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Patience is the Key to Success

The market is tanking. Investors are freaking out. The fear is palpable.

And, I have been sitting patiently on the sidelines.

Since the service started on Tuesday (9/20) the Russell 2000 has pushed approximately 5.5 percent lower.

Yet, until today I have been on the sidelines in the Options Advantage portfolio .

Why? - Because patience is the key to any successful long-term trading strategy.

Most traders get drawn into trades that do not fit their trading style because they are just plain bored and looking for something to trade.

But as a trader, you have to have the inner strength to pounce on the opportunity when it presents itself - not force yourself to pounce when the time isn't right.

I've talked before about hunting sloths instead of chasing wolves. Sloths aren't as exciting. They're not quite as common. But when you see one, it's almost a stone-cold lock that you can take it down.

And to be honest, it's much easier to be a patient trader than a patient buy and hold investor. If you're a trader, you probably only have to wait a few weeks at most for an ideal situation to present itself. If you're a standard long term value investor, you could wait years for the ideal time to buy or sell.

Yes, there are currently some short-term extremes in the market, but until today, my proprietary model told me to stay on the sidelines. Plus, even more so than the model I follow, my own common sense told me that I should just stay out of this mess.

While everyone was running for the exits and stressed about their accounts at night, I have been sitting in cash, waiting patiently on the sidelines for a trade set-up to come to fruition.

My options strategies thrive on this idea. And, my performance speaks for itself. (I have an 89.5% win ratio with an 8.3% average gain).

Yes, there will be times of little trading, but they will be made up for with times of heavy trading. Allow the trades to come to you and not the other way around. This is absolutely imperative if you wish to truly make money over the long-term in options.

With the market now down for the year with great uncertainty ahead, why would you not want to use a strategy that can take advantage of a bull, bear or sideways market?

It just doesn't make sense why investors choose to stay away from options and it is my goal to show you, through my options strategies how to effectively use options to grow your portfolios or to just bring in income on a monthly basis.

Boring? Maybe to the aggressive crowd out there. But, I am more interested in the profitable trades: high-probability trades that I am confident in due to the short-term extremes that have entered the stock market.

Ultimately, this whole endeavor is about creating and teaching you a successful way to make money using stock options.

If I can't find an edge, which means the risk/reward doesn't suit my liking, I have no problem sitting on the sidelines. Cash is a position.

My proof? If you were in cash over the past week, you're outperforming the S&P 500 by 3.5%. If you were in cash since January 1, 2011, you're outperforming the S&P 500 by almost 9%.

In trading patience is a requirement.

Remember, patience is the key. Opportunities are made up easier than losses, so if you let a few opportunities 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 and not a sprint.

I will continue to patiently wait for opportunities to arise and only trade scenarios where the probability is overwhelmingly on my side. That means trading extremes. This certainly does not guarantee a successful trade, but it definitely makes for a favorable one.

If you're interested in joining me, I suggest taking a risk-free trial to my brand new service, Options Advantage .

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


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

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