Are you a trading genius?

Yesterday I ran into a buddy at church.

I had talked to him before about the trading I do and since we hadn’t crossed paths in a few weeks, he asked how things were going.

I told him last week was one of the best weeks I’ve had. My account’s sitting on new all-time net liquid highs, my trades were rockin’ & rollin’ and the markets were super green.

It reminded me of when I first got into trading options.

In the days before discovering the simple Wheel Strategy.

I was buying calls and selling verticals, leveraging a lot of margin, and I thought I was hot stuff.

It turned out that it was just an incredible month in the market and when that turned around I looked like a fool. Instead of managing my risk (which is the main game) I was leveraging my money as much as possible to grab all that “gold.”

Lesson:

It’s easy to think you’re a genius when the markets are moving strongly. But when the bears take charge, it becomes clear who was smart with their money and who was foolish.

Again, I’ve learned over the years that the main game is managing risk.

Trade ideas come and go.

If I was fishing, last week was like a giant school of fish swimming all around my boat. I couldn’t haul in “fish” fast enough!

Weeks like that do happen (obviously). But I no longer think for a second that making a lot of money on a bullish week makes me some sort of trading genius. After all, pride goes before destruction.

What’s better is to plan my trades and trade my plans.

Simple. Repeatable. Profitable.

All right, let’s talk about today’s news... 

Bloomberg

Why it matters …

“Buy the rumor, sell the news?!...” This is an age-old maxim that happens except when it doesn’t.  Everyone is expecting the Fed to cut rates on Wednesday. It will probably happen, but then it is expected to happen so the rate cut is priced into the current market. The real question is that when it happens, will stocks sell off? This article indicates that it will, except if it doesn’t! Ha

I’d say, don’t worry too much about it. Sell some conservative puts as today and tomorrow will probably be sideways.  Friday is Quadruple witching day which is typically a down day, so expect to roll your positions for amazing amounts of premium and keep rolling for a few weeks to collect premium along the way. If the market defies the norms and goes higher, your puts expire worthless and next Monday starts with lots of dry powder…wash, rinse, repeat.

Comments: We have a stronger than anticipated green start this morning for Fed week. Bitcoin is taking it on the chin, but the other indexes are green at the time of this writing. As mentioned above, this week is expected to be dominated economically by the FOMC meeting on Wednesday, followed by quadruple witching on Friday. Strap on that seatbelt and lift your hands high, this could be a fun ride!

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I’ve got four trade ideas to share for the Premium subscribers averaging 1.76% return on risk.