My mom has always encouraged me to make dangerous decisions.
But when I told her I wanted to trade the markets for a living — safe from meth dealers and artillery fire in my home office — she wasn’t having it.She said she lost money in stocks. So did all her friends. The last thing she wanted was for that to happen to me.
So she suggested staying in the military — or, if I really wanted to work with numbers, becoming an accountant.
I didn’t argue. I told her to give me six months. If it didn’t work, I’d take her advice.
I’ve been trading for 12 years now, so you can guess how those first six months went. But despite the success I’ve had, my mom still doesn’t trust the stock market.
She’s fallen for the same popular investing traps that blow up casual investors…
Stop Buying Stocks, Start Buying Charts
My mom never mastered Step 1 of investing — picking which stocks to buy.
She tends to buy stocks her friends tell her about. They usually cost less than a dollar. Her friends say they’re going to the moon. (They don’t go to the moon. They go to a penny.)
Or she buys household names, like Enron and General Electric. She thinks because the companies are profitable, the stocks will follow suit. (They usually don’t.)
I understand why she falls for these investing traps. After all, everyone says value and company fundamentals are important.
But in reality, fundamentals have nothing on a good chart.
It seems so obvious to me. Stocks go up when traders buy them. It has nothing to do with the company’s latest earnings, or how “undervalued” the stock is. You buy the stocks going up and sell the ones going down, and confirm the trend with the level of activity.
I haven’t managed to convince her yet. But maybe I can convince you…
First, let’s look at a chart of AMC Entertainment Holdings, Inc. (AMC).
This is a classic meme stock. In June 2021, it soared over 600% on nothing but the madness of crowds. There was no fundamental analysis involved, just pure hype.
At the bottom of the chart is the volume, or dollar amount of trading activity. It’s a measure of the funds flowing in and out a stock.
As meme traders jumped in, dollar volume spiked. But soon, the stock ran out of buyers. As dollar volume flatlined, the price began to fall. Today, AMC has given back nearly all its gains. Barring a miracle, it will likely never trade at its highs again.
Now take a look at Occidental Petroleum Corporation (OXY):
In March 2022, news spread that legendary investor Warren Buffett was buying shares of OXY. Other investors immediately rushed in, generating the dollar volume spike.
If a stock is good enough for Buffett, it’s good enough for most investors. Over the next few months, dollar volume remained high as other traders bought in. The stock price continued to rise, hitting all-time highs just this month.
Based on dollar volume alone, you would’ve done far better buying and holding OXY in 2022 than AMC in 2021.
But active traders can do even better…
Look closely at that big spike in March. Right before it, dollar volume was higher than average. This was probably Buffett buying. Because he controls so much capital, his buying was just too big to hide.
Traders who were paying attention could’ve gotten in before the news dropped — and before OXY jumped 50%.
Stay Ahead of the Market With “Money Flow”
To manage this, traders use indicators specifically designed to track dollar volume. This lets them know the exact moment market whales like Buffett place large bets.
One popular example is the money flow index. But there are other, more powerful indicators out there that track options money flow.
That can be an extremely powerful trading edge.
There are dozens of ways large investors use options. It could be a multibillion-dollar fund hedging risk, or an institutional investor locking in shares for a potential takeover.
These moves often blindside the rest of the market. But with the right indicators, you can stay one step ahead…
That’s what Andrew Keene does in Super Options. He uses not one, not two, but 20 customized indicators to track the market’s BIGGEST options activity.
To pass his scanners, these trades have to have a minimum of $1 million on the line. Even the richest investors don’t risk that much without good reason. More often than not, they know something we don’t.
By piggybacking on these trades, Andrew’s subscribers have made 139% in 2022.
And now, for the first time ever, he’s ready to share this with readers of True Options Masters.
Regards,Amber Hestla Senior Analyst, True Options Masters