is it – Momentum oscillator indicating when price is going to change direction
Settings – 12 and 26
How to Use Them – When the 12 is below the 26 and then crosses the 26 to move above it the price will likely move higher. When the 12 is above the 26 and then crosses the 26 to move lower the price will move lower as well. The bar chart histogram indicates how much momentum is behind the price movement.
RSI relative strength index:
What is it – Measures the speed and change of price movements showing overbought and oversold conditions, indicating when price will swing the other way
Settings – 30 Oversold, 70 Overbought
How to Use Them – When the indicator is over the 70 mark this indicates the price has a good chance of slowing down or reversing, the closer to 100 the greater the indication price is going to slow or reverse. The opposite is true for the 30 mark, indicating the price will begin to rise.
Momentum:
A momentum oscillator will provide a indication of the amount of demand remaining in the market for a given trend to continue.
Breakouts vs. Breakdowns:
Shows the overall market direction of how many stocks have risen versus fallen. If the market index is rising but the number of breakdowns is high this indicates a few large stocks are propping up the market.
Average True Range:
Measures volatility over time. Gives a graphical representation of how volatile one particular time frame was in comparison to others.
VIX:
Shows overall volatility of the market, higher the VIX the higher the probability of large market swings or gaps
Money-Flow Index:
Helps determine overbought vs oversold conditions
Common Candlestick Trading Patterns2
Long position: Purchasing the investment, making a profit on the rise in price
Short position: Selling an investment you do not have and buying it later, making a profit on the fall in price
Bullish Patterns: Price will continue upwards
Bearish Patterns: Price will continue downwards
Trendline: Straight lines drawn on the price chart that reasonably connects points of price resistance. The slope of the line can be up, down or horizontal.
Breakout: Bullish; A breakout is a significant price movement beyond a previously identified areas of resistance.
Breakdown: Bearish; A breakdown is a significant price movement beyond a previously identified area of support.
Gaps: Significant price gap between the closing price and the opening price with no trading volume in-between.
Flat Top Breakout:
Direction; Bullish
Pattern; The investment makes higher lows but consistently gets stopped from making a higher high at the same level of price resistance. The price will become tightly coiled as the higher lows near the upper resistance point.
Timeframe; Daily or Intraday
Entry Point; Short term trade – The long entry point would be along the higher lows trendline with the stop loss slightly below having a profit target set at the flat top resistance point. Long term trade – A long position can be opened as the price breaks the upper resistance with a stop loss below the bottom trendline.
Channeling:
Direction; Bearish or Bullish
Pattern; When the price is constantly fluctuating between two price points and clear straight parallel lines of support and resistance can be drawn.
Timeframe; Daily or Intraday
Entry Point; A long position can be opened at the bottom of the channel with a stop loss close behind having the price target at the top of the channel. A short position can be opened at the top of the resistance channel with a stop loss slightly higher and the price target set at the bottom of the channel.
Triangle Descending:
Direction; Bearish
Pattern; A trendline that connects a series of lower highs and a second horizontal trendline that connects a series of lows. A move below the lower support trendline suggests a breakdown is coming and further lows will persist.
Timeframe; Daily but can be Intraday
Entry Point; Short term trade – A short position can be taken when the price reaches the lower highs resistance trendline with a stop slightly above. Long term trade – A short position can be taken after the investment breaks the horizontal lows trendline with a stop above the descending trendline connecting the lower highs.
Triangle Ascending:
Direction; Continuation
Pattern; Trendlines of a triangle need to run along at least two swing highs and two swing lows. They are considered a continuation pattern, as the price will typically break out of the triangle in the price direction prevailing before the triangle.
Timeframe; Daily
Entry Point; A long trade is taken if the price breaks above the top of the pattern. A short trade is taken if the price breaks below the lower trendline. A stop loss is placed just outside the pattern on the opposite side from the breakout. A profit target is calculated by taking the height of the triangle, at its thickest point, and adding or subtracting that to/from the breakout point.
Triangle Expanding:
Direction; Continuation
Pattern; There is a breakout or breakdown. Then the price action swings both ways creating higher highs and lower lows. Several of these swings are needed to create a rising trendline connecting the higher highs and a descending trendline connecting the lower lows. These lines moving in opposite directions creates the triangle which provides the areas of buying and selling opportunity. The price will likely swing for 5-7 times prior to moving in the direction of the original long term trend.
Timeframe; Daily
Entry Point;
Bearish trend – Short term trade – A short position would be opened at a price point near the higher highs support trendline with a loose stop loss above it and have a price target at the lower lows trendline.
Bullish trend – Short term trade – A long position would be opened at a price point near the lower lows support trendline with a loose stop loss below it and have a price target at the higher highs trendline.
Flag:
Direction; Continuation
Pattern; Part one is a sharp breakdown or breakout on high volume followed by price consolidation on low volume. The consolidation should form trendlines in a triangle pattern that doesn’t retrace more than half or the breakdown or breakout. The long term price should break in the direction of the overall trend.
Timeframe; Daily or Intraday
Entry Point; Along the trendlines with stops placed just outside with price targets equal distance of the original break
Pullback to moving average or price support:
Direction; Bearish or Bullish
Pattern; Moving averages have a tendency of being areas of support and resistance for price. These support and resistance areas are stronger when several time frames share price areas of overlapping moving averages. Even more consideration should be given to moving averages that are in areas of previously identified price support. A pullback occurs when price has been consistently rising creating a positive trend but begins to fall or stall. Once the price falls back to these areas of rising moving averages it is likely to begin rising once again. The opposite is true for prices that are constantly falling.
Timeframe; Daily or Intraday
Entry Point; At or near the moving average with a stop on the other side.
Double or triple bottom:
Direction; Bullish
Pattern; Has two or three equally low price points that form an area of support that is followed by a positive breakout above the resistance area
Timeframe; Daily or Intraday
Entry Point; Long position opened at the double bottom support area with a stop loss lower and a price target above the high.
Head and Shoulder:
Direction; Trend Reversal
Pattern; Bullish-to-Bearish – Forms when a stock’s price rises to a peak three times and declines to a common price baseline after each rise. The first and third peak are similar in height with the second peak as the highest. If the price breaks below the baseline on high volume after the decline of the third peak, the subsequent decline will likely be the full distance the second peak advanced off the baseline. Opposite is true for Bearish-to-Bullish.
Timeframe; Daily
Entry Point;
Bullish-to-Bearish – Short position opened slightly after the price breaks the baseline with a stop above the baseline and a target price equal to the distance from the baseline to the second peak high.
Bearish-to-Bullish – Long position opened slightly after the price breaks the baseline with a stop below the baseline and a target price equal to the distance from the baseline to the second peak low.
Cup and Handle:
Direction; Bullish
Pattern; Investment in an upward trend trades down about ⅓ of its increase, this creates the left side of the cup. Then trades sideways near flat levels creating the U shaped bottom of the cup before resuming its upward direction to its previous high creating the right side of the cup. The handle of the cup is a decline in price which could be a straight line not exceeding one third of the price gain of the cup’s right side. An upward movement in the cups handle indicates the price rise will continue. Trading volume decreases on the cup’s right side decline, remains low in the U of the cup and increases on the left side’s rise. This pattern can take 7-65 weeks to develop.
Timeframe; Daily
Entry Point; Long position opened at the rise of the handle with a stop below the handles low
Candles and Doji’s
This section covers how to read individual candles. Each of these candles appear at the end of a trend. They symbolize the reversal of that trend and the price movement towards the opposite direction.
Hammer – Bullish candle appearing at the bottom of a downtrend – Investment moves significantly lower after the open, but rallies to close well above the intraday low, maybe even above the open creating a small real body and a long lower shadow. Lower shadow should be at least two times the height of the real body. Price must start moving up following the hammer for confirmation, this is where long positions are opened with stop losses placed below the shadow.
Hangman – Bearish candle forming at the top of an uptrend – Investment moves significantly lower after the open, but rallies to close well above the intraday low, maybe even above the open creating a small real body and a long lower shadow. Lower shadow should be at least two times the height of the real body. Price must start moving down following the hammer for confirmation, this is where short positions are opened with stop losses placed above the real body.
Morning Star – Bullish candle appearing at the bottom of a downtrend – Three candlestick setup where the first is a long-bodied negative candle extending the current downtrend, a short middle candle that gapped down on the open, and a long-bodied positive candle that might have gapped up on the open and closed above the midpoint of the body of the first day. Notes: The higher the volume on the third candle represents a stronger bullish trend.
Evening Star3 – Bearish candle forming at the top of an uptrend – Consisting of three day candles starting with a long positive body day, followed by a gapped up small body day, then a down close with the close below the midpoint of the first day.
Bullish engulfing – Bullish candle appearing at the bottom of a downtrend – forms when a small negative candlestick is followed the next day by a large positive candlestick, the body of which completely overlaps or engulfs the body of the previous day’s candlestick. More likely to signal a reversal when preceded by four or more negative candlesticks.
Bearish Engulfing – Bearish candle forming at the top of an uptrend – a small positive candlestick is followed the next day by a large negative candlestick, the body of which completely overlaps or engulfs the body of the previous day’s candlestick. Signal is more significant when it is after several positive days.
Dragonfly – Bullish candle appearing at the bottom of a downtrend – The open, high and closing price are at the high of the day with a short shadow downwards.
Gravestone – Bearish candle forming at the top of an uptrend – the open low and closing prices are near the bottom with a short shadow upwards.
Bullish Tweezer Bottom – On a bullish stock these doji have long wicks on the bottom that are a minimum of 60% the overall length. Buy on the opening of the third day if on the high side.
Bearish Tweezer Top – Small body with a long wick containing 60% of the candle. Sell at the opening of the third day if lower.
Websites with Helpful Resources
Root Website = TheOptionsGuide.com
Direct to information = TheOptionsGuide.com/option-trading-strategies.aspx
Graphical explanation of options profit and loss, provides free educational material
Finance.Yahoo.com
Provides overall market reviews, financial calendar, information on all stocks, statistics, historical prices, charts
Root Website = Finviz.com
Direct to information = Finviz.com/screener.ashx
Stock screening with numerous filtration options.
Tradervue.com
Provides a detailed analysis of your gross daily profit and loss along with the volume of trades that have been made. Breaks down trading into a per share percentage of winning trades along with your total daily gain and loss your average hold time gains, losses, volume and breaks everything down onto a daily performance to show you what day you’re better at trading even down to what our you’re better at trading in us were you able also tell you how long you’ve held the trades see you can tell if you’re better added day trader swing trader I long-term value investor. This website has a free version of that can accommodate most traders
Root Website = BarChart.com
Direct to information = BarChart.com/options/call-spreads/bull-call
Provides options trading ideas.
Root Website = StockCharts.com
Direct to information = School.StockCharts.com/doku.php?id=technical_indicators
Educational tools on stock trading, detailed breakdown of technical indicators
Root Website = GoodCalculators.com
Direct to information = GoodCalculators.com/black-scholes-calculator/
Black Scholes Calculator for options. Calculates fair price for options
OptionsProfitCalculator.com
Calculates profit on various options strategies
Marketwatch.com
Covers domestic and global market sentiment. Keeps up to date on current affairs.
OptionsEducation.org
Menu in the upper left hand corner has most of the free education on options trading.
Platform.ThinkorSwim.com/platform/index.html
One of the more widely utilized paper trading platforms. Provided by TD Ameritrade which has been bought out by Charles Schwab. Large number of features available.
Options Investing45
Options Key Terms
Delta – Movement of the options price relative to $1 move in stock
Gamma – Measures the rate of change of Delta
Theta – Time Decay, Reduction in the price of the option per day
Vega – Measures change in volatility
Delta, in a loose sense, is the probability that an option will expire in the money
Delta below 50 typically means the option strike is Out of the Money
Delta above 50 typically means the option strike is In the Money
Strategy: Bull
Action Taken: Buy Call
Investment Direction: Up
Potential Loss: Premium Paid
Potential Gain: Unlimited
Premium: Spent
Profit & Loss Graph: Graph will be updated later
Strategy: Bear
Action Taken: Buy Put
Investment Direction: Down
Potential Loss: Premium
Potential Gain: Change in Price
Premium: Spent
Profit & Loss Graph:
Strategy: Bear Income
Action Taken: Sell Call
Investment Direction: Down
Potential Loss: Unlimited
Potential Gain: Premium
Premium: Received
Profit & Loss Graph:
Strategy: Bull Income
Action Taken: Sell Put
Investment Direction: Up
Potential Loss: Change in Price
Potential Gain: Premium
Premium: Received
Profit & Loss Graph:
Strategy: Bull Call Spread
Action Taken: Buy a Call and Sell Call with a higher strike price both have the same expiration date
Investment Direction: Up
Potential Loss: Premium
Potential Gain: Difference between the strike prices minus cost
Premium: Spent
Profit & Loss Graph:
Strategy: Bull Put Spread
Action Taken: Buy a Put and Sell a Put at a higher strike price, both have the same expiration date
Investment Direction: Up
Potential Loss: Difference between the strike prices minus the net credit received
Potential Gain: Caped; Premium received from selling the higher strike put minus the premium spent buying the lower strike put
Premium: Received
Profit & Loss Graph:
Strategy: Bear Call Spread
Action Taken: Sell a Call and Buy a Call at a higher strike price, both have the same expiration date
Investment Direction: Down
Potential Loss: Difference between the strikes plus the premium
Potential Gain: Premium
Premium: Received
Profit & Loss Graph:
Strategy: Bear Put Spread
Action Taken: Sell a Put and Buys a Put at a higher strike price. Both have the same expiration date
Investment Direction: Down
Potential Loss: Premium
Potential Gain: Difference in strikes minus premium
Premium: Spent
Profit & Loss Graph:
Cryptocurrency Investing
This area willl be updated later.
Additional Notes
3-6 days of high buying pressure indicates a possible Bull market forming
0-300 4% breakouts = normal
300-500 4% breakouts = increased buying pressure
500-750 4% breakouts = high buying pressure
750+ 4% breakouts = extreme buying pressure, broad-based market thrust
3-6 days of high selling pressure during a Bear market could lead to a rubber band setup, Or if the indices are oversold in the stochastics this could lead to a counter-trend move to the higher
0-300 4% breakdowns = normal
300-500 4% breakdowns = increased selling pressure
500-750 4% breakdowns = high selling pressure
750+ 4% breakdowns = extreme selling pressure, broad-based market thrust
Ratio of 4% Breakouts / 4% Breakdowns
>2 = Bullish Thrust = Good for long positions
<0.5 = Bearish Thrust = Good for short positions
Several days of 0.5 after sustained Bull run could mean market is about to fall