Wednesday, 16 October 2024

Is This Really the Biggest “Hack” to Stock Trading?

 
   
     
One of the things you'll often hear me talk about is that the biggest advantage you can get in the stock market is actually quite simple: having a long bias.

We are fortunate to have a U.S. stock market that has been overwhelmingly bullish for the last century. So much so that, by using time to your advantage, most people could build significant wealth just by investing a small amount of money into broad market indexes every month over their lifetime.

Yet, most people still undervalue the simple advantage of focusing on long opportunities with extreme conviction.

Now, don’t get me wrong, there are times for trading to the downside and certainly times for smart hedging, but in my opinion, those should only be used sparingly.

There are numerous examples I can provide to show just how powerful this upside-focused advantage is, but a great one to demonstrate has to do with the new “Overnight Options” strategy I’ve been working on.

I won’t be sharing all the details of this strategy until next week, but you probably already know from my Telegram (and recent newsletters) that I’ve been obsessed with figuring out a daily strategy for years…

In my recent newsletter about how profit factor works, I explained that the reason I want something that works with an opportunity nearly every day isn’t just to trade more…

It’s because a solid strategy with more opportunities stacks up profit potential more effectively.

So, for months, I’ve been testing variations of daily income opportunities. I can’t count how many different data sets, tests, and trade structures I’ve put together... but it’s a lot.

Finally, last month, I landed on what looks to be the most promising daily income strategy I’ve ever seen—by far.

I was so excited I even posted about it in my Telegram channel that week.

 
 
Since then, I’ve gone 9 for 10 in live money trades with this strategy, and I’m falling in love with it.

But the point I want to emphasize here is that this is a daily strategy that ONLY goes long.

The bullish advantage is so significant that even trading virtually every day and never considering a short trade can still give you what’s probably the strongest profit potential strategy I’ve ever come across.

That’s why I think simply having a strong long bias is the best “hack” you can have.

I’m not saying the market is always bullish—please don’t misunderstand me. What I am saying is that, over time, the market has such a strong bias to the upside that a large collection of trades will inevitably have higher probability and higher profit potential when they are biased to the upside.

In fact, if you take that phenomenal equity curve I shared above, based on my new “Overnight Option” strategy, and flipped it to look for the opposite criteria to go short, the strategy would not be very effective.

The trade structure itself still gives me a huge advantage regardless of direction, so it would still probably be slightly profitable, but the bias to the long side is the single biggest advantage in all of the criteria.

I know that people get very concerned when the market is overextended, as many believe it is now, and think a correction could be on the way. I, too, believe we could see a serious correction within the next six months.

However, I want to remind everyone that building your strategy or your day-to-day investing around a bearish narrative puts you at a major disadvantage.

I hope this helps, Nate

P.S. If you want to get more updates about this “Overnight Option” strategy, be sure to join my Telegram.
   
 

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