« Dust in the wind. Profitable. »

How’s your Christmas celebration going? Eating, drinking, celebrating with family, and meeting long-time friends? We hope everything is fine on your end.

I know that during the social media times we are living, when people do not talk to each other anymore, sitting around the table with wine, food and nice conversations instead of staring at the luminous screen sharing food pictures is like saying that Bigfoot exists.

In the physical world, however, people still raise questions and questions need answers. Simple ones, not the fistfight they usually get into in the comments section on Twitter, for example.

One topic emerged during the petit comité: losing money in the stock market. About 10 individuals around the table and I was the only one working in the financial markets. Half of them got burned in some get-rich-quick strategy and they were all craving for clarifications.

— Losing money is OK, it’s pretty normal. The good thing about the financial markets is that you can only lose –100% while you can make +200%, +500%, +1000%. The problem is how much there is inside that –100% in relation to the total amount you have.

Silence settled over them. The Bigfoot does exist.

Then I said, “Let me exemplify”.

Imagine you get, for example, 4% of your account value and spread it into as many positions as you can, with the lowest correlation possible and no more than –0.25% loss of your total account value per position. Let’s say you mix in the same portfolio green stocks, 5G, cryptos, and recent IPOs. Now imagine you check the numbers two months from now and, while many positions perished, many others thrived and you are up +10%. What do you think? Is it a bad thing?

Silence settled over them again.

OK, let’s talk about the Bigfoot then.

Chart of the Day

Correlation Heatmap

This simple heat map will tell you how correlated the broad market sectors are with one another. The greener, the more correlated they are.

Video of the day

Trading Concept Check: Portfolio Design

Watch this quick video to help you make sure you understand the important concept of proper portfolio design for all of your trading and investing strategies.

Traders Lounge 11 PM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

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.