≈ There are no facts about the future. ≈

Traders,

Yesterday’s message introduced you to the concept of equity risk premium and volatility. Today, let’s shed some additional insight into the second topic.

There are no facts about the future. So to inform our plans and expectations, we look to the past for a baseline. The heroic Winston Churchill said the farther backward you look, the farther forward you can see. Since volatility goes hand-in-hand with market downturns, it helps to understand the frequency and magnitude of previous corrections/bear markets. 

• If you analyze the S&P 500 over the past century, you discover the following: 
• Declines of at least 5% occur roughly 3x a year. 
• Declines of at least 10% occur roughly 1x a year.
• Declines of at least 20% occur once every four years or so. 
• The average depth of a bear market is -30%. 

That said, if you want to really scare the children, mention the 50% crash of 2008 or the nearly 90% nuclear meltdown of 1929.

So, yeah, the market’s volatile, and now you have a general idea of the average frequency of selloffs. I’ll hasten to add they don’t arrive on a set schedule and sometimes crashes cluster. 

You, me, and everyone else that wants to build real wealth should celebrate the heck out of the volatile history. As I said yesterday, it’s why equities provide such fantastic long-term returns. It’s compensation for the drama we have to sit through along the way.

Chart of the Day: Is it Over?

If you’re wondering if Tuesday’s roaring stock market rally marks the end of the correction. The answer is a resounding yes. At least, it is if you’re using the CBOE Volatility Index as your guide. It got absolutely crushed, signaling that fear and panic were exiting the building. Good riddance.

Video of the day: Queen’s Court: Hot potential swing trading setups on $AAPL and $AMAT

In today’s Queen’s Court, Coaches Emily and Matt analyze two Hot potential swing trading setups: AAPL and AMAT.

Today’s line up

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.

The Coaches Show Replay

If you missed last night’s episode where Coaches Gino Poore and Greg Holmes talked about Trade Management on a Volatile Market or would like to watch it again, check it out here.

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.

Trade Masters 7:00 PM EST

Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.

Trading Justice 454: Tyler Craig on Stock Market Volatility

In this episode, we welcome Tyler Craig back to the podcast to discuss recent market volatility. Tyler is a trading coach at Tackle Trading, veteran investor, architect of the Bear Market Survival Guide, and a great educator. Listen in to the feature presentation to hear Tyler’s thoughts on how to interpret, and understand it. Tyler also discusses the pros and cons of protective put buying, and covered call writing, in markets like this.

Listen to the episode in the player below:

Financial freedom is a journey

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.

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.