This past weekend I did a Bootcamp in Irvine, California. There were 60 of you learning how I personally trade stocks, options, how I pick the best stocks, how I limit my losses, and also, when I take profits.
Talking about limiting the losses, the news today is a Boeing crashed in Ethiopia in Africa, killing all 157 people that were inside it. And this morning, Boeing was down 9%. So, the question is:
How can you protect yourself from such a loss?
If you have Boeing in your portfolio, I mean, wow! This morning would have been bad. Boeing is one of the major stocks in the Dow, and this morning, it was dragging the whole Dow Jones down.
Click the video above to take a look at the charts with me.
Let's talk about the charts and how can you protect yourself from suddenly being down.
Because honestly, when you have a plunge like this, no stop loss is going to help you.
There are two things that you can do not to get caught in something like this.
The first thing that you can do is look at the indicators
Look to see what they're already telling you. Because when you look at Boeing, the indicators were already saying right now Boeing is no longer going up.
If you look at it, since December until a few days ago, Boeing was rising from $300 to $440. That's 50%. That is phenomenal.
First, take profits while they are there.
Second, use three indicators.
I like to use the RSI, Stochastics, and the MACD in order to determine whether stock is more likely to go up, down, or sideways.
As long as the RSI is above 50, and Stochastics are above 50, and we see that the purple line, which is the MACD, is above its orange line, we're good.
Now if you look back a few days, you’ll that the RSI was dipping below 50 and the MACD was going below its moving average. This means that the stock was more likely to go sideways since it stopped its upward momentum.
For me, this would definitely be the time to get out. You see, the indicators were telling us early to get out before it plummeted. If you would have gotten out, it would be at around $425 and you still could have called this a fantastic move.
Second, trade stocks that are not in the news all the time.
When the mainstream media talks about stocks, they are very susceptive to, or very receptive to these dramatic moves.
Tesla is a prime example, its in the news all the time, as are Apple and Amazon. Is this making sense so far?
See, many years ago at the beginning of my trading career, I was doing this. I was trading the mainstream stocks because other people talked about it. I mean, this was back in the days.
IBM, and Boeing, and Alcoa, right? These days everybody is talking about Facebook, Netflix, Apple, Google, and yes, Boeing was definitely one of the high-flyer stocks because again, since the beginning of the year, it was up 50%.
So, what do you do?
You just don't trade mainstream stocks.
So which stocks should you trade instead?
Well, as you know, I like to use my software PowerX Analyzer to find the stocks that are perfectly trending for my style of trading.
This morning, we had our live boardroom with private students.
One of the trades that we place was for CRS.
What do they do? Carpenter Technology Corporation - nobody knows, nobody cares.
We wanted to bet on a falling market. Didn't get filled yet because overall, the market was going up, but this is one of the stocks that I like to trade because it shows a really nice ROI.
If you had traded this stock, according to my very simple rules over the past year, based on a $10,000 account and a $10,000 position, you would have made $6,464. That's not bad at all.
If you're interested in learning more about this, go to mytradingroutine.com.
Another stock was PATK.
It looked really, really good. And if you had traded at a $10,000 position over the last year, following my rules that I call the PowerX Strategy, you would have made $7,790 - almost a 78% ROI.
These are the stocks that nobody talks about because I don't even know what Patrick Industries does.
With Boeing being down 9%, slightly bouncing back, but still down 6% dragging down the whole Dow Jones…
How could you have, or how can you, protect yourself from being caught in such a huge loss?
- Watch the indicators.
And usually they tell a story before it happens. Now, of course, indicators cannot predict that a plane was crashing this weekend, but there were already signals that Boeing has stopped going up, and this is when it's a good time to get out.
- Stay away from mainstream stocks.
This is why I programmed the PowerX Analyzer to find stocks that nobody else is talking about because this way, I don't have to worry what Elon Musk, or Jeff Bezos from Amazon, or Tim Cook from Apple are doing.
All right. Hope you find this helpful. If you would like to learn more on how I personally trade, go to mytradingroutine.com.
If you’d like to experience one of our Live Bootcamps, which are free, go to bootcamp.rockwelltrading.com and see when we're coming to an area close to you.
And by close to you I mean, if we are within two hours driving distance, you should get in the car and come! I promise it'll be worth your while.