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How to be hedged - the mechanics!
I am a strategic trader (not investor) which means I rarely enter into a trade where I perceive the probability of profit (POP) being 50/50. Buying a asset or selling a asset is hovering around 50/50, therefore employing a gamma of techniques which gives you a mathematical and statistical improvement on the 50/50 bet is the optimal solution. If you are a trader you have a lot of slippage (costs) therefore entering a 50/50 bet net-net you lose over time, however investors don't reside in the same wheelhouse. You buy and hold like Warren Buffet watching the years go by and letting inflation to it's thing. Techniques to employ to improve your POP as an investor can be daunting, options are one of the solutions but we’ve all heard that buying options is senseless because 90% of options expire worthless ??. In fact this statement is ambiguous because only 10% of option contracts are exercised. I rarely hold any options to expire probably less that 0.01% of the time. Statistically only 10% of option contracts are exercised, 55%-60% are traded prior to expiration, 30%-35% expire out-of-the-money. YouTube Video
The Manager, Fidelibus Lucrum, Pooled Investment Club.
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How To Invest Now?
I wanted to give this channel subscribers a big heads up. For those of you that have seen my postings in the past knows how bearish I am and today my model gave me a big sell signal with a huge down side target on the (/YM Dow futures). Here's the frightening bit -3596 so target around 21200, that's around -14% if my math's is any good. Good luck everyone. YouTube Video
The Manager, Fidelibus Lucrum, Pooled Investment Club.
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Stock market risk - it is there even if nothing happens
As you know from my previous postings risk evaluation is a passion of mine. With hindsight 08 was a great time to buy stocks but today we are confronted with many of the exact same opportunities. One's choice isn't solely all in stocks or all out of investing most commodities, Sugar, Crude, Platinum, Gold, Silver offer great opportunities today. It is exactly as in the Las Vegas casinos you don't have to play only on the roulette table where your odds are 37 to 1, however the house pays only 35 to 1 if you win the same on combination bets. On the other hand blackjack has the best odds of winning, with a house edge of just 1 percent. Financial markets are as vast as the galaxies and stocks merely a macrocosm of that galaxy. YouTube Video
The Manager, Fidelibus Lucrum, Pooled Investment Club.
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