After seeing an ugly January in the stock markets, all I can ask for is more of the same trend. The reason why? Increased volatility has created an environment that allows the individual trader to thrive.
You see, when stocks soar and are up high …at their highest highs… it’s extremely difficult to buy them without feeling like you are chasing.
Have you ever done that before?
Have you ever bought something because you had to have it, knowing deep down inside that you have been caught in a craze, instead of actually gaining value?
That’s exactly what it feels like when you hit the trigger on AAPL (Apple) at $130.00 or NFLX (Netflix) at $123.00
But now – there are some amazing opportunities. For instance, Facebook just went from $94 to $115 in a just a couple of days. That’s a 22% increase. Could you imagine a 22% increase in one stock in just 3 days?
That is why I only focus on individual opportunities.
That’s why the market dropping is possibly the best thing that can happen to us. You wait on the sidelines, and then you pick-off opportunities, one by one. The advantage of being an individual trader is that you don’t have to play by the “house” rules.
For example, on the last trading day in January, the markets were up huge, but this was not a signal that the bear market was over; instead, it was forced buying.
As per my chief Option Strategist, “Institutionally managed money, particularly pension funds, are mandated to maintain certain allocations. When stocks initially fell a record 10% in January, the equity portion of their portfolios also dropped below mandated thresholds, thus forcing fund managers to buy stocks and bring the allocation back in line by the end of the month. The rally on Friday was driven by uniform program-buying, in index products; volume in underlying shares was actually fairly light and lacked conviction given the size of the move.”
Institutions had to buy on Friday to bring allocation back in line … but we didn’t. And since the buying was forced on a Friday, by Monday the markets had already given back a nice piece of those gains.
So instead of buying AAPL at $98, we could’ve grabbed it a day later at $95.50. We could then kick it out back at 98. 2.5% for a couple of days but heck, let’s say a week. That’s 10% a month or 120% a year, without the anguish of crossing your fingers and hoping stocks will stop going down.
When you begin to read this book, you will start seeing how you, the individual trader, can make more money by the market going down rather then up.
A friend of mine manages a large fund, which shows their holdings publicly, so I can see when they buy a million shares of a certain stock at $30.
Remember, once you are in a fund, you have to stay in the stocks for a while, because It’s too hard to move in and out of a million shares at once.
However, this isn’t the case for me as an individual. When the markets sell off and that $30 stock goes down to $17, I (as an individual) can buy a couple thousand shares for a quick 2 or 3 point move.
It’s the “individual advantage.” In essence, if we can buy lower, trading will be even better for us. Think about how powerful that is.
Now, you too can gain your individual advantage by getting access to the same book I read when my trading career began.
All the Best,
Adam Mesh is CEO and Founder of The Adam Mesh Trading Group. For the past 18 years he has coached thousands of students to all levels of success in trading. He is also creator of the revolutionary Advanced Beginner’s Guide