The plane trade strikes again
Learn To Trade Options with John Carter. Get options trading strategies and options trading tips from a professional options trader. Simpler Options provides a daily options trading newsletter with video analysis to explain option trading and help in your understanding of options trading.Option Trading Strategies | Online Training |
Home    Free Options Trading Videos    Become a Member!    Blog    Refer A Friend Program    Login
home | Free Options Trading Videos | The plane trade strikes again

The plane trade strikes again

John F Carter 1/27/2014

As typically, for whatever reason seems to happen, when I travel we get some pretty big movement. I did fly out on Thursday and was traveling Friday and bam, had some pretty good moves here.

So this is a pretty significant move and let's just take a look at this in context. And the first context you always want to take a look at of course is the 21 period moving average, which we'll talk about and whatever major trends are in place. So you can see right here that yes, while we did break this shorter term trend line, this more intermediate term trend line is fine. And the question just becomes is this just yet another decline that you buy with both fists or is this a little bit more serious.

Well, I always just try to keep things as simple as possible. So we got a couple of things here -- remember there's a squeeze. Those generally last 8 to 10 bars. So just remember that that does bode for about 8 to 10 days of downward pressure. Obviously, there'll be some rallies but I just always try to keep it simple. I found that the simpler the better. That is if you're below the 21 EMA then you short rallies. OK. Now every time that we've done that it's been short lived. I mean here I shorted the rallies. It was like, ooh ooh it's working -- no it's not. Obviously, you have stops in place. But this is, you know, this is real selling.

The correlating markets are also unwinding like the Japanese Yen, and gold and bonds. And I'll cover that in the premium video. But at this point to me the worst thing that could happen on Monday is that we actually open up like say at 17.96. So that's know, that's going to get sold and we just keep going lower. It'd be better to actually flush out, do some margin calls. In the premium video I'll talk a little bit about what the margin calls are going to do to stops tomorrow. All right.

So I've had -- especially a lot of people that are on the free newsletter, just kind of asking this. Like, hey, what are some ways that we can use these Voodoo lines. I mean if you go through and you look at some basic -- some of my favorite stocks to trade. I mean TSLA's a notable one. I'm hoping Tesla gets slammed on Monday morning into this Voodoo line. If it does I will buy it with both fists. That to me -- it's stuff like that you know when you get those rare moments, they just become these very unique day trading opportunities. And what I'm going to do is -- I have a lot of people just kind of asking questions like, how do you handle stuff like that. How do you handle gaps into Voodoo line? How do you use the Voodoo lines? And different things like that. So for those that have been newer and not really familiar with our work I'm going to do a basic live trading course this week. And I think it's good because I think the markets are going to be really volatile too. So this will take place on Tuesday and Wednesday.

So what I was going to do here, it's just kind of a -- it's a two day live trading class this Tuesday and Wednesday. And in this what we're going to do is talk about how to use the Voodoo lines the right way. Because everybody -- a lot of people have seen the Voodoo lines. But it's kind of like OK, how exactly do you trade them...especially when the markets like this are volatile. Because they do offer a fairly amazing trading opportunities. Both from a day trading perspective -- especially before the market opens. You can actually scan which stocks are going to gap right into that. And there's a couple of really cool ways you can take advantage of that. What indicators to use at which time in which stocks. And this is really important because the squeeze you know, a lot of people kind of like -- oh red dots and the squeeze, you know that means that, you know, that I take that trade if know the momentum's above zero, etc.

There's really about five different ways to use the squeeze. And you can use it for directional trades like if you were buying calls or puts or buying or selling stocks. But it's actually also great -- you'll get a specific trade as to when to do an Iron Condor as well. So there's actually a ton of different things you can use for it. And I just want to go through the cycle of, this is how I use the squeeze from soup to nuts. You know, you have these red dots, this is what you do when you have red dots. This is what you can do when it fires and this is what you can do when it's done. How to recognize a good set up in the right time frame to enter the trade. And that's where I find a lot of people kind of screw things up because they're just looking at the wrong time frame. There's some times frames you really shouldn't even look at or waste your time with. Trade management -- the right time to get out when the trade goes well and when it doesn't. One of the biggest misnomers that newer traders have is they'll get into a trade and they'll have a target and a stop and at that point they think they're done and that's ridiculous. I mean that's just kind of the opening -- it's like the opening you know when you're playing poker. It's the opening bet and you want to adjust your target and your stop every day based on the action of the stock. And there are some days you just cut it loose. Say you know, to heck with this, it's not working and you've gotta know what those signs are. And that saves traders a lot of angst. Which stocks to trade, which markets to trade and which ones to avoid like the plague because they're just manipulated too much. What swing trading set ups are poised for big moves in 2014. There's actually a couple that I'm really excited about and we'll talking about those on Tuesday and Wednesday. Current market analysis.

This will all be recorded if you can't attend. Again it's going to be Tuesday and Wednesday. This one is going to be just a nominal fee. This is more like -- we've got a lot of newer people. They just want to know like, hey how do you use the indicators, how do you trade. And I'll be doing this in the morning session as well. Now if you are already a gold member, the afternoon session I will actually pop into the room. So the morning session I'll be doing with the group here. Then the regular afternoon session I'll also be in the room. So you'll have kind of a, you know, you'll be fine there.

If you want to sign up and kind of see...learn more about these indicators and obviously you know, see the morning session and stuff like that, that's fine. But I will be in the room as well. So don't...I don't want you to worry about that. But this is -- we're just getting a lot of emails from people right now from people going like, hey this is great. I don't fully understand what you're doing. And so what I'm going to do is just take this time to go through soup to nuts all the different trade set ups that I use, all the different trade management that I use so that you can kind of get up to speed with me and what I'm doing. All right. And it looks like it'll be a really fun week because Tuesday and Wednesday will be crazy. Hope that helps. You guys have a fantastic evening and we are...I'm looking forward to seeing you on Tuesday and Wednesday. Have a good night.