This is the most typical question of any new investor. It makes a big difference between being profitable and losing money. Let’s start with this, what kind of investor do you want to be? If you’re on our website and following Option Zoo, then chances are you are looking at swing trading. Good! In our opinion this is the best way to go. Day trading is very risky and very few actually make it(including me). Long term investing is too slow and in most cases won’t yield you the kind of returns you’re probably hoping for. So for us “in the middle” swing traders, let’s start with patience. This is key to becoming a successful investor. It’s somewhat rare to buy a stock or option and see it go up immediately although it happens occasionally.
Rather than trying to predict the very bottom, it’s best to have a range in mind. That’s why in our Zoo Picks section, you’ll see us give a broad range. This is best, because we know it’s likely to move somewhere in that predicted range before going higher. So, after analyzing and buying a stock or option what should you do? Walk away! Seriously, just walk away and be patient. If you’ve done it right, applied the correct metrics and have a good idea where the stock is moving, then all you have to do is be patient. That’s not to say you shouldn’t watch at all. Obviously we all get it wrong at times or there are unforeseen events that drive the stock. Only you can decide when to let it go.
Personally, I like to go by the “don’t be greedy” model. It’s painful sometimes, as you can see in the example. I purchased several option contracts of the April 16th, $27 calls on SPCE for $5.9 each on January 13th and after what I thought was a decent move higher, I sold only 2 days later for $8.05, making a nice profit of approximately 36%. Well as you can see, had I held on, I would have made significantly more money. I believe those same options as of this article are roughly $30 per contract. But you can’t dwell on these trades! Sell, take your profit, move on, don’t look back. Because it very easily could go the other way and many times it does.
In closing, for those of you who aren’t sure when to buy or sell, that is where our Premium Member service can help. First our disclaimer:
Trading options or securities is risky. We do not guarantee results and ultimately the decision to buy and sell is up to you.
Okay, that being said, perhaps you don’t know when or where to get into a trade or maybe you don’t care to learn or you’re just a busy person with no time for research. You can subscribe to our premium trading service and get immediate access to Zoo Picks, where we give you our best stock picks with a buy and sell range. These ranges are simply recommendations using our proprietary system of stock picking. We’ve found patterns in certain stocks and apply various indicators to find the highest probability trades. Join now! As a Free Member you get access to one free pick every month, but Premium Members have full access to all of our picks. The market is a ZOO! Don’t go it alone.