How Fussy would you be if you could only make six trades in a year?!

It was great to meet some familiar and some new faces at the Dan Zanger workshop in Los Angeles on Saturday.  Since then I’ve hopped from West to East, spending a few days in Caribbean before it’s back to work in New York next week.  

For those who didn’t and couldn’t make the workshop I’m going to give you one major lesson from it, and it’s in the form of a question:  

How fussy would you be if you were only allowed to make say six trades in a year?  You see, what Dan said was that although he makes a lot of trades, he admitted that many were just to pass the time and gain new experiences, while there were only ever six or so in a year that he was really excited by and which would make the big home runs.  It’s a philosophy shared with (and learnt from) the greatest investors and traders such as O’Neill, Buffett, and co, who are very fussy indeed about where they invest and trade.  

In our world we’re trading a very similar strategy but with the addition of the OVI.  You’ve seen how powerful it is when all the planets line up.  Now these guys “back up the truck” when they see something they really, really like, but they also caveat that approach by stipulating that you must have a lot of experience before you start to be able to load up in the way they do.  

In simple terms that means you do NOT bet the farm on any trade.  

That kind of experience will take some time if you’ve just begun, and you may need one or two knocks on the way, but the beauty is the legitimacy and speed of our approach.  The OVI combined with the breakout approach that we focus on really does accelerate the learning curve, but it’s not an excuse to take a flier at something that looks ok’ish.  Stick to the opportunities that look wonderful (like AAPL at the beginning of this year) and you’ll be set very fair.  That one had everything going for it, and we’ve documented it many times, so take a look back through my blogs on www.ovitradersclub.com since last December and remind yourself what we’re looking for.  

Looking at the markets this week you should notice that the banking sector is struggling a bit again with some bearish flags forming and OVI readings looking wobbly for the big banks like BAC, GS, JPM, MS, etc.  

AAPL looks like it’s going to be a bit messy for a while and traverse untidily, so we’ll look for pastures new in the coming days.  

One stock that was shaping up nicely was VZ, but it already broke out today and has formed a doji / shooting star candlestick, which means we need it to consolidate for a few bars if we’re going to trade it to the upside.  

VZ 

By the way, here’s the room from my terrace, but I can assure you it’s not all play!  There’s plenty of work being done here too, but that’s the beauty of being able to watch the markets – you can literally do it from anywhere.  

Catch up later this week, and stay fussy! 

All the best

Guy