A trading foundation to combat tough economic times

[Archives]( Live]( [Twitter]( [Youtube]( [Instagram]( [Discord]( [Tiktok]( [The Secret Behind "Hyper Turns"]( Over the past year, the market has been a disaster. But a small group of trades saw gains of 442% in two days… 500% in five days… even up to 1,060% in a little more than a week. They’re called “Hyper Turns.” On January 24 at 2 p.m. (ET), Garrett {NAME} reveals the truth behind them. [Click Here to reserve your seat now]( MAIN STORY A Trading Foundation to Combat Tough Economic Times By Tom Gentile. Dear Reader Since October the S&P 500 has recovered over 15% of losses sustained last year, which looks promising on the surface; and, it included heavier trading volumes – a sign of strength. Although the market may look promising at the moment, officials at the World Bank have explained “the worst is yet to come.” The global economy is slowing significantly, which will inevitably translate into fewer jobs, fewer opportunities and increased poverty – in a world where 47% of the world population lives on $7 per day, or less, as it stands. Well, we don’t need to look very far to realize the fundamentals of our current economic conditions have not changed over the past month despite the market rising nearly 15% off the lows of 2022. The market has had some strong movements throughout the past 12 months – both up and down. And the bullish moves are lasting long enough to convince traders that the worst is behind them, only to be followed by bearish movements causing emotions to run high – resulting in losing trades and poor decision making. There is a solution, however. It’s my policy to be aware of what’s happening around me in the world in order to explain some of the market’s behavior, but also to follow a rules-based trading approach to avoid making mistakes and losing money during uncertain and volatile times. So, let’s talk about ironing out the emotions involved in trading and the ripple effects caused by confusing news headlines and market swings. There are plenty of things happening around the globe to help me understand why market volatility and trader’s emotions run high. The ripple effect of rising energy and food costs are impacting the world, not just the U.S. Economies in the world are more interconnected now than they ever have been. So, when any developed region experiences economic issues, the ripple effects can be felt far and wide. Consider the U.S. Dollar for example which rose continually between March and September last year. A strong dollar makes it more expensive for people to invest in the U.S. because their currency won’t buy them as much. Additionally, although they’re loosening up on policy, China’s zero-covid crack down created lock downs which negatively impacted product manufacturing. It’s another reason why we’ve experienced delays in products arriving in the U.S. along with shortages – driving prices higher as a ripple effect. And many European countries have long depended on heating oil from Russia, which has been cut off due to sanctions – creating panic and an increase in inflation across many countries. Energy volatility due to OPEC’s manipulation can influence fuel prices, which are passed all the way down the line to consumers at the checkout stand – hello inflation. People were generally happy about our last two inflation reports despite the fact that they’re still indicating high levels of inflation. The market has responded positively to them. The U.S. labor market is still strong – causing more ripples. Federal Reserve Chairman, Powell, is cognizant that employment in the U.S. must suffer to rein in inflation. Our unemployment rate has remained near 3.5% for a lot of this year, but it’s expected to rise above 5% by some estimates by next year – which means millions of unsuspecting Americans are yet to lose their jobs. With the global inflation rate anticipated to peak near 8.8% by year end, it is expected to remain elevated for longer than some expect. Additionally, the IMF has forecasted global economic growth to dwindle from 3.2% in 2022 to 2.7% in 2023 – with 33% of economies expected to experience recessionary contraction. With all the interwoven ripple effects I’ve mentioned above, you can understand why I think it’s so important to have a non-emotional, systematic approach to trading. Systematic Trading If you want to use short-term trading as a way to increase savings and assist you when the market turns, you’ll want to be sure and reduce the emotions of trading. That’s where systematic trading plays a role – it’s one of the best ways to reduce emotions from trading. I learned my lesson the hard way when I first started trading options back in the ‘80’s. And I’ll tell you, I had to take some time off and regroup. I realized after experiencing great loss that there must be a better, perhaps even stoic, approach to trading. So, I listened to a mentor and my journey into rules-based trading began. The foundation of rules-based trading There are four simple things to include with a trading plan to make it systematic – let me share these with you. The first part of a systematic trading plan includes using one or more technical indicators to help you understand what’s happening with the stock’s price action right now – regardless of the noise media headlines are creating. The first two lines of code I use in my software include moving average lines – technical indicators. Specifically, I use a 10/30 crossover, which means I look for the average stock price over 10 days to cross above or below the average price over 30 days. In the image above, you can see the purple line (10-day MA) crossing below the blue line (30-day MA), indicating weakness in the trend – followed by a down turn in price. On the right side, you can see the 10-day moving average line crossing upwards, indicating bullishness to the stock. These simple moving average lines help make trading easier – it doesn’t matter what’s happening in the news or across the world, I can simply see how the stock is behaving right now. The second part of a systematic trading plan will include “back testing.” This simply means I’ll go back in time to see if I can repeat the process. So, if I think the trend will change once the crossover occurs, it should repeat itself over time – and the more history I can review, the more confidence I’ll have using the technical tool. The third part of a systematic trading plan is to forward test it – meaning put trades down on paper in real time to see if your system is working in the real world. Once I’ve “practiced” my systematic approach to trading on paper, I’m ready to take it to the next step – go live! So, the fourth part of a systematic trading approach involves trading it. Once my confidence in the tools is strong enough, I’m simply ready to put the trading plan to work. Now, since I know the trading approach will work most of the time, but not 100% of the time, I’ll simply incorporate proper money management to every trade. Proper money management is as simple as spreading my funds across multiple trades, having a profitable exit point, and an exit to minimize losses when they occur. High emotions can make decision making very tough. We can’t always control what’s happening in the economy or the stock market, but we can be informed in order to have at least an understanding, and then trade with confidence knowing that we’re using a systematic approach that works for us, not against us. Until next time, Tom Gentile America's #1 Pattern Trader Join Tom each Monday through Wednesday at 12:00 p.m. ET as he discusses a range of strategies that can make money in a strained market environment. Did you miss the Live session? Watch Tom’s replays!   FEATURED ARTICLES [The Rally Won't Last - Here's What to do.]( [Five Indications the Market has NOT Bottomed]( [This Bear Market Rally Could Prompt a 2001-style Crash]( [Tom Gentile WANTS YOU to be his Next Elite Trading Protégé!]( Legendary trader Richard Dennis took a group of complete novices and turned them into millionaire traders. In fact, in just 5 years, these novice students earned $175 million between them. Tom Gentile wants to recreate history, and he wants you as his next elite trading protégée! Tom will throw back the curtain and show you the secrets that mint millionaires. [Get your VIP PASS here for this must-see event](   GET STARTED [Options 101: The Easiest Options Guide You’ll Ever Read]( With anything and everything you’ll ever need to know about trading options, this is the best guide to making money in the markets you can get. [Straddles – How to profit up or down!]( Is there a way to trade options regardless of market direction? The answer is YES! Straddle trading takes the guess work out. Straddles can profit if the stock’s price rises OR falls on speculation. [Earnings: The IV Crush]( Trading options is a zero-sum game, meaning there will always be a winner and a loser on either side of a trade. Trading through an earnings report and losing in spite of the fact that the underlying stock price went in your intended direction can feel like getting stung by the biggest bee in the hive – Ouch! There is a right way to trade earnings. [The All-in-One Chart]( Welcome to my guide on the All-in-One Chart. The charting tools are made available for you to utilize in Tom’s Option’s Tools. My All-in-One Chart is made up of several components to help evaluate charts. Although there are many other factors involved in decisions regarding trades, chart analysis is a part of the process. [How to set up a Microcurrency Account]( Currencies make up the biggest market in the world today. In fact, every single day, up to $6.6 trillion is traded in the currency market. But there’s something extraordinary happening in this massive global market… It’s all hidden in a tiny offshoot that’s helping regular, everyday Americans become rich in the blink of an eye. They’re called microcurrencies – and it’s your turn to take advantage of these major moneymakers by setting up your own Microcurrency trading account.   CASH COURSE For the first time ever, I’m letting a small amount of new readers get 100% free access to my Cash Course. This cornerstone course will show you – in just seven simple steps — everything you need to know about trading options. Plus, you’ll learn how to make the perfect trades using the same methods I’ve used to train over 300,000 readers. So get ready – I’m about to show you how to cash in on any market – whether it’s up, down, or sideways. 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