How did I do it? What kind of trader can still sit on the beach and tan in the middle of a hurricane? On first glance, it doesn't appear to make any sense. But if you trade contrarian, it does.
All the positions that I exited out of today had two things in common:
1. They were crushed down by overreactions in the news making them oversold
2. They actually were in good positions to grow fundamentally, as in they had just re-positioned themselves, such as an acquisition, or a spin off, that make investors get skittish, but looking ahead in their books it would increase their value in the long run.
I ignored the panic and bought the solid at deflated prices due to panic. As several days went by, investors came to their senses with the panic over and took a good look at these stocks and the price jumped back to where it should be, and in the process our calls reinflated to a higher price producing profit. As a matter of fact, it was such the case that these stocks were oversold due to fear that they were able to even bounce up during a market crash day when the NYSE suspended trading. Think about the power of that. That shows you what a boon contrarian trading can be.
And you can do it forever. People will always react to greed and fear. And if you have the balls like I did today and rushing in the burning building and buying SPY while everyone else was running out, if the market does jump in the next day or two the crushed SPY calls that I bought for a discount today are going to pump back up to higher levels where I can sell it and make 20-30% in a day or two.
But it sure is hard to ignore that screaming voice at the back of your mind that says "Stay out of SPY! What are you nuts?? The Market is CRASHING! Stop!!! You'll lose your money!!" Sure, I hear that. But as a contrarian I ignore it and do the opposite of what everyone else does. So I can have the money no one else can.
Continue to follow me over the next few days. Things will get interesting.
Tradinginsider
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