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Tackle Today: Choose a Trading Strategy

April 20, 2022

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«Which is Best?»

Traders,

You just finished step one of the 7-Step Guide to Trading and now know what the posture of the broad market is and your accompanying bias.

The second step is: Choose a Trading Strategy.

If you’re a stock trader, this step is straightforward. Either you’re bullish enough to seek out long stock trades or bearish enough to search for short trades. Which you choose should be a byproduct of the trend of the broad market indexes and your bias.

Things get interesting when a trader uses options strategies because there are dozens of ways to build a bullish or bearish trade. Here are three key factors that could influence your decision.

Market Bias: We use a number spectrum to bring granularity to market bias. Based on the trend of the S&P 500 and other indexes at the top of the market, you should determine where you lie on the scale: -3,-2,-1,0,1,2,3. That, in turn, will steer you toward specific strategies. For example, if my market bias is +1 (mildly bullish), I’m probably not going to buy call options because that’s too aggressive.

Existing Portfolio Exposure: Do you already have a lot of exposure? If so, you might not want to add aggressive trades. Alternatively, if I just turned bullish on the market and have a neutral portfolio, then I might look to add aggressive plays.

Personality: Regardless of your market bias, specific options strategies are likely to speak to your personality. Do you favor high probability plays with a low ROI? Or do you like the more directional nature of buying options?

Together, these three factors should help you narrow down the most appropriate trading strategies to deploy in the current market.

Tomorrow, we’ll move into Step 3: Find and Analyze Potential Trades.


🛑 Upcoming Webinar › Trading for Beginners: The 7-Step Guide to Trading with Coach Matt Justice | April 25th at 8:30 PM EST on YouTube

Learning to trade properly requires a process. This Free Trading Course will help you develop that process so you can make good decisions at each step. Join Matt Justice in this webinar to get an understanding of the 7 steps taught in this course 👉 https://bit.ly/7stepstotrade

① Start at the Top of the Market
② Choose a Trading Strategy
③ Find & Analyze Potential Candidates
④ Plan the Trade
⑤ Execute the Trade Plan
⑥ Manage the Trade
⑦ Journal Each Trade


Video of the Day: 7-Step Guide to Trading – Step 2: Choose a Trading Strategy

Step #2: Choose a Trading Strategy. A Professional Trader has strategies. It’s very important that, BEFORE you pull the trigger and enter a trade or investment, you need to identify which strategy is best based on the market conditions, your analysis, your portfolio, and your personality.


Chart of the Day: S&P 500 ($SPY)

Chart of the Day: S&P 500 ($SPY)

Stocks have been sinking for three weeks. We’ve been waiting for support to form all along the way. The best-case scenario has always been that a higher pivot low would develop. If Tuesday’s rally can stick, there’s a good chance we’ve finally found the next floor.


Today’s line up

Traders Lounge 11 AM 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 Frank Martin and Gino Poore talked about Earnings Season 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 Podcast: Each week your hosts guide you on a journey of financial education.

Trading Justice 472: 7-Step Guide to Trading

In this episode of the podcast, Matt and Mark discuss the importance of being data-driven as a trader as they discuss the 7-Step Guide to Trading.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

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.


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