Wealth Principle #1: Understand how spreads work and use them to your advantage.

Is debt bad? Not always.

Let’s say you can consistently earn 5% on your money every month. This is a conservative number for a savvy option trader, and [...]]]>

Option Trading System. Stock Option Trading System Indicators. Principles for Option Traders.
3 Wealth Principles for Option Traders

Wealth Principle #1: Understand how spreads work and use them to your advantage.

Is debt bad? Not always.

Let’s say you can consistently earn 5% on your money every month. This is a conservative number for a savvy option trader, and many people should be able to achieve this kind of growth.

Now let’s say you have access to a line of credit at 2% interest.

If you can make 5% a month and borrow money at only 2% a month, you can borrow the cash and keep the spread, which in this case is 3%.

This is a form of arbitrage and I do not recommend it for everyone. But it is an extremely important concept to understand. Because if you understand it and are able to leverage it, you could very quickly ratchet up your net worth without even using your own money.

Wealth Principle #2: Don’t trust the talking heads on TV to give you sound investment advice.

Once something hits TV, it’s too old to be of any value. The institutional investors like Warren Buffett have already made their moves.

Most of us already know this, but it’s still tempting to think you’ve gotten a “hot tip” when you hear a “stock expert” pontificating on the tube.

Don’t be fooled.

The best investors lead the market… and then the media comes along and reports on what’s already happened. If you really want to become wealthy, you must become a leader, not a follower.

Wealth Principle #3: Develop resistance to society’s influence over your buying habits.

Humans are naturally competitive creatures. When a neighbor buys a Lexus, all of a sudden we want one too. And when a friend upgrades into a McMansion, we develop a hankering for a big home with curb appeal–just like our friend’s new house!

That’s just the way we work.

But there is no greater wealth-eroding power than unbridled consumerism. At some point, you have to develop resistance to the media… to how society tells you to live… to always buying bigger, better, fancier things.

Get a handle on this and you’ll be far ahead of the maddening crowds.

These are three wealth principles I’ve tried hard to live by, and they have served me well. What wealth principles do you live by?
Best regards always,
A.J. Brown

P.S. My option trading system is designed so that you can make your trades in only 30 minutes a day. It requires some up front effort to learn the processes I use. But once you learn and practice them, you might eventually be able to do everything in 20 minutes or less each day. Learn about my Trading Trainer membership program here.

Is there is a quick and easy way to find great trading opportunities?

Of course, this question is probably on many people’s minds. The phrase “hard work” appeals to very few people. “Quick and easy” sounds a lot better. And nobody wants to sit and stare at a computer [...]]]>

Quick & Easy Way to Trade Stock Options

Is there is a quick and easy way to find great trading opportunities?

Of course, this question is probably on many people’s minds. The phrase “hard work” appeals to very few people. “Quick and easy” sounds a lot better. And nobody wants to sit and stare at a computer screen all day watching the price movements of individual stocks.

Guess what? I’m like everybody else. I don’t want to be chained to my computer either! But still, I must confess…

There is no Holy Grail to option trading.

There is no magic strategy or “blue pill” you can take (a reference to the movie the Matrix). If there was, I’d be in the blue pill business!

And yet even though there may not be any instant solutions for becoming a great options trader, you CAN get to the point where trading is quick and easy. It is a process. It takes time.

When you start out, you almost feel like you’re learning a foreign language. There are new words, new concepts, and new skills for you to master. There is a kind of subculture to become acquainted with.

But over time, you get the hang of things. You start to understand concepts that were at first difficult to understand. You begin to experience some breakthroughs.

With enough practice, what was once difficult becomes easy. What once took hours, now takes minutes.

It’s like cooking a meal for the first time. You follow the recipe exactly. And even though it might be described as a “30-minute meal,” it takes you a full hour to prepare, not counting the cook time.

The second time you make this meal, it goes faster. The third time, even faster. And so on. Eventually, that “30-minute meal” that once took you an hour to prepare, might take only twenty minutes.

It’s the same with stock options trading.

In the beginning, you will invest more time learning. You will have to go slowly and closely follow the “recipe” to avoid making mistakes. But over time, as you practice the process, you will become very proficient.

So quick and easy comes with knowledge, experience, and skill. It doesn’t always come right away, but it comes eventually.

This is a good thing. After all, if it were quick and easy for those without knowledge, experience, and skill, wouldn’t everyone be doing it?

Best regards always,
A.J. Brown

P.S. My option trading system is designed so that you can make your trades in only 30 minutes a day. It requires some up front effort to learn the processes I use. But once you learn and practice them, you might eventually be able to do everything in 20 minutes or less each day. Learn about my Trading Trainer membership program here.

CLICK HERE: Get Free Option Trading Reports and Training Videos Sent Straight to Your Inbox

Now and then I get asked what are the best technical indicators to use in trading. I know some of you out there are endlessly hunting for the holy grail of technical indicators that’ll get [...]]]>

What’s the Best Overbought / Oversold Indicator?

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Now and then I get asked what are the best technical indicators to use in trading. I know some of you out there are endlessly hunting for the holy grail of technical indicators that’ll get you in and out of trades flawlessly every time. If you find it let me know, and in the meantime here are a few rules of thumb:

1) It’s never a good idea to make trading decisions based on a signal from a single indicator. Technical indicators work best when you use them together, and as one part of a broader trading plan.

2) The best trading plans are simple, using a small number of solid technical indicators along with a few other proven tools and techniques. Too many indicators on a chart confuses things, sometimes even giving contradicting signals.

3) Popular technical indicators are popular because they work (and also because if enough people use them, they can become a self-fulfilling prophecy).

4) And the most critical rule of thumb: It’s at least as important, if not more-so, to know how to use overbought / oversold indicators as it is to know which are the best to use.

That last point is significant, so let it sink in. A better question for this article might be What’s the best way to use overbought / oversold indicators in my trading practice?

As you might know, overbought / oversold oscillators are leading indicators. In other words, they try to predict what price will do in the future. For example, when a security that has been trending up for awhile dips down and an  indicator signals that the security is “oversold,” there’s a good chance that price will soon spring back up into the trend. A buying opportunity could be right around the corner.

But we don’t take it for granted that a signal from one single indicator, especially a leading indicator, is enough to get us into the trade. Securities can stay in an overbought or oversold condition for a long time. An overbought or oversold signal simply triggers us to keep an eye on a trending security to see if it actually does start to go back into the trend.

And if that happens, we look at a few other things to validate that this is a good trade.  Is there enough volume to show that there’s strength in the movement back into the trend? Is there significant resistance or support in the way that might keep us from making the trade? Is there any upcoming event around the security’s company, like an earnings announcement, that could throw off price unpredictably? Etc.

Getting back to the original question, which overbought / oversold indicator do I like best? In my trading, I mostly use the Williams %R. The Williams %R, a popular indicator created years ago by author and leading trading expert Larry Williams, works by showing the current closing price in relation to the high and low of the past N (typically 10) days. Readings on the indicator range from -100 to 0. Readings in the upper range, from about -10 to 0, indicate the security is extremely overbought while readings from about -90 to -100 suggest it’s extremely oversold.

When the Williams %R shows an extreme overbought or oversold condition in a trending security, it’s time to watch for that security to kick back into the trend, and then use your other trading tools and techniques to confirm whether this is another potential profitable trade.

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Ever wanted to get the inside scoop on what it really takes to succeed as an option trader? Then you’re in the right place.