The 13 New Trading Rules for 2019

I’m sitting here at my Lake Tahoe lakefront mansion watching the snow come down heavy and the Dow Average meander around and go nowhere.

It is one of those perfect, picture postcard days with all white except the choppy cobalt blue lake. The fields outside are covered with snow crystals sparkling.

After the close, I’m going to have to shovel off my outside decks to keep the weight of the ice from collapsing them.

Those (TLT) puts are looking pretty good this morning, and are approaching the maximum profit point with only a few weeks to expiration.

In these tedious trading conditions, it is more important for me to teach you how to avoid doing the wrong thing than pursuing the right thing.

I am therefore going to fill you in on my 13 Rules for Trading in 2019. Tape them to the top of your computer monitor, commit them to memory, and maintain iron discipline.

They will save your wealth, if not your health. Here they are:

1) Dump all hubris, pretentions, and stubbornness. It will only cost you money.

2) The market is always right, even if all the prices appear wrong.

3) Only buy the puke outs and sell the euphoria. Do anything in the middle, and you will get whipsawed.

4) With option implied volatilities so low, outright calls and puts are offering a far better risk/reward right now than vertical bull and bear vertical call and put spreads. It is also better to buy stocks and ETFs outright with a tight stop loss. This won’t last forever.

5) If you do trade spreads, you can no longer run them into expiration then collect the last few pennies. If you have a nice profit, take it. Don’t hang on to the last 30 basis points even if it means paying more commission. The world could end three times, and then recover three times before the monthly expiration date rolls around.

6) Tighten up your stop loss limits. Not losing money is the key to winning in this market. There is nothing worse than having to dig yourself out of a hole. Don’t run hemorrhaging losses, like the (VXX) from $55 down to $25. It will get easy again someday.

7) Buy every foreign crisis and sell every recovery. It really makes no difference to assets here in the US.

8) Several asset classes are becoming untradeable for long periods (retail, the ags). Stay away and stick to the asset classes that are working (gold and short bonds). This is not the time to get greedy and bet the ranch.

10) Turn off the TV and just look at your screens and data. Public entertainers on the tube have no idea what the market is going to do, especially if their last job was sports reporting. Their job is to get you to watch the ads for General Motors and TD Ameritrade.

11) As the bull market in stocks enters its ninth year, too many traders, analysts, and strategists have become complacent. You are going to have to work for your crust of bread this year. This is earnings, technology, and cash flow-driven bull, not a QE or tax cut-driven one.

12) It is clear that more money was allocated to high-frequency traders this year. That is driving the new, breakneck volatility, increasing stop outs.

13) Ignore Washington at all costs. The market doesn’t give a fig what’s going on there, to quote The Queen.

The hackers are getting better. Better change your password from 12345 to DKFGGIDKFOKBJGELXPEVJBKDLKFBBJFCJCKVLBKGTY69!, and hope that the 69 doesn’t give you away.

Only The Real Gunslingers are Prospering in This Market

Testimonial

I hope you have great plans for the weekend. I am absolutely loving your trades.  They have paid for my membership.  I wish I was able to catch them all.

Best regards,

Robert
Oregon

 

Testimonial

Hey John and the MAD Team, here’s a late Happy New Years!
 
You really nailed and keep nailing great reversals and trends that are just beginning to deserve a watchful eye.

I’m still a bit stuck on futures, but I realize the safety in your spreads is a lot smarter…Thx for all you know and for all you do.

Rod
Alberta, Canada

 

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Thanks to both of you for taking the time to answer me back. I am going to hang in there.

I like your newsletter because the unbiased perspectives you share and the way in which you look at market opportunities in a realistic, factual manner. I am just hoping to turn that advantage into profit and learn.

I don’t like financial advisors as they open your account, offer canned advice, and disappear after they take your money. I want to have the independent skills needed to manage my own wealth, as I grow old.

I don’t expect that to happen overnight or without advice, but I am hoping that your newsletter is something above par not just in appearance, but in results.

Time will tell.

Thank you again for returning my emails. That says a lot.

Best,
Ryan
Hammond, New York

Testimonial

The confidence you have given me to enter the USD:JPY spot positions have returned me in excess of $1,500,000 in the last few weeks.

I’ll be in California next year.

Can’t wait to catch up. Dinner is on me, both times!

I know you said you aren’t retiring until you’re well into your seventies. Why so soon?

You’re welcome to use this as a testimonial.

Cheers

Peter,
Australia

Testimonial

I used your Apple (AAPL) vertical bull call spread idea, but went in a day later at and got out today for a gain of $720 on 12 contracts.

One day makes a big difference, of course! When AAPL took the big hit, I jumped on your idea.

 

I am a new member, but now have paid for my membership in full! Can’t complain.

I also took small gains today on the Salesforce (CRM) position of $1,020. With the market so volatile, I am OK with taking the small gains. They may disappear the next day.

Kent
Chandler, AZ

Testimonial

Thank John for his ceaseless banter. I enjoy this service so much. Great stories!!!!

I hope our paths cross soon.

Thank you

Bill
North Carolina

Testimonial

First and foremost, thank you for what you do.

The small cost of this newsletter pays for itself a thousand times over. My returns mimic those of your portfolio for the year and for that I am grateful. 

The only suggestion I would offer is to keep doing what you are doing. It is people like you that will help return the once storied name to Wall Street.

Regards,

Shirin

Tampa, Florida

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 I can’t tell you how much I enjoy your blog. It is the first place I go every morning and I miss you on the weekends.

I stumbled upon your site about 4 months ago and have been addicted to it since day one. I really appreciate not only your insight into the markets but also your global and historical perspectives.

All of this served up with your great sense of humor makes it a must read! Thanks for all your hard work.

Chip

Testimonial

Thank you for the analysis of Nvidia (NVDA). I wouldn’t have looked at them without your analysis.

I got in NVDA at $69 Nov 2 after it dipped 3-5% from the recent top, it exploded up on the 11th Nov, +29% to $88, and eventually made it to $290!

More trade alerts to the people :)

Best Regards

Per
The Netherlands