How to Trade Conservative Credit Spreads
From: Daniel Beatty
Date:
Dear Future Credit Spread Trader,
I have been trading options on stocks part-time for over 6 years, but I have not always been successful at it.
In fact the first 2 years were dismal, pathetic, and down right destructive. You see my full time job is as a veterinarian and I also have 4 children.
This leaves me with no time to trade during the day when the market is open, but I still tried...
It all started when I was just looking to make a little more money on the side and I went to a local seminar on how to trade stocks and options.
Of course, it was just a promotion for selling their coaching system, but I felt I had learned quite a bit during the two days I had spent there. So I tried trading without buying their system.
I opened my trading account with $2000 and started trading for about 1 month and only 1 month because I had lost it all in that small amount of time!
I thought "Oh, I just did not learn enough." So I plopped down some more money for an option trading scool and started over.
Did better this time! The first 3 months were good, I was profitting and watching my capital start to grow. Then things started to go wrong.
I just was not able to watch my positions during the day when the markets were open. I was too busy and even though the options school told me that I was going to be able to do this after the markets closed, I started losing.
I knew the problem I was having was the greed/fear factor! I was letting my emotions get involved in my trading, I was not following the rules and worse I was having a difficult time sleeping at night.
In fact, I was up many nights checking out my trades trying to predict where the next move was coming and what I was going to do about it, where was I going to place my stops, what would be my next trade.
My work was suffering, I was on edge all the time; checking out my trades in the middle of the day when I was suppose to be working. I was late for appointments because I was watching the opening of the markets.
To make matters worse, my wife and children were starting to not like me as I was spending too much time at the computer instead of with them. I would wake up and go to sleep with my laptop in the bed. Something had to break...and it did.
In the next 3 months I lost the rest of my account. A grand total of $2000 the first time, $2500 for the options school, and another $2000 plus profits for the second time around. About $7500 in less than 2 years, what an expensive failure!
As you can guess my wife said, "NO MORE!" So I went back to the drawing board, literally. I had no capital but I had all this knowledge I knew that there was something in everything that I learned that would work.
Spending the next year and a half working on a strategy that I could use that would make consistent profits without me having to be there to watch the markets closely. A strategy that would allow me to be less worried about my positions. One that I can truly check once a day.
This is that strategy. Tested for the past three and 1/2 years, the first 6 months paper trading proving to my wife that it can make money consistently and that I would not be on the computer for longer than 10 minutes a day checking it, and less than one hour a week looking for the next trade. I put more capital into my trading account and have been using this strategy for the past 3 years to consistently make money. It has improved my life tremendously allowing me another source of income, one that if I wanted to I could increase my positions or the amounts of trades I make and replace my full time income. I want you to experience the ease of this strategy, but first I have to ask you a few questions...
 | Do you want to sleep better at night knowing you don't have to be exactly right on the direction of a trade to be profitable? |
 | Would you feel better knowing your profit and your risk prior to placing a trade? |
| What kind of relief would you have knowing exactly when to close your trade? |
| Can you see how good it would be to know the free tools that will help you make your decisions much easier? |
| Think about how relaxed you would be if you had a step by step plan to follow when trading? |
I can
teach you
how to trade credit spreads using options on the indices like the SPX,
OEX, RUT or even using options on stocks
| What a credit spread is |
| What tools to use, most of them free |
| Which brokers to use for options trading |
| Some simple technical analysis |
The conservative part is in the gain. Many options traders shoot for 50 to 100% gains, but it takes a lot of time and effort and a lot of skill to place these type of trades and be successful. You would have to be able to trade anytime the markets are open.
Are you able to do that? Do you have another life outside of trading? Maybe you need to work and unfortunately that means you can not be at your computer to trade if you HAD to.
With the conservative method you sit quietly by, checking your trade once a day after the market closes making sure it has not broken the exit rule. If it has not then, check again the next day. If it has then you close the trade either right there and it will execute the next morning or if you can, close the trade yourself the next morning when the markets are open.
It is much more restful. No worrying about the trade. You know when you are going to close the trade and how. You know your profit before you open the trade and the exact amount of loss if it goes bad.
The gains are consistent and that is the key. Following the rules and placing the trade step by step, the profits roll in 80% of the time (it is in the setup it has to be that way). Even if the trade goes against you, you have a specific method (an exit point) to cut your losses and move to the next trade.
This is not a black box system, but instead a step by step method that leaves you in charge. You will learn some simple technical signals and some simple tools to implement these types of trades. This is a very simple basic trading system that anyone can follow.
Only $47
