by: Michael Chupka, PowerOptions (www.poweropt.com) Director Of Education
‘Twas the day of Expiration, and all through the market,
A Cautious optimism kept closed the wallets.
Recent Index highs hung over as a dare;
Gold and silver had run up without a care.
(Click on the video below and check it out!)
The year that had just passed rattled through my head,
Recalling recent profits, but also dread;
First with a smile of lament, to ’08’s wise crack,
‘On which of the Big Three might be first to crack?’
With the recent IPO, has GM returned?
While others stayed in Ford and perhaps weren’t spurned.
I thought on passed years when many stayed in cash,
And thought ‘had they come back in to increase their stash?’
Also fearing bottom lines that were now low,
Of those caught in the Flash Crash, May 6th, you know?
And, though I wish for a crystal ball or magic seer,
I cannot fret but must learn from the last year;
From iPads and iPhones to BP’s ‘oil slick’,
How can one protect profits and make them stick?
I thought on the words of those who won the game:
Cut your losers short, let your winners run away.
Now Apple, or Silver, or Gold or Amazon!
Trade Fossil, or Google, or wait for facebook.com?
What fundamental strength will keep me from a fall,
Or become loss, take away, take away all?
With the VIX (Volatility Index) falling low,
Should I expect a sudden event, or stagnant flow?
Will there be more gold and silver which upward flew,
Or will the VIX remain low and the market stagnate, too?
In 2011 will the option premiums dry up and go poof,
Or can we expect a shift sending stocks through the roof?
Should I close my holdings, and start up from the ground,
Starting new with positions that to me seem sound?
Regardless of strategies, I cannot trade like a fool;
Always use due diligence, not just trade the news.
Which is why I use the patented PowerOptions tools,
23 strategies to Search, Compare, and Analyze what’s new;
aggressive, conservative and neutral strategies,
Far out, near term, standard expiration or weekly,
Vast stock and option filters to help my trades grow,
Plus tons of education to keep me in the ‘know’.
Ability to identify the risk-reward I seek,
and insure positions to avoid the loss slope, so steep,
So I can cut my losers short, and let my winners run away,
forcing proper position sizes, and limit loss on my trades.
Myrisk-reward might not appeal to all trading elves,
But it forces the thought successful traders use themselves:
Cut the losers short, let the winners run away,
Do not cap your gains, nor take too large a risk on any trade.
When you focus on limiting your risk first,
The winners will come, and you won’t get hurt;
Avoiding losses by limiting risk first, this I know,
Is a consistent way to make your portfolio grow;
Still take advantage of stocks that take off like a missile,
And if the market tanks, you can sit back with a whistle,
Knowing your positions are insured, and you invested right…
For 2011, happy trading to all, and to all a good night.
[tags] Index, IPO, Flash Crash, risk-reward [/tags]