Jeff Bishop: How to Become a Successful Trader?

Jeff Bishop compiled a list of 10 different ways to become more consistent and profitable trader. Anyone could accomplish all ten of these…

Becoming a successful trader doesn’t just happen overnight.

But then again, it isn’t something that needs to take years either.

And look, I struggled for more than a decade before the light switch finally came on.

During that time, I compiled a list of 10 different ways I upped my game to become more consistent and profitable in my trading.

These aren’t difficult tasks that I’m going to lay out for you.

In fact, I can almost guarantee that anyone could accomplish all ten of these…

I say almost because there’s always going to be that one person…you know who I’m talking about…

Let’s begin with one of the easiest out there – trade small and often.

Trade small and often

Sometimes you win and sometimes you lose. That’s the nature of trading. It’s a giant exercise in probabilities.

Just the other day I had the best chart setup fall flat on me. Rather than fly into a rage, I accepted that it’s part of the game.

For as much as any one of us thinks we know about the market, there’s always some way it finds to humble us.

That’s why the best traders don’t try to swing for the fences in just a couple of trades. They earn their stripes over a lot of them.

By trading small and often, you reduce the variance in your trading, making the results converge on your average expectations.

That sounds like a mouthful, so let me unpack that.

Let’s say that I implement a strategy that wins only 10% of the time. I risk $1 each trade to make $20.

If I start with a $50 account, I know that I’m likely to lose 9 times before I win once. However, it’s also possible I could get a series of 20 losers in a row.

However, if I keep betting the same amount over and over, eventually, I will win over time.

If I bet too much on any one trade, it can wipe me out. That’s why I want to make sure that I keep my trades small enough that I can let the averages work in my favor.


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Decide between intraday or day to day trading

Kids can take up plenty of my attention during the day. It’s one of the joys and drawbacks of working from home.

I also learned long ago that I was better at swing trading than at day trading

Although now, I’ve become reasonably proficient at both.

However, as the CEO of Raging Bull, and an active Angel Investor, my time is somewhat limited.

That’s why I prefer to swing trade and play option spreads.

But that’s what fits with my lifestyle. You need to choose the whether it works for you or not.

I know some folks that crave the intraday action. Others can’t stand being in front of a computer for more than a few minutes.

The point is – pick something you are comfortable with that you can continue.

Choose one setup

There are as many ways to trade the markets as stars in the sky. Just type in trading into your Google search and you’ll see what I’m talking about.

However, you don’t need a lot of setups to become a great trader.

Nathan Bear turned a $38,000 account into over $2,000,000 in two years using his TPS setup.

Find one that you’re comfortable with and at least generate a modicum of success. You want something that will keep you interested.

Realize, it doesn’t have to generate tons of trades from the outset. In fact, you want the opposite.

Just a trade or two a day will be plenty to get you working hard to sharpen your skills.

Focus on making the right decisions

This psychological trick works wonders. As I mentioned before, trading is an exercise in probabilities. Sometimes, you can hit losing streaks or hit a hot one.

Money comes afterward. The first thing you need to do is make the right decisions.

If you have a good setup, solid risk management, and repeatability, then the money will come.

Create a 90-day plan

As I said before, becoming a successful trader doesn’t just happen overnight. Even when you do turn that corner, it’s a constant battle to keep it going.

That’s why I like to create 90-day plans to keep me on track.

These help me work on my fundamentals, learn new skills, develop and nurture habits and routines, as well as give me milestones to measure against.

When starting out, keep the plans simple. Never make them more complicated or onerous than you can handle. These should be realistic and achievable.

Honestly journal your trades

I can’t tell you how important it is to write down your trades.

Most traders start this in earnest. Eventually, they only write down the ones they like, skipping a few here and there. Soon, they can’t figure out why their account balance doesn’t match their journal.

Your trade journal should contain enough information for you to analyze and assess your weaknesses and opportunities. At a minimum, you should be able to calculate a win-rate and a general risk/reward ratio.

Tweak your risk/reward and win-rate

Speaking of risk/reward and win-rates, once you’ve established them, it’s time to start tweaking them ever so slightly.

You might assume that if you set wider stops or tighter targets that your win-rate will go up. Generally, that is true.

However, it isn’t always a 1 to 1 relationship.

That’s why you want to break it down and really understand where the sweet spot is. Sometimes, you can tighten up your stop loss without sacrificing win-rate.

To me, that’s something I want to know and incorporate immediately.

Fix one small piece at a time

Trading is a lot like sports. You can’t work on everything at once. Otherwise, you just flop.

Instead, take things piece by piece. When you find an area of weakness, break it down into the smallest components and work on those.

Not only is this proven in the business world and psychologically to work better for most people, but it can also give you a greater sense of accomplishment.

Create routines

Humans are creatures of habit. Routines help us stay on track and remain focused.

Every weekend and before each trading day, I go through the same steps to evaluate the markets, my current trades, and my plan.

One of the best parts of routines is the efficiencies they create. By doing the same things over and over, you become better at looking through the charts and making decisions. That means less uncertainty when it’s time to act.

Find a mentor

Last, but certainly not least – find a mentor.

Learning from someone who’s already been through the wringer can cut your learning curve and save you both time and money.

You want to have someone that you connect with and helps you understand your trading and the markets. They should speak to strategies that resonate with you and help you improve.

That’s the entire goal behind Total Alpha.

I created a well-rounded service to not just educate traders, but provide them an array of trading styles and choices to suit their needs.

But before you jump into the ocean, why not test the waters?

Join me for my upcoming Options Masterclass where you’ll learn some of my favorite techniques for analyzing and trading stocks and options.

Click here to register.

Source: TotalAlphaTrading.com | Original Link

Jeff Bishop’s Total Alpha Options Masterclass: Is Gold About To Blow Up Like Oil?

Jeff Bishop shares his thoughts with Total Alpha members about gold. We don’t have enough gold on hand to cover if everyone decided to exercise their futures contracts and take delivery of physical gold. And that, could be a disaster in the making, said Bishop

Market pundits are still trying to wrap their brains around what happened in crude oil last week— but there’s already talk of the next freight train…

I’m talking about gold…and get this…Jerome Powell knew about this!

A few Total Alpha members emailed articles asking me for my thoughts on gold.

And after looking into it for the better part of the weekend, I feel obligated to share them with you, because there is a risk that isn’t being discussed.

We’ve already seen gold prices charge higher to challenge its 2012 highs.

GLD Monthly Chart

Apparently, the lessons from the Great Recession didn’t make their way to every corner of the market.

Why do I say that?

Because we don’t have enough gold on hand to cover if everyone decided to exercise their futures contracts and take delivery of physical gold .

And that, my friends, could be a disaster in the making.


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How gold trading works

Gold works much in the same way that crude oil does. Most of it trades in futures contracts. They trade with different expiration cycles.

Unlike option contracts, futures contracts require you to take delivery of the item if you hold it at expiration, rather than if you choose to.

You might have noticed that there are two types of oil in the market – west texas intermediate and brent. Those are based on where oil is settled (U.S. vs U.K.). The same thing occurs with gold.

Most gold futures settle as cash. That means they never take delivery of the gold itself.

But what if you wanted all that gold? Could you get it?

That’s an interesting question and the crux of our potential dilemma.

Gold costs

Unlike oil that requires specialized storage, gold can pretty much sit wherever you want it to. On the other hand, getting it to where you want is tricky.

With oil, we didn’t have enough storage to meet the supply. In this case, there isn’t enough potential gold or gold in the right places to meet demand.

Despite the disconnect in markets recently, people hoard gold during times of uncertainty. You’ll see people start buying up the physical asset when and where they can.

Except, right now, you can’t do that.

In fact, if you try to buy gold bullion online, not only will you be paying a huge premium over the spot market value, you’ll be lucky to find any.

That means someone’s got to ship it to your location and that costs money…lots of money that isn’t necessarily being factored into everyday traders’ decisions.

The transport dilemma

As I mentioned, you’d have a tough time getting gold here in the U.S. That seems a bit nutty, but it’s also a large part of why we don’t use the gold standard anymore.

In fact, Jerome Powell alluded to this in his testimony last year as to why we don’t want to go back to the gold standard. There simply isn’t enough gold to cover all the contracts in existence.

Recently, the Chicago Mercantile Exchange (COMEX) and London markets changed their rules to allow 400-ounce bars in London to be substituted for delivery of 100-ounce bars on U.S. contract that was divided up four ways.

Seems reasonable right?

Here’s where the rubber meets the road.

Every time Chicago markets fall short on supply they need to do two things.

  1. Melt down 400-ounce bars into four 100-ounce bars
  2. Ship that to Chicago (during a Pandemic no less)

That’s a large reason why the difference between gold futures and spot prices has been wildly diverging.

Gold Futures (top) vs Spot Gold (Bottom)

We could already be in crisis mode

Initial rumors suggested that some bullion banks that were supposed to make physical delivery in Chicago essentially went under. In theory, that’s what led to this new fractional futures contract from the COMEX.

Congressman Mooney of West Virginia caught wind of the entire matter and demanded answers as to the change. As he eloquently noted, if there are widespread defaults, you don’t have nearly enough gold on hand to cover delivery, which could create financial chaos.

On top of all this, the delivery problems between the U.S. and London may be only part of the issue. Back in London, there could be an issue with delivery between banks.

London trades what’s known as ‘unallocated gold’ or ‘gold credit’ which is issued by the bullion banks. When market makers don’t believe the other can fulfill their obligations, the markets start to freeze up. This might be why gold trading volumes in London have fallen while gold futures volumes have skyrocketed.

How that impacts the ETFs

Thankfully, the GLD ETF trust holds its gold bullion in London, so any transport issues shouldn’t become an issue with the ETF.

However, if there really is a liquidity issue between the market makers, then the ETF could be in for a world of hurt. It derives its prices from the London markets, not gold futures. If participants really are afraid to trade with one another, then share prices of the ETF may get thrown out of whack.

Nonetheless, because the ETF is backed by physical assets, any dislocations from price would be temporary. AKA – you could find some cheap buying opportunities on some crazy news!

When in doubt…

…leave the heavy lifting up to me. I’ve been through this a time or two and know how to weave my way through traffic. You join me and get exclusive access to my live portfolio. There, you’ll be able to see exactly how I make my trades in real-time along with text alerts.

Why put yourself through the headache of figuring out the gold markets?

Click here to register for my free options masterclass.

Source: TotalAlphaTrading.com | Original Link

Jeff Bishop Total Alpha: These Are The Stocks That Will Be Historic Buys

Jeff Bishop Total Alpha Strategy is starting to eyeball some stocks for his Total Alpha portfolio and even his personal retirement accounts.

Stocks are starting to get into rally mode—on the hopes the country has flattened out the curve.

And while we’ve seen a surge over the last two sessions.

There are still plenty of good companies which remain beaten up.

I’m starting to eyeball some stocks for my Total Alpha portfolio and even my personal retirement accounts.

Look, it can be difficult to buy these stocks when markets experience a freefall, and the global economy looks bleak.

But you have to stare fear in the eyes and just say: Not Today Pal. 

You see, this is when the savvy trader starts to load up.

However, some stocks won’t recover, while others will take a long time to.

Allow me to explain to you how I find value, and what compels me to buy a stock for the long haul.

The Three Keys To Survival

Do you know why most civilizations started near bodies of water? Location was the single most critical factor determining whether a society flourished. Large bodies of water provided a source of drinking water, food, and commerce.

So what is the equivalent to corporate bodies of water?

I see three main components that tell me whether a company will survive.

  1. Diversified Business Lines – For most of my life, I always looked at diversification as taking away focus from a company’s core capabilities. This epidemic is forcing me to rethink my ideas. Single-line businesses are the highest risk companies at the moment. Royal Caribbean isn’t likely to be around next year. However, Apple offsets hardware sales with music and content services, so at least they have some revenue generation right now.
  2. Minimal Operations – Many companies out there aren’t doing a lick of business. The Cheesecake Factory (CAKE) even said they wouldn’t pay rent this month on any of their locations. However, Wayfair (W) told the market that people stuck at home keep ordering furnishings. A fair amount of companies continue to operate at some level. That helps them retain both customers and talent, precious commodities in this market.
  3. Strong Balance Sheet – The U.S. government may have stepped up with loans to the business community. Yet, companies with large amounts of cash on hand will be able to fully take advantage of the same values we see as retail investors.

I understand that it may be tough to figure out who fits these criteria. That’s while I compiled a shortlist of some companies I want to own as they get cheaper.

Apple (AAPL)

Tim Cook faces a lot of obstacles at the moment. Supply chains have been disrupted. Customers may pull back spending. A huge portion of their workforce lives in Coronavirus hotspots.

Yet, the company has enormous amounts of cash to draw on. I’m talking $100b in cash and short-term investments. That’s more than the size of most major companies.

Regardless of the lockdowns, the company still ships orders to customers, and they continue to bring in money off their content services.

You can see how Apple’s services revenues have climbed over time to account for 20% of their total. Those revenues aren’t likely to disappear during this lockdown.

With such a strong balance sheet, I could easily see Apple picking up smaller startups for pennies that add to their long-term growth. They’ve got plenty of credit to pull on if they want to swing for the fences.

Southwest Airlines (LUV)

Airlines have been obliterated during this pandemic. Most states aren’t allowing for travel, while international flights have become virtually non-existent.

That’s why I like Southwest as they’re the best of the bunch. Southwest doesn’t have the international exposure that a lot of the other companies do. Their point to point business model seems much more likely to work as the patchwork of local economies start to reemerge.

I love the fact that they only have $1.85b in long-term debt, with over $4b in cash on hand. Compare that to Delta Airlines (DAL) with $2.8b in cash an$d 2.29b in long-term debt, and you can see why I like Southwest.

Visa (V)

Let’s be honest – we’re all shopping from home right now. If you haven’t bought something in the past week, you’re probably an outlier.

No one is working with cash right now for two reasons. First, most transactions are moving online. Second, no one wants to touch cash since it could carry the Coronavirus.

Visa is a great company that continues to work at reasonably full capacity. Yes, transactions are down overall, but they aren’t getting cut out like other businesses. We all need to buy groceries, even if that’s our one outing for the week.

Selecting My Entry

With any of these stocks, I don’t have a particular price in mind. Rather, I plan to scale into these trades throughout the next several months.

In the meantime, they’ll be plenty of plays along the way. One of the best ways to get on board is with my Bullseye Trade of the week. This is my highest conviction trade, where I aim to get 100%+ return on the trade.

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