I closed the call side of the trade for a loss, but I more than made up for it 3x over when I closed the 270% gain on the puts. The KMX strangle trade ended up being a 37% overnight winner - even though the stock went down overnight. This is why hedges are so powerful. They allow you to profit no matter which direction a stock goes. The No. 1 mistake traders make in volatile markets During volatile markets, one of the mistakes traders make is they try to time it. You might hear traders saying "the bottom is in, everything's a discount, let's buy now." But that rarely works out in my experience. When I started trading on the Chicago Board Options Exchange back in the 1990's, I dealt with volatile markets almost immediately. It was right when the dotcom bubble was happening. Euphoria was at an all-time high. People were making millions - on paper. But when the dotcom bubble burst, I saw traders lose millions just as fast. I remember one particular trader was up more than $500,000 - only to be down $1.2 million when it all came crashing down. The truth is... wild markets can change a trader's fate fast. Which is why it's often a fool's errand to try and time them. Nobody in the history of the world has ever bottom ticked the market and bought at the low and sold at the absolute highest point. Sure, you might be right once or twice... and then you'll be wrong six times and your portfolio is completely blown up. YOUR ACTION PLAN Don't make the classic amateur mistake of trying to time these wild markets perfectly. Use time-tested strategies - like the hedge trades I mentioned above - that have been proven to generate outsized returns during times of volatility. P.S. Another one of my favorite trading strategies in turbulent markets is called a "Gift Gap." In our recent backtest, Gift Gaps showed rare gains of up to 114% in 19 days, 235% in 11 days, and 452% in eight days. Next Wednesday, April 23, at 2 p.m. ET, I'll be going live for a special training called the Chaos Cash Trading Summit to show investors how to use Gift Gaps to their advantage. It's 100% FREE to attend. Go here to reserve your spot. |
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