How My Readers Put Another “P” on the Page

[Trading With Larry Benedict]( How My Readers Put Another “P” on the Page By Larry Benedict, editor, Trading With Larry Benedict [Last week]( we looked at a recent trade we did with One Ticker Trader. By using a mean reversion strategy, we made a 23.5% return in less than 24 hours by trading options on the Dow Jones Index. It was our ninth winner in a row. Today, I’m going to explain this strategy further by running through another recent trade we did with that service… This time, we traded options on the Nasdaq Index – using the Invesco QQQ Trust Series 1 (QQQ). The trade lasted two days and generated a 23.7% return. Remember, when it comes to mean reversion, the strategy remains the same no matter what ticker or time frame… I look for a stock or index that has overshot. And then we aim to profit when it snaps back the other way – like a rubber band stretched too far. Now let’s see how this QQQ trade played out… Recommended Link [Who is this man, and how can he save your retirement?]( [image]( Meet Brad Thomas, the self-made millionaire, and editor of Intelligent Income Investor, who is always on the lookout for income-focused opportunities. And now – for the first time ever – he is going to reveal how to collect thousands of dollars from America’s fastest-growing companies that generate so much wealth so fast it’s possible for you to collect substantial wealth from them every single month. [Watch his latest video to discover how he does it.]( -- The Market Got Too Far Ahead of Itself Take a look at QQQ’s chart below… Invesco QQQ Trust Series 1 (QQQ) [Image] Source: eSignal After topping out in August (a lower high in QQQ’s long-term downtrend), two key technical signals underpinned QQQ’s downward move… - The Relative Strength Index (RSI) bordered overbought territory (upper grey dashed line) and then began to trace lower. - The 10-day moving average (MA – red line) bearishly crossed below the longer-term 50-day MA (blue line). QQQ’s fall petered out when the RSI and stock price started to move in different directions (orange lines). While the RSI began to trend higher (making higher lows), QQQ’s stock price was making lower lows. This change in momentum triggered QQQ’s rally from its low ($255) on October 13. [#1 Expert on Seeking Alpha reveals: The SWAN Retirement Blueprint]( However, QQQ’s subsequent 11.5% rise in just two weeks eerily reminded me of the summer rally. Back then, the market simply got way too far ahead of itself. That led to massive disappointment when the rally wasn’t sustained. And with tech earnings about to commence, I feared a repeat. I suspected the market had once again shot too far. The RSI on the QQQ chart was also forming an inverse ‘V’ (red circle), warning of another potential change in direction. Take another look at the chart… Invesco QQQ Trust Series 1 (QQQ) [Image] Source: eSignal While we typically look to the RSI’s extremes – when it is overbought or oversold – we can still trade countermoves within the overall RSI trend. So, with the RSI inverting – and QQQ vulnerable to any earnings disappointments – we took out a short position by buying a put option on October 25. (A put option increases in value when a stock price falls.) Two days later on October 27, our trade was nicely in profit territory. So we closed out our position by selling our put options for a 23.7% gain. Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Take Your Profits When You See Them Our QQQ trade once again highlights how important it is to be nimble. You should always take your profits when you see them. As I like to say, [put a “P” (profit) on the page](. It sure beats swinging for the fences. But there were a couple of other reasons why we took our profits at that time. With tech heavyweights Amazon (AMZN) and Apple (AAPL) about to report earnings, a surprise to the upside could have sent our put option underwater. And the volatility index (VIX) looked particularly weak. That can sometimes indicate the potential for a surprise rally. So we took our profits and banked them. Of course, we generated this return by using options… However, whether you trade options or prefer to stick with shares, this trade shows how even a small change in momentum – in this case, a reversal – can provide the setup for a profitable trade. That’s one secret to our success so far in [One Ticker Trader]( and I’d like to invite everyone to learn more if you aren’t already a member. You can find out the details about our strategy [by going here](. Regards, Larry Benedict Editor, Trading With Larry Benedict Reader Mailbag In today’s mailbag, [One Ticker Trader]( member Joseph thanks Larry… I’m excited to have signed up for Larry's One Ticker Trader program. Thank you. – Joseph K. Thank you, as always, for your thoughtful comments. We look forward to reading them every day at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… [Is retirement around the corner? Watch this 32-second Options Trading Video]( Options expert Jeff Clark is on a mission to show every American at or near retirement how easy it is to trade options. He even gives you names and tickers of the stocks. [Watch his 32-second Options Trading Video here.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [An Insider's Guide to Making a Fortune from Small Tech Stocks]( [THE 101 GUIDE TO PRE-IPO INVESTING]( [The Ultimate Guide to Taking Back Your Privacy]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. 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