Written on September 5, 2017 at 5:30 pm, by Tim Justice
One of the most important things you can do as a trader is to journal your trades. This short video, is to explain how to use one of our tools, the Tackle Trading Trade Journal.
At the bottom of this post, you can download the journal. It’s what we use for our team to keep score, keep records and keep track of what we’re doing.
First, enter the account value. The calculations will be done for you, at the top of the journal, as you fill out the information for the trades.
Line 1, Symbol. When you make a trade, fill the information out box by box. On the dropdown menu, choose credit if you received a credit, debit if you paid for the trade, Long stock if you bought stock, short stock if you sold stock.
Entry Date, Entry Price, Entry Size, these are all items you log for your trade entry.
Exit date, exit price, exit size, (as well as exit 2 information), allow you to log your trade exit.
As you log your trades, you’ll then get a Profit or Loss column populate on the right, the more trades you enter, the more data you have. The more data you have, the better you can identify if you’re doing a good job, or not, and then make corrections and adjustments to your trading and your system.
Keep score! Every trader needs to,
Get in the game.
Written on May 4, 2017 at 1:38 pm, by Coach D
So you put a collar on your stock position for earnings and now want to know what to do to unwrap it? here’s an example of how.
Written on March 3, 2017 at 2:24 pm, by Mark Justice
There are certainly some roller coaster rides you can go on if you trade biotech or pharmaceutical stocks. In addition to the unknown and known events that every company has, there are constantly (at least it seems that way) news related to the company’s development of drugs and therapeutics that dramatically impact the stock. That was the case the other day for PTC Therapeutics, Inc. (PTCT) which closed down more than 19% after disappointing phase 3 trial results on nonsense mutation cystic fibrosis treatment candidate.
Written on March 3, 2017 at 2:18 pm, by Mark Justice
Monster Beverage (MNST) was in a consolidation pattern for a few months before pleasantly surprising on earnings. While there are no great patterns currently that can change quickly and the resistance level that formed last year is certainly one to be aware of if you are going to trade this stock.
Written on March 3, 2017 at 2:13 pm, by Mark Justice
Round Numbers can play a major role in the formation of new support or resistance zones. Numbers such as $10, $20, $30, $40, $50 and so on often create a phycological barrier for traders and investors in the formation of new price levels. Following a negative earnings report it will be interesting to see how Etsy, Inc. (ETSY) responds to $10.
Written on October 5, 2016 at 4:27 pm, by Old User
Guest Coach Brad May pulled together this how-to video about setting up a Tools Bar on Thinkorswim for you. You can give it a watch below:
Brad May started his trading journey in 2012 as a Rich Dad student and is currently generating weekly Scouting Reports for Tackle Trading. The core of Brad’s trading style consists of option strategies along with technical and analytical analysis. His knack for programming has enabled him to code several unique indicators, primarily focused on Vega trading around earnings events, using the Think or Swim trading platform.
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All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
Written on September 6, 2016 at 10:23 am, by Tim Justice
Philosophy of the Covered Call
The Covered Call is a cash flow strategy that includes buying an equity in increments of 100 shares and selling call options against the underlying equity position for 1 contract for every 100 shares owned. Liquidity is an important factor, the options should carry enough liquidity for the trader to be able to buy back calls sold, sell new calls when needed and get in and out of the position as needed. Covered calls can be used in trading accounts, investing accounts and any account that is looking for cash flow as a core component of its performance.
Position Size Rule: Covered Calls can be as small as a trader can trade and up to 10% of your portfolio. The larger the portfolio, the smaller the per position size is recommended. The smaller the portfolio, the Covered Call may need to increase in size but should not exceed 10%
Construction of the Covered Call
Building a Covered Call requires 2 actions, 1st buying a stock and 2nd selling a call. The stock should be bullish or neutral, and generally fit the traders’ overall investment objectives. Stability, consistency and credit are important factors to consider. Many traders prefer stocks that pay dividends, but it is not a mandatory component. To build the covered call you need to buy the stock in increments of 100 shares. This can be done individually or it can be done simultaneously with the selling of the call option.
Selling the call requires the trader to select the expiration and strike price of the option. For consistency, use the following guidelines:
Theta Rule (Time till Expiration): 28-60 days. For cash flow, 28 days is better, for a trader looking for less management, 60 days is better.
Delta Rule (Strike Price): use the call closest to 40 delta. For example, if you have a strike with a delta of .38 and .46 you would use the .38. Traders who are trying to maximize cash flow would use a delta rule with the highest extrinsic value.
Management of the Covered Call
If the stock moves up: the call option will increase in value and eventually need to be bought back (potentially for more $ than the original credit) and rolled to a new call. If the value of your call ever loses its extrinsic value to where that extrinsic value represents less than 1% of the underlying price, then roll the option.
If the stock moves sideways: the call options value will decrease over time. Once the value of the extrinsic value of the call is less than 1% of the stock’s price, roll the call option to a new strike and expiration.
If the stock moves down: the value of the call option will drop, and once its value is less than 1% of the price of the stock, roll the option to a new strike and expiration.
If the stock becomes bearish: consider either selling the stock and taking your loss as an investor, or buying a put option in the same expiration as the call you’ve sold to protect the downside risk. Buy a put only as a protective measure during short term drops in price and/or market or sector risk that is driving the stock lower. You can buy the put manually, or use a conditional trigger at a specific stock price that represents where you want to protect.
If the stock has earnings or a corporate event that has risk: buy a protective put in the same expiration with the same delta as the call you’ve sold. Use a risk graph to analyze your potential gain or loss from the earnings gap.
Written on July 20, 2016 at 12:45 pm, by Tim Justice
Developing as a Trader. Routines, Discipline, Expectations.
This is a message for beginners.
If you’re new, you need to learn how to think properly about your next steps. Your first job as a new trader is simply to breath, focus and develop a plan on how you’re going to become great.
You don’t need to start trading today. You’re not ready for that yet.
The expectations you should be setting, should be based on once you’ve developed as a trader and are running as system. You will have one or all of the following goals.
Daily profit goals for day trading. Monthly goals for swing and position trading. And, Yearly salary and income you want to earn from running your trading business. You will need to establish these monetary goals at some point.
Set goals that you have to work your tail off to achieve. Don’t set wimpy goals. Dream big, don’t be a loser.
Remember, if you’re going to start a trading journey, your goals should be greatness. It should not be mediocre. Don’t listen to the expectations from Traditional thinkers or what the System has told you. You should have high expectations for what you want to achieve.
Don’t start with live trading. If you’re new, you’re not ready for it. The worst thing you could have happen is for you to start making money right away. If you start in the market, and find profit before you know what you’re doing, you’ll get a false sense of how the business works. Don’t start live trading. You can either win, lose or draw if you start right away – and none of them will be a reflection of your long term success as a trader.
To achieve your goals, you will need discipline and money management. Your portfolio should have designed money management rules, position sizing rules and curbs in place. That’s why you start with education. Until you’ve been trained on how to think about the money behind trading, your energy and focus should simply be on getting the education you need to build the system you are going to run.
This is the 6 step process you will go through if you do this correctly:
1. Education is first.
2. Design is Second
3. Testing is Third
4. Paper Trading is Fourth
5. Live Trading is Fifth
6. Review and Adjust is Sixth
My expectation for you is simple. You should do something daily to get better and more educated at what you’re doing or how to run your business. If your goals are more long term, then you may set your standard as bi weekly or weekly. But if you want to be a trader, you should have a daily expectation. Be patient with yourself, be honest with yourself, and make sure you take this part of it seriously. I believe that if you go out and start developing, and continue a positive track, you can achieve great things. You need to believe that as well. No excuses.
Schedule your time into your calendar. Don’t assume you’ll do things, and if you know that procrastination and follow through are a challenge for you- and if you’re human then they are a challenge for you – then approach this with the seriousness it needs and set aside the time by scheduling it in. You don’t take phone calls during that window, don’t answer email, don’t try to multi-task, simply set aside the time for your trading development. Even 30 minutes per day will be a tremendous start.
Your Routine will be critical. You need to know what to work on during your daily scheduled routine. The basic things you should try to do: read the news, check the heat map and read the chart on the S&P 500. Until you are doing those things extensively, don’t try to do more than that. Keep it simple, the important part of this step is to establish a routine so you can develop a habit.
If you were going to learn how to ski, you wouldn’t start with a Black Diamond. Take the bunny hill first. Start with the basics, and don’t try to emulate what a veteran trader might do now, make this work for your life. And, do it consistently, and make no excuses. It’s ok and normal to be confused when you read the news.
Every day you should also try to watch a new video, read a blog or listen to a podcast from Tackle Trading and Trading Justice as a part of your continued education. The content we have in our archive will take you a long way, but it’s too much to try and process now. Do it one step at a time.
If you’re a Legacy Education student, you need your education to start with Master Trader, the on-demand trainings, and watch them one at a time.
Final Thought: Always approach life, and the new opportunity you have, with excitement, energy and take it seriously. If you want to accomplish something you can. It might not be instantly, but the field you’re diving into is great. It’s a process.
Take care, god bless and Get in the Game.
Written on July 6, 2016 at 11:36 pm, by Tim Justice