I am usually a pretty positive person.
But after reviewing all of my Trade Alerts for the past six months, I discovered that most of them were in-the-money Vertical Bear Put Debit Spreads.
So I thought I would take the opportunity presented by these quiet markets to educate you on the method to my madness.
Markets don?t go up forever. Trees don?t grow to the sky. Sometimes they meander sideways after a long run up. Sometimes they roll over and die.
So if you want to make money all the time, not only in rising markets, you need to be able to execute a Trade Alert that profits when a stock moves sideways, up small, or down big over a limited period of time.
A Vertical Bear Put Debit Spread tilts the risk/reward balance overwhelmingly in your favor. The only way you can lose money is if the underlying security goes UP a lot immediately.
Hint: Even in a bull market, stocks can move sideways or down for 4,5, or even 6 months a year. So, a Vertical Bear Put Debit Spread is a valuable tool to have in your tool bag.
It also gives you a nice insurance policy to protect you other long positions in case we get hit with a black swan, suddenly move into a correction, or suffer another flash crash. Remember, in-the-money Vertical Bear Put Debit Spreads do best in the least amount of time in falling markets
Vertical Bear Put Debit Spreads aren?t always the best bet in a falling market. When you are in a true bear market, just buying long dated puts outright and running them will make more money. But keep in mind that you are also taking a lot more risk.
You win more games in this business hitting lots of singles, like this one, than counting on a few home runs. That is the classic error of the beginning trader.
My training video on ?How to Execute a Vertical Bear Put Spreads? takes you through the entire order process, including reading the initial Trade Alert, placing the order through your online platform, how to monitor it on your position sheet, and of course, how to take a profit.