<b>How is everyone?</b> Hope all got thru the correction with their psyche intact. It's all routine here, but I continue to learn very valuable lessons.
I've been through many, many, many corrections and the last Bear Market. I lived in Silicon Valley in the hey-day (I've now gone Hollywood - CA that is.) By following the flow of institutional money (price and volume action from the major averages) I prepare well for 'tops' and have called every market 'bottom' within days.
This bodes well for a "trader" and by selling option premiums...I have fully-refined a relatively conservative strategy that AVERAGES 50% per year.
Since coming to EliteTrader, it was brought to my attention that "slippery" money will not allow for me simply staying in cash (like I've been training members for years at my covered call website which btw manages the world's only "live" covered call fund - that actually meets these lofty expectations and hence IS the best-performing fund on the planet) during downturns, so here at ET I dusted off a nearly fully-developed index spread strategy and implemented it in my Covered Call Fund at Collective2.com.
Granted this late-stage bull market continues to exude frothiness, yet I've learned the very valuable lesson of including to my (price/volume) <i>proven</i> methods that relative strength amongst market-leading institutional favorite stocks at this juncture can "prop" markets up (as it did from Mar-July as well as the abbreviated, re: Fed intervention, recent correction) - hence no need to be too cautious (like my 2002 stop-loss successes), despite a rapid buildup of distibution days, when GOOG, RIMM, AAPL, BIDU and now a whole slew of Chinese stocks continue their ascent.
These spread trade skills (coupled with my market timing routine) have now increased my AVERAGE annual return substantially - probably on the order of about an additional 20% per year! My <i>initial</i> entries into (bearish) index spreads at what (on first glance) appeared to be the strong possibility of a market "top"/pending correction - indeed had to be stopped lowering capital by about 15-20%.
Of course this was recouped with my eventual 25-30% jump, but during these events (tops and bottoms) we'd like to PROFIT the 15-25% <i>almost</i> each time. MORE IMPORTANTLY is the fact that a strict stop-loss methodology ensures preservation of capital and <b><i>these methods can be used for life!</i></b>
So after the initial "failed" entries <b>the</b> near-exact "top" was spotted and profited from in my C2 account - that only recouped the 12-15% standard hit to a (high-yielding/risk managed) Covered Call Fund. <b>WE LOOK TO NOW JUMP FORWARD</b> 30-50% with our Sept 18 re-enty of our funds in the next few months - not only with covered calls, but with our stock spreads, married puts, bullish index spreads and of course all the while continuing with a <b><i>strict proven stop methodology,</i></b> which is oh-so key.
Of course no real profits have yet been made, but the astute student will learn that all is very well on track to meet the annual average (every 52 weeks my funds routinely outperform the Nasdaq by about 25% - so this annual return is an <b><i>average</i></b> dictated by the annual market return) with low risk, plenty of free time and sleep and eventually (2-3 years) blasting past the Forex Funds, scalping systems, etc.
Paysense
We actually got hit an extra 10% or so: 7% from not having a stop on IOC (now all positions - not just biotech holdings - have stops and I diversify more) and another 3% plus from various "learning curve" errors. The one spike to the lows was an option "quote" on one open leg of a spread that the actual bid/ask prices we starkly different...and I've adjusted my allocation model for less volatility. Also, my fund was postioned for ANY Fed action but the drift from the highs was the low volume lull that occured when waiting. As you see 20% was quickly recouped with low risk.
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