Quick Start – Monthly Profits
Strategy Check List
Rule 1 - Scan & Determine Direction
As of this recording my preferred primary scan is to use Williams %R with a 30 period setting - aka - Pattern #4. This scan tells you where price is in relation to its rolling 30 bar range.
Starting with a visual scan of my stock list is as quick as looking down the watch list to determine which stock(s) should be looked at.
Don't have a table watch list? - Given that the smaller Fishing pond now has just my top 50 stocks - it is considerably less time consuming to visually inspect every chart and should only take 5-10 minutes
Step 1 - The Williams %R 30 Scan - Look for stocks in the top and/or bottom 20% of the indicator range. This will help you find stocks potentially breaking out of a range and starting a new strong trend.
Step 2 - Laying Trend Phases - Laying on the mechanical trend phases as a filter to trade only in the direction of the trend. Ideally looking for Phase 3 or Phase 1 trends.
Step 3 - Visual Trend Inspection - We want to visually confirm what the indicators are suggesting.
Rule 2 - Trade The Next Pullback (or the last pullback)
The two types of pullback I describe in the training are a continuation or a reversal. (Those little V shapes)
As price moves higher in a bullish trend Williams %R 30 will likely have a reading showing that price is in its top 20% = Use a continuation pullback
As price retraces in a bullish uptrend Williams %R 30 will likely have a reading showing that price is in its bottom 20% = Use a reversal pullback.
Price & Time based Retracement - Using this tool in these ways allows me to find the type of entry I like and in the case of reversal pullbacks forces a time based element to the retracement which is especially helpful if there is not a deep price based retracement.
Step 4 - Trade the pullback - Pattern highs for bullish entries & pattern lows for bearish entries.
*Rules 3, 4, 5, 6 are mainly to do with In trade management
Setting up the trade with stock options
Expiration selection - The average time in trade is 20 days and when you factor the weekend is approximately 1 calendar month. I typically suggest having twice as much time than actually needed.
At the time of writing I tend to default to around 100 days to expiration - this will vary depending on what expirations are available.
Strike selection - Using Delta as a filter for selection. Choices are
- 70 Delta - Deep in the money. Good for synthetic stock position. = Not a common choice for me
- 45-50 Delta - At the money - Usually the first strike out the money. = Default Selection
- 30 Delta - Out the Money. Takes advantage of gamma expansion. = Choose if target big enough
- Debit spread - to make trade more affordable. Potential to maximise profit.
Step 5 - Choose appropriate expiration. 100 days to expiration
Step 6 - Choose appropriate strike. 1 strike OTM or 30 delta
On its way...
- Stock Price Targeting
- Option Price Targeting
- In Trade Management
- Account Management Consideration