Shortly after that, I added a bearish position in Schlumberger (NYSE: SLB). The stock had been falling, making lower highs and lower lows and trading in a downward channel. With the stock near the top of the channel, I shorted the stock and bought put options, expecting Schlumberger to continue to drop toward the bottom of the channel. Just over a month later, with the stock near the bottom of the channel (just as I'd expected), I closed out the position for a 15% winner on the short of the stock and 246% on the puts. More recently, I helped my readers more than double their money on a long position despite a tanking market. Just last week, on March 6, I recommended readers buy CNH Industrial (NYSE: CNH) because it was at the bottom of its channel. It was a low-risk, high-reward trade. Four days later, we cashed out with a quick 12% winner on the stock and a 140% gain on our options - despite a miserable market. I trade quite a few different chart patterns, but the channel is my favorite. It's easy to understand, we get to buy low, and the risk-reward ratio is excellent. I don't have to know the theories of Freud, Maslow, and Skinner to know what investors and traders are thinking. All I have to do is look at a chart, and I get a visual representation of their behavior and a better understanding of what is likely to happen next. Good investing, Marc |
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