The Most Exciting Market Mover…

Momentum is a very powerful force…

Over the past few weeks we’ve witnessed all of the major averages push to new highs. Momentum following the sell-off in February was one of the driving forces behind a lot of those stock gains.

But we have to be selective in our trading right now. Think about it — when stocks go straight up during a rally. Instead of chasing trades, we have to look for attractive pullbacks in stronger stocks before pulling the trigger.

Remember, we’ve been all over this move to new highs from the start. You certainly know me for being bullish!

We’ve seen a lot of action already and we’re barely into the year — who knows what the rest of 2021 has in store for us as the world finally begins to reopen after a year long pandemic. But if you’re following price, you know that stocks across the globe are excited to get back to “normal”. That’s a HUGE win for the bulls.

The trend is UP until proven otherwise…

As I’ve said over and over again, you have to follow the money! Whenever the averages have sold off they’ve always rallied to new all time forever highs. To step in front of this has been an absolute disaster for anyone trying to short the market.

Even though the market can be a little choppy right now, there are still exciting rallies to find…

It’s all about keeping an open mind and, most importantly, focusing on the price!

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Trading Tip of the Day: Know Your Limits!

Greg Guenthner

Every trader needs to have some boundaries. So take this as an opportunity to evaluate your trading philosophy… What stocks should I avoid at all costs? When should I sell a winner? When should I cut a loser?

Maybe you think buying stocks below $1 is too risky. Or maybe you have volume requirements so you don’t get stuck in a name that’s too thinly traded.

Perhaps you think 10% is a great time to take your profits. Or if you’re trading options, maybe you need to see 30% before you take your money. It might even be higher than that for some!

You might not want to lose more than 20% of any trade you put on. Maybe you have a bit more risk tolerance and you’ll go as low as 50% from your initial investment…

Whatever your preferences, you need to know what your constraints are. It’s essential to know your limits and stick to them. I recommend writing it down. Writing it down forces you to commit to your rules in a way you might not otherwise do. You can write it on a white board, or a post-it note…

So if the market ever tempts you, you’ll be less likely to throw a bet down on a trade that you know, deep down, is outside of your comfort zone.

Bottom line: Know your limits, and stay consistent!

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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