Happy Monday, traders…
Ben here.
I’m noticing that many traders are plagued by the same problem — overcomplicating their trading strategy.
Whether it’s the indicators on their charts, the strategy they’re employing, or the contracts they’re buying … people tend to make trading harder than it needs to be.
Trading isn’t easy, but it isn’t rocket science, either.
Take my Smart Money strategy, for example. I’ve spent years building this system to simplify my trading (and take most of the guesswork out of it).
Meanwhile, I know some killer traders who simplify trading even further…
I know one guy who makes one trade per year: He waits for the CBOE Volatility Index (VIX) to dip to $12, then swing trades it to $15 or $20.
Then, I know another guy who patiently watches stocks he likes until they hit their 50-day moving average, then buys, swinging them back up to a previous high.
These strategies are easy to execute because they’re simple.
But if you overcomplicate your trading strategy, it’ll be extremely difficult to execute your moves with precision and discipline.
With that in mind, let me show you three ways to simplify your trading this week…
Don’t Overcrowd Your Charts
Sometimes I’ll see traders using a chart riddled with dozens of indicator lines, and think … “Why?”
Just like having too many trades on your mind, having too many indicators on your charts can do you a major disservice.
It may seem like the more indicators you use, the better chance you have of carving out an edge for yourself … but I think this is a fallacy.
Rather, using too many conflicting indicators can lead to more confusion, less directional clarity, and potentially serious eye strain.
If your charts look anything like this…
… then it’s time for you to remove some indicators.
Keeping your charts clean will help you keep a clear head while trading.
Plus, not all technical indicators are created equal.
I have my favorite technical indicators, but they won’t necessarily work for you.
Every trader is unique. You should experiment with different indicators to find which ones help you trade better.
And speaking of improving your trading strategy…
Stop Strategy-Hopping
If you’re tempted to strategy hop — changing your trading strategy as often as you change your socks — it’s time to pay attention…
I see this problem all the time with newbie traders. They pay attention to too much trading advice and then find themselves moving from one game plan to the next.
But constantly flipping between trading strategies is a mistake.
You’ll never find consistency. Even worse, you’ll likely overwhelm yourself without ever truly mastering anything.
What you ought to do instead is hone your skills with a few reliable strategies, making them your bread and butter.
This means investing time and effort into practicing a limited number of methods, patterns, and setups.
Recognizing each strategy’s strengths (and adapting them to align with your trading psychology) can be a total game-changer.
Moreover, sticking to a well-thought-out plan can make trading easier by eliminating trades outside your strategy.
That way, when you see others trading a setup that doesn’t perfectly fit your game plan, you’ll pass on that trade without being tempted by the fear of missing out (FOMO).
Now, let’s zero in on what matters for options traders…
Pick the Right Strike Price and Expiration Date
One of the best aspects of options trading is that it lets you design a wide variety of trades, spreads, and positions.
But remember, this freedom can sometimes lead to big trouble, especially if you’re picking a strike price that’s too optimistic…
Buying a contract that’s far out of the money (OTM) might seem appealing…
After all, if the stock reaches that price before your contract expires, you could make a much bigger profit than had you bought contracts closer to the current stock price.
But this is where newbie traders often slip up — they get too focused on the maximum profit they could make without considering the risks involved.
If you’re holding far OTM contracts and the stock moves in the opposite direction — even just for a little while — you could watch your position lose 50% or more in days, hours, or even minutes.
Meanwhile, buying contracts that are at-the-money (ATM) or slightly in-the-money (ITM) can still give you a juicy profit if you’re right about where the underlying stock is headed.
Bottom Line: Don’t aim too high with your strike prices. Keep it realistic and choose a strike that isn’t too far off from where the stock is now.
My usual strategy is to choose strike prices that are slightly OTM, but not too far out — close enough to be dangerous.
I find this gives me a good balance of risk and reward on each trade.
But that’s what works for me. It won’t necessarily work for you. Get to know yourself and understand what works for you.
💰The Biggest Smart-Money Bets of the Day💰
- $2.57 million bullish bet on KWEB 07/19/2024 $30 calls @ $1.39 avg. (seen on 4/26)
- $2.62 million bullish bet on GLD 09/20/2024 $250 calls @ $1.95 avg. (seen on 4/26)
- $1.65 million bullish bet on TSLA 06/21/2024 $210 calls @ $2.34 avg. (seen on 4/26)
Happy trading,
Ben Sturgill
P.S. This earnings season has been chock-full of incredible ‘Smart Money’ trading opportunities (and it’s just getting started)…
TOMORROW, April 30 at 8:30 a.m. EST — My colleague Danny Phee is hosting an urgent LIVE WEBINAR where he’ll reveal the most promising ‘Smart Money’ trades we’re seeing this week.
Stop missing perfect setups — CLICK HERE NOW TO RESERVE YOUR SEAT.
