Find your trading philosophy and “predict” the future

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Mike Merson and I did a monthly survey of the crypto markets we call “Crypto Claptrap”.

We call it a “claptrap” because we are 100% aware that we are just two young guys who have made a lot of money with this stuff. We are not experts.

I’m talking about it because last week I predicted that Shiba Inu (SHIB) would be the next cryptocurrency to feature on Robinhood.

Robinhood hasn’t added any new cryptocurrency to its platform since dogecoin in 2018. But Robinhood has made a lot of money on dogecoin this year – too much to ignore.

In fact, dogecoin accounted for 34% of the company’s crypto revenue in the first quarter of this year, down from just 4% in the previous quarter.

So I figured the obvious choice for Robinhood would be to add the next dog-themed nighttime cryptocurrency sensation, SHIB.

Lo and behold, this week rumors started to circulate that, of course, Robinhood is considering adding “SHIB” to its list of parts offerings. SHIB jumped about 12% before Robinhood released its statement. I’ll mention that they’ve been careful not to deny it’s true – just that they haven’t announced anything official.

Am I a medium? Did my YouTube video with its entirety of 333 views spark a movement overnight? Is Robinhood Board Reading True masters of options?

Obviously not. (Well, I won’t count that last thing.)

But once you understand how I am able to make predictions like this, you might be able to start making them yourself – and earn a lot of money as a result.

Manifesting the future

This is not the first time that I have a prediction that comes true.

In January, when dogecoin hit a dime, I predicted it would hit a dollar within a year – a 100x return.

I ended up cashing in when it crossed 7 cents because I found a house that I really wanted to buy. Two months later, it eclipsed 70 cents. Not a dollar, but close enough. And as Mike and I covered in Claptrap, the crypto bull run is not over yet.

I’ve had a ton of big wins like this over the past year or so. I gained 2,143% on Moxian, a company that makes it easier to work from home for small and medium businesses. It was an obvious bet in October 2020, when the stock was trading low despite the pandemic’s toll on office work.

I won 515% on online advertising company Marin Software – the cheapest software stock I could find on Robinhood. Again, this seemed pretty obvious as the pandemic further increased our reliance on software, especially for advertising with everyone locked down.

The reason I am able to trade like this is because I have developed my own personal philosophy in the stock market.

This philosophy serves as my guide, my pole star for every decision I make …

My three guidelines for spotting “obvious” opportunities

As I mentioned last week, I didn’t make any money in my first three years of trading. It was only after many mistakes and thousands of exchanges that I finally developed my own personal guide.

It’s a list of rules that keep me calm during losses and help me seize opportunities when I see them without raising my heart rate or blinking.

  • Buy innovative technology. No need to search Google to know that electric vehicles will be more predominant in 10 years than they are today. This is why I own a multitude of shares of electric vehicles.

    As this industry grows, it will also launch other innovations such as eVTOL (Electric Vertical Takeoff and Landing) and Autonomous Driving which could follow the same scenario. This is just one example.

    You could make the same argument for blockchain and the emerging space industry, as well as cannabis and psychedelics. I see no way that these stocks will not increase dramatically over the next decade.

  • Buy a basket of stocks. Since I like to speculate on technological innovation, I take a basket approach. I invest a little in each stock knowing that I can bet on one of those stocks which will go up 10,000% at some point and carry most of my portfolio.

    For me, it’s a numbers game. I don’t have to be right, I just need to be right.

  • Psychology matters. Most experts say you should ignore traditional financial media. I actually don’t agree.

    I think you should pay really close attention to the headlines because those are the thoughts that get put in the minds of the audience. Once you understand what the herd is thinking, it’s easier to stay one step ahead of them.

    And once you realize that price charts are just a reflection of the buy and sell decisions humans make, you can read them like a pro and make big, short-term gains.

It’s one thing to place a trade, it’s another to know why you are placing it. Whether you choose your own trades or our own, it is extremely important that you understand WHY you are trading the way you do.

Successful traders have a rules-based system that keeps them in line, or a thoughtful approach that keeps them focused.

But you have to figure out for yourself what YOU think is going on in the stock market and why.

I love working for Banyan Hill because we have a ton of experts helping me do it without me having to do a lot of legwork. And if you’ve read my latest dispatches, you know I don’t like to work so hard.

Murphy’s Law states that if anything can go wrong, it will. This thinking is ubiquitous in the stock market and leads many people to bet on a bear market that never comes.

I say, if an idea seems obvious … even too obvious … this is probably where things will end. Let’s call it Cimorelli’s law.

Don’t overthink things. Do not work more than necessary. Read stuff from people you trust.

Abolish any pessimism that makes people think the world might end tomorrow.

Look for those “obvious” situations that most people don’t recognize.

And will earn money.

Ciao,

Chris Cimorelli
Editor-in-chief, True masters of options

Card of the day:
A warning sign
From a hot sector

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(Click here to enlarge the image.)

Today, we are going back to basics with a simple table of SPDR Select Sector Consumer Discretionary Fund (XLY).

This ETF holds a basket of non-core consumer stocks. Things that are considered luxury expenses – cars, fast food and coffee, travel, casinos, etc.

Interest in XLY tends to correspond to an attitude of risk in the stock market. When this index bursts, it is a good sign that the broader market is about to rise.

But I would be remiss if I did not highlight the RSI divergence at the bottom of the chart, however. While XLY hit higher highs, the RSI hit lower highs. The last time this happened, in early 2021, the ETF took a 15% top-to-bottom haircut.

I’m not saying such an extreme move will happen this time… This massive selloff matched a general market risk aversion attitude in February.

Additionally, the RSI could potentially rise in some feverish trading today and invalidate this divergence. But if it cools off, expect the XLY and potentially the wider stock market to decline in the days and weeks to come.

Better,

Mike Merson
Editor-in-chief, True masters of options


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