Why I Don't Care About Stocks

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"What do you think about the markets here?"

That's a question I often receive. My typical response, I don't care . Okay, that may be a bit harsh, but it is true. For the most part I really don't care about the daily news that flows in and out of the market. I am an options trader. I trade strategies based off probabilities. I create statistical advantages based on my current market assumptions.

We must realize that knowing what is going on in the news and knowing how to make money consistently are two separate things. For successful options investors it's about your strategy, your logic, your process, it doesn't matter what you think the market is going to do tomorrow. I realize it's a difficult concept for the options newbie to understand.

You see, it doesn't pay for me to try and absorb every financial story out there. All I care about is when my indicators hit extremes. I allow probabilities, not the talking heads, to define my options strategies.

And this means that the strategy enters periods of stagnation. Trades should never be forced. A forced trade is not a statistically sound trade. Again, this market apathy is a long-term approach to options trading and should be expected if you wish to bring in profits over the long-term.

Boring? Maybe to the aggressive crowd out there. But, I am more interested in the profitable trades - not trying to be the short-term hero who trades every scenario out there. I am confident in trades that consist of short-term extremes that have entered the stock market - high-probability trades.

What is a high probability trade?

The High-Probability strategy is a short-term directional strategy that utilizes single calls and puts based on overbought/oversold extremes in the market. The strategy requires patience coupled with a disciplined approach. The strategy consists of approximately 2 to 5 trades a month with holding periods of 1 to 10 days, however; there will be some months when I make no trades..

Again, the key to this strategy is patience. Waiting for the appropriate scenario to trade with a high probability of success is what makes this strategy a success.  As I always say, opportunities are made up easier than losses. So if you let a few pass you by don't dwell on what could have been. There will always be more opportunities around the corner. Remember, trading is a marathon not a sprint.

What Indicators Do I Use to Successfully Trade the High-Probability Strategy?

I learned early on to keep it simple. Pick a few indicators and follow them forever. I can't tell you how many traders that I know that want to follow  bull flags, bear flags, candlestick patterns, Fibonacci retracements - the list goes on and on. They will try and teach you about their long list of indicators to make themselves look impressive, but in reality most are horrible traders and unsuccessful over the long-term.

Why rely on the barometric pressure, gulf stream speed, humidity, ocean temperature and astrological temperament to tell the weather when you can just look out your window?

The High-Probability strategy uses a few basic RSI models plus my proprietary model to take advantage of sentiment and technical extremes.

If you're interested in learning more about my options strategy and the indicator I use, click here to sign up for a risk free trial to Options Advantage , my service dedicated to making safe reliable gains with options.

Until Tomorrow,

Andrew Crowder
Chief Options Strategist
Options Advantage
Wyatt Investment Research

Disclosure: None



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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