This is better than being lucky

Something I love about trading:

It’s almost a pure meritocracy. Meaning, the money moves from the unskilled to the skilled. 

Sure, there are flashes of times when the lucky-but-unskilled make the big bucks and the unlucky-but-skilled lose a lot. But those are usually momentary events.

When it comes to making a profession out of this stock trading bid’niz, luck has very little to do with it.

For instance:

I once had a trading mentor say, “It’s easy to make money in the markets; the real trick is keeping it.”

Unskilled traders who get a lucky win streak are statistically guaranteed to give it all back. And who will they be giving it back to? The professionals, i.e., the skilled traders & investors.

At a macro level, the skills are simple: buy low, sell high.

Or, in the case of how I trade: sell high, buy low (Options are awesome!)

There is one other macro skill to develop, and it took me many years and thousands of trades, and identifying the right trading system for me in order to get it right. That skill is the psychology of trading.

In other words, how to handle big money swings without panicking (when it’s down) or partying (when it’s up).

Because professionals get in, get out, and log another day at work.

... 

And it’s the best job I’ve ever had.

(also, today I’ve got my editor back, so we’re splitting the newsletter again. He usually handles the Headlines & Indexes section.)

Yahoo Finance

At least two Fed officials are warming to Trump's call for a rate cut, which could cause a clash behind closed doors.

Yahoo Finance

Why it matters…

Well, I’ll be jiggered?!  (Not sure what that means, but when I was young it was a statement of surprise.)  The EU and the US actually hammered out a trade agreement that makes some sense.  The reason that is so surprising is that the EU represents, like 27 countries who can’t seem to agree on anything!

The markets should react positively to the news, but only at the open.  The rest of the day and week are full of landmines, rainbows or some combination of the two.

The Fed meeting on Wednesday will probably be a defiant “Nothing Burger,” but if they were to lower rates, even .25%, the markets would probably ooze green.

If you missed it, I gave an overview of the week’s Almanac thinking (bullish vs bearish) to the Premium subscribers on Saturday July 26 (linked). You can always log in to the TradingThoughts.com website and look up old posts.

The end of the month (Thursday) generally has a sell-off as folks take gains or losses for the month.  The new month begins on Friday when options are expiring.  I suspect it is a good week to either book profits from older trades and/or sell conservative (1%) puts and expect to roll them for higher premiums on slight pullbacks.

This is a HUGE Earnings week as indicated in the Weekend Premium edition of the newsletter.  Be careful taking positions that have earnings in this week or next.

Comments: Well, we opened green … LOL

Now we are mixed with Bitcoin knocking, once again, on the $120k door.  Oil is up and gold is down. I was concerned we would have a blow-out green day with no opportunities to sell Puts, but that is not the case, thankfully.  Go through your scans/lists and check out the charts.  There are some good ones out there if you hunt.

Because it’s Monday, I’m sharing some of the real trades I’ve taken and a Sample Trade idea for Premium subscribers to consider. The real trades I took inside my main account have already given me 1.84% average Return on Risk, which is well above my normal weekly target.