The Best Trading Strategy
People often ask, “What is the best trading strategy?” Is it the PowerX Strategy? Or you might have heard me talking about Binary Power Spreads.
Recently I’ve been selling put options, which has been working really well in these volatile conditions.
So which of these strategies is the best strategy? That’s what we are going to talk about right now.
So when we talk about the best trading strategy, you need to understand that each trading strategy is for specific market conditions.
Let me actually show you on a chart what I mean by this. So let’s just take a look at the Dow Jones over, let’s say the past year, since 2019.
Now, as you can see, you know that we have been in the longest bull market in history. The bull market has been going on for eleven years.
Looking at this you see that you have a market that is just crawling up with smaller retracements but overall, we are going up, making new all-time highs.
Do you think that you trade this differently than something that we have going on right now in March and April 2020 where we have this meltdown where the market went down by 30%?
Absolutely.
So one of the things that you need to understand when you look at trading strategies, there is no one-size-fits-all.
It’s almost like if you only have a hammer, everything looks like a nail to you. You’ve heard about this before, right?
So in your arsenal as a trader, you should have multiple trading strategies, and most importantly, you need to know when to apply what trading strategy when.
The strategy that I personally trade most of the time is…
Trading Strategy 1: The PowerX Strategy
The PowerX Strategy is perfect for normal market conditions.
And what does it mean when we talk about normal market conditions? Here’s what I mean by this.
I want to see a VIX, the volatility index below 30. So let’s talk about the VIX and what it means.
The VIX is the volatility index, the fear factor that we have in the markets. And as you can see, normal levels for the VIX are between 10 and 20.
We can go back over the past few years.
Now, as you see, every now and then the VIX is spiking like crazy.
So here the last time it did it, it was in 2008, 2009. No surprise. This is when we had the last financial crisis.
So during these times you, of course, have different trading strategies that work than your standard bread and butter strategy.
But you see, most of the time it stays below 10 and 20, every now and then it has to spike up there.
If you go back in time, I believe that here in 2000, as we had the market crashing we were also spiking.
But most of the time, as you can see, it is pretty normal.
I’m switching back here to the daily chart where the VIX is trading between 10 and 20, and right now we are still pretty high levels.
We are right now at above 40 here. So the PowerX Strategy right now, I’m not using that strategy. I wait until the VIX, the volatility index, is below 30 again.
Now, another trading strategy that you might have heard from us are the so-called…
Trading Strategy 2: Power Alerts
The Power Alerts are a long-only strategy.
I designed this strategy so that you can trade it in retirement accounts. This is where we are issuing buy signals for certain stocks.
We have been in a crash over the past few weeks, and right now, we are still diddling around a little bit and don’t know where we are going.
So we did have a few Power Alerts coming up when we actually moved up here over the last few weeks.
But I didn’t send them out to you because I’m very, very skeptical right now about what is going to happen.
This is why if you have signed up for the Power Alerts and you say, “Well, I haven’t received anything since February.”
Look at this. This is when we had February. In February, the markets were still going up. That’s when we issued the Power Alerts.
Will we issue them in a market that is going down?
No, of course not, because this is when you lose money if you would try to buy when the market is falling.
Now we’ll talk about Binary Power Spreads and also selling puts.
My goal is to be here for you and show you the stuff that you can use in your trading right away.
Trading Strategy 3: Binary Power Spreads
Now, this is a strategy that is perfect for small accounts and you can trade this pretty much all the time.
This is a strategy that we are trading in all market conditions.
It doesn’t matter whether the VIX is high or low, whether we are going up or are we going down, the Binary Power Spreads is a strategy that we trade all the time.
This where you can get started with as little as $1,000 – $2,000, but I think $3,000 is ideal is to get started.
This is a strategy that many of you are trading right now with us, that is actually really fun to trade.
Now finally, a strategy that is working really, really well right now is…
Trading Strategy 4: Selling Put Options
This is a strategy that works perfectly as long as the VIX, the volatility index is above 30.
This is why I believe it is super important that you have more than just one strategy.
I want to share with you right now what I’m doing.
As today, April 20th, the VIX is still above 30.
Now, some of you know that we had a course about how to sell put options that included 2 days of live trading.
On day one I explained the strategy, and then the two following days we were trading the strategy live.
Would you like to see where we ended up after two days of live trading? Let me show you my account right here:
As you can see, after a few days we were up around $1,900. It just jumped up down a little bit, but you get the idea.
This was the result after just two days. Now, again, I need to make sure that you understand my results are not typical at all.
I’ve been doing it for a very, very long time. Your results might be completely different.
By sharing my account here, it is not that I say, “Oh, my gosh, if you learn this strategy, you will make the same amount of money.” No, not at all.
Your risk tolerance is different, your execution might be different. So for you, the results might look completely different.
The reason why I’m showing you my account is that you see exactly what I personally do right now and the results that I achieve.
And again, these results are not typical at all.
So as you can see, it is important that you are not a one-trick pony. You want to have multiple trading strategies in your stable.
What Is The Best Trading Strategy?
I know that that you might have just purchased The PowerX Optimizer, or you might have just purchased The PowerX Strategy.
It is a great strategy to learn and use in normal market conditions, which we have 95% of the time or 98% of the time.
This is a perfect strategy that I like to trade. It is my bread and butter strategy.
But every now and then you see that we have crazy market conditions as we have right now.
And when this is the case, you just look into your own playbook and see which trading strategy should you trade right now.
Think about it, if you had only one trading strategy it’s like playing a football game with only one play all the time.
Can you imagine trying to win a football game if you only ran one play for the whole game? Of course not!
Now I personally believe that you only need three to four different strategies.
I don’t think that you need to have more than four different strategies and here’s why.
When you do, you might get confused.
You need to have a strategy you can quickly pivot to when the market volatility goes crazy like we’re seeing now. This is the time I love to sell put options premium.
When we return to normal volatility this is when you want to buy options, great.
And then if you have another strategy that you can trade all the time, like the Binary Power Spreads, that’s perfect.
Is this making sense?
So when people ask me, “What is the best trading strategy?” I say, “Depends on what the market conditions are right now.”
Because depending on the market condition, you have to grab into your toolbox and get the right tool out. You cannot fix everything with a hammer.
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