At the beginning of the year, the market had a significant sell off. In fact, it was one of the worst starts to a new year in the history of the stock market.
As an individual investor, your focus should be on individual stocks, individual opportunities. I learned that simple rule from the greatest trading book ever written.
That’s why a significant drop is the best thing that can happen to us as investors. Let’s use WYNN as an example. WYNN is currently trading around 90 but in the last 52 weeks, it’s been as low as 50. It’s high in that same time is 105. So at 90, there’s a lot of room to move in both directions.
The market has been going up for a while now but what happens if we head lower? That’s when we have the opportunity to buy WYNN at a 50% discount again or profit as it goes down.
So if/when the market drops 1,000 points, we have the opportunity to profit on the way down or grab one of the market leaders at a discount with huge upside.
Now, the immediate question you should ask next is “but it can still go lower too, right?” And the answer to that is of course it can. That’s why we never want to try and pick the bottom. We as investors want to wait for the stock to bottom and buy it with the momentum on the way back up.I learned that in the same book, it’s available to be downloaded right now.
So let’s say we take a shot at WYNN when it’s at 70 and it starts heading down, we can be out if it goes below 70 for a 2% loss. Then all we need is to get back in when it crosses back above that level. If it gets back to 100, we lost 2% and followed that up with a 42% gain!
If WYNN get backs to it’s highs for the year (and if any stock could do it in just days, it’s WYNN), that would be a 64% gain. In either scenario, your performance in that one stock did not just outperform the best savings accounts and mutual funds, it made them look like the planet earth when you google how small is the earth!
That’s why I want us to go down and down big! Stock becomes cheaper and opportunities become bigger. The key is to stay out until it’s time to get in. In the greatest trading book ever written, the protagonist is given a very short leash on his trading account so he waits weeks and weeks before hitting the buy button but when he does, he’s instantly rewarded.
That’s what I would like to see in your trading. First patience and then the big smile that comes from instant gratification. The best part is that when the market is tanking, that’s when it’s easiest to see which stocks are strong. The strong stocks will stop going down ahead of the rest or they just won’t go down.
On the first trading day of the year, Visa (V) hit a low of 75.01. The next day with the market in neutral, V hit 76.50. Now we have information.The 75 level is something we can pay attention to. We might not trade it right away but now we are prepared so we can react quickly when the time is right. Now, you can start forming your plan by simply getting access to the same book I read when my trading career began by clicking here.
I hope the market goes down more so this can be our best trading year ever!
All The Best,
P.S. There is only one book, I have read more than once and it is still, to this day, the greatest trading book ever written. You can get it here!
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 Full Contact Trading