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There’s 2 parts to every trade. In order to make a good trade — BOTH parts need to be correct.

 

This past week, we issued what appears to be an almost perfectly timed short entry via SPY puts on the index. But in actuality, it only turned out to be an OK trade.

Why?

Because the 2nd part wasn’t timed well. Every trade has 2 parts – when to buy and when to sell. When to get in and when to get out.

Even if you get in at the perfect time – if you don’t get out – you could be leaving a lot of money on the table.

We entered a trade perfectly this week but exited a bit too early cashing in $500 – on a $1000 investment – but if we had held on to my target – that $1000 would have become $4,000 – so definitely kicking myself. Lesson learned – it’s not good enough to get one half of a trade correct. Both need to be correct.

Be greedy when others are fearful.

The best opportunity to make money is when there’s blood in the streets!

Well, on a smaller scale – that’s what happened going into the Good Friday 3-Day Weekend in April 2017 — the markets sold off.

That weekend, we posted a prediction on our blog and to our members that the markets would reverse.

The title of that post was: “Panic into Good Friday Wkend: Case for Reversal”

At that time, the S&P500 E-mini Futures were trading at 2327 ES. Two weeks later, the market at 2380ES after touching 2393 ES. That’s well more than a 50+ rally.

Based on that prediction, we profited around $1,300+. This video discusses how we came to that prediction and how we and our members profited from this trade alert.

What is the VXX and why do we care?

VXX annual performance 2009-2016

Well, we care about the VXX because we can make money with it – in a higher probability fashion than we can with some other tickers – and that’s based 7 years of data. While limited, we can glean some interesting insights into how we can make VXX work for us.

VXX is an exchange traded note that trades just like a stock would (or an ETF) during market hours. By holding VXX — it sort of continually does trades for you.

What kinds of trades?

It buys the 2nd month VIX futures contract and sells the front month VIX futures contract. In a contango up-ward slopoing term structure environment, this generally translates to buying high and selling low — which is the opposite of what you’re supposed to do to make money.

That’s why VXX always loses value – historically. Just look at a  long term chart.

To make money, shorting VXX is generally a good idea – especially during times of elevated volatility.

 

Long Call Options Strategy – This is the most basic options strategy that lets you leverage your capital. The tricky part is timing because timing does matter when trading options.

Below is a video walkthrough of this most fundamental options strategy – along with pros and cons.

Out of the Money Call Options – This is a modified version of the long call options strategy. Instead of generically picking an at-the-money strike price where the strike price is close to or near where the stock is currently trading – an out of the money call option involves selecting a strike price that is above where the market is trading at.

These options are more high risk high reward – type trades and here’s why:

Warren Buffett’s best investment advice is to buy the index fund – he recommends the S&P500 for solid diversification.

But there are multiple ways you can buy the S&P500 index fund.

* Invest directly with Vanguard

* Buy Vanguard’s S&P500 ETF (VOO)

* Buy the Spiders ETF (SPY)

We examine the pros and cons of each one in terms of expense ratio, trading commissions, and more.

We also examine a strategy that uses a no-fee broker (Robinhood) – and how this approach can let you get invested into the index fund without trading commissions.

However, the one downside is that when it comes to dollar cost averaging, it’s not so simple as you can’t buy decimal numer of shares. Still, our preferred method of getting invested in the S&P500 is either to buy SPY or VOO from your broker of choice.

Never depend on a single source of income

In this podcast, we talk about Warren Buffett’s best investment advice – which is to dollar cost average into a low-cost S&P500 Index Fund over time.

We will cover:

* What is an index fund

* Why the S&P500?

* What is dollar cost averaging?

* Specific Buffett quotes from the Berkshire Hathaway Annual Report

* What this means for you

In another podcast, we’ll address specific share classes of the Vanguard S&P500 index fund and dive deeper into differences between the various ways you can invest in the S&P500 – and what the pros and cons of each method are.

A recap of the financial markets leading into the November 8/9 election results including the option strategies we implemented before the election as well as after the election that resulted in 50%+ gains.

It is Thanksgiving Weekend 2016 – and a lot has happened leading into the election, the night of the election, as well as the first few weeks after the election results. We take a look at all three and review the option strategies we implemented to make money in this volatile environment.

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In this episode, we discuss the risks of credit spreads and go into detail on how to adjust a credit spread when the market moves against you by a lot.

People often associate credit spreads with high probability success — which is true, but they also fail to mention that in the meantime, there could be significant volatility in your account, particularly if the market moves against you immediately after putting on the trade.

For each day that goes into expiration, you get a little help with time decay – and a market reversal can do wonders do position that has been in the red, but still – stomaching through the possibility of losing many multiples of what your max profit could be is not easily done.

This past week would have resulted in max profit – but due to the large drop in the market against our position (which we initially intended to leg in an iron condor – but never had the chance t0) — we adjusted the short strike down from 215.5 to 213. In the process – we did not increase the quantity of the 213 strike enough. As a result, we were only slightly positive, rather than fully positive for this week – even with the market expiring above our short strike.

Wednesday Weekly SPY Options

Additionally, we now have Wednesday weekly options in SPY in addition to Friday weekly options. SPX is even better – with Monday, Wednesday, as well as Friday options.

This makes it easier to collect time decay on weekends — since the weekend is that much closer to expiration with Wednesday options than it was with Friday options. That said, directional risk is still the number one concern with executing an option spread — unless you are able to leg in an iron condor at the right times.

Eventually, we will get daily options — it’s just a matter of time.

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 Silver Surfer: Welcome to LifeStyleTrading101 where we trade the markets, and you live the lifestyle. We aim to make $1,000 every week.. We don’t always win, but we certainly win more often than we lose.

Guest Introduction: Don

Silver Surfer: Today we have a special guest – one of our customers joining us to share his experience so far trading with us. Don is taking time out of his busy schedule as someone who trades while having a full-time job to share his experience so far.  And I thought it’d be really interesting to get his perspective since I know many of you have full time jobs as well. Don, pleasure to have you here.

Don: Yeah, thanks for having me.

Silver Surfer: Let’s start off with quick introduction about yourself. Kind of your experience, how many years have you been trading, what your kind of arrangement is in terms of your daily schedule.

Don:  I’m late 30s. I’ve been a saver and investor most of my life.  Maxing out 401k, buying dividend stocks via drip – pretty traditional.  Not a lot of trading in my past, not until about 5-6 years ago, I started paying more attention to overall net worth and realizing that I had a decent amount of capital not working very hard for me.  I started getting interested in more strategic investing/trading.  I my research I quickly gravitated toward technical analysis.  I studied Investor’s Business Daily, various options trading – covered calls, iron condors, etc.  Over that time of 5-6 years I got into day trading futures and found I was too busy at work to kind of keep up with that. And then not too long ago, a friend introduced me to LifestyleTrading101 and I rolled my eyes and said they’re all a scam but I’ll take a look at it. And uh, I’ve been really really extremely pleased with the results. I’ve been a part of your service since early June. And it’s been going quite well for me.

Silver Surfer: So early June, so basically a few months. You mentioned that you felt like a lot of services out there are kind of like scams. Is that what your perspective is based on your experience, maybe you signed up for other services…

Don: Absolutely. I wouldn’t say I’m a crazy person who spent $120K on services, I’ve met some folks who spent so much money on trading services that do nothing for them. But I’ve been with 3-4 different types of services all varying in the range of around $1k a year. But none of them have really helped me get to consistent profits. I think I could if I were a day trader based on the stuff I learned from one of them. But in general, I struggle to keep up with the daily tasks of work and job and a family and trading effectively. I haven’t really found anything that works for me personally. And I’ve tried many different services. But since I’ve signed up it’s been working extremely well. I’m almost floored. It kind of feels dirty but I like it. It’s working really well for me.

Silver Surfer: Yeah, great to hear. You also mentioned you’re familiar with options trading, covered calls, iron condors. Some of our members don’t have experience trading options. So curious, what was your process for learning about options, or is that something you just dabbled by experience or did you read books on it?

 

Don: I’m an adventurist learner myself by nature. I like to dig in and learn things all the time, so youtube videos. Reading books. There’s a book on iron condors I read, a book on basic options – kind of one of the basic getting started dummy’s book. And a lot of youtube videos. I was using ThinkorSwim as a platform prior to now, I’m using interactive brokers and ThinkorSwim, but getting on there and looking at the prices, writing them in excel, tracking what happened. Everybody learns differently, but I’ve definitely spent a lot of time learning options and because of that I’m very comfortable with understanding th...

Aaannnddd…. welcome to the Lifestyle Trading 101 Podcast. We are  approaching the end of July and have recently been on fire with our trade calls. This doesn’t always happen but we’ve been many many weeks of calling the markets correctly and trading it profitably.

Overview

This past month or two has been incredible and everything from the Brexit crisis or crash, stock market crash, which we’ve predicted ahead of time saying that it could be a buying opportunity. And then, indeed, the market went straight up since then for 2-3 weeks in a row.

Over July 4 weekend, the metals exploded to the upside and, since then, for 3 weeks it basically just trended down until we had this Fed day today, as really the best buying opportunity. And we do think there’s more upside to gold and silver. Long-term, we think it’s very good.

Fed Day: Wednesday July 26, 2016 (Photo by Mark Wilson/Getty Images)

Brexit aftermath end of July into July 4 wkend and some more.

Guest Introduction: Peter

Silver Surfer: Today we have a special guest, actually my brother Peter, whose account I’ve actually been trading since the beginning of this year – January 2016. It’s currently end of July going into August and we’ve had some incredible returns. Of course I’ve got to mention the downsides. There were times when we were down quite a bit.

Like many of you, Peter has been following the blog, listening to the podcast, really from an outsider perspective. Not completely understanding exactly what i’m doing. But curious. And so I thought it’d be interesting to get his perspective on perhaps he can ask some of the questions that some of you may have and that can help all of our listeners to better understand what it is that we’re doing here at LifestyleTrading101. And what you can do to make money, $1k every week, which is the goal of our site.

Peter: Yeah, so this is Peter here. I’m SilverSurfer’s brother, followed his investment blog and trades from the very beginning. There is just one thing I want to bring up first before I continue further. And that’s related to what I’m allowed to say and versus what I’m allowed to say.

Legal Disclaimer:

Due to regulations related to the Investment Advisers Act of 1940 – I’m not allowed to talk about my client experience being positive because testimionials/endorsements by definition are selective — usually filtering out the negatives and showing only the positives to the public. Further, my experience is not necessarily indicative that future experience will be similar — that past success would mean future succes s. That’s just not necessarily the case in trading and regulators don’t want want investment advisers to suggest this in any way.

It’s unfortunate because as a small investment fund, there’s no way we can effectively encourage others to check us out if we don’t point to the successes. But on the regulation side — I can understand why the regulators want to protect investors — nothing in trading is a guaranteed success. Failures inevitably come.

As such, there’s a lot I can’t say today. But here’s what I think I can say today:

1) I can talk about my background as a more in-depth introduction

2) I can discuss / ask questions about the investment strategy

3) I can talk about transformation of this success into an investment fund – that once created will be regulated by the Investment Advisers Act of 1940.

That’s about it. I have to avoid my personal client experience so that’s what I’ll do here today.