If You Are Tired of Losing in the Stock Market, Use this Tiny Tweak to Your Trading and Limit Losses Like a BOSS

When you're trading the stock market, it sucks to have a string of wins....and then "give it all back" in one or two bad trades! I'll bet you've got a story like that. I used to as well.

Trading would be just PEACHY if it wasn't for those pesky losses. Duh.

Some folks think they can limit losses with a "STOP" order. But in fact, a "STOP" order actually affords almost no protection at all. Either it dumps you out too early, or an opening gap violates your stop and you get out at a price you never would have chosen.

But here at RadioActive Trading we've proven that the "RPM"... RadioActive Profit Machine can turn a losing stock picking system and make it a winning one. And we do it without relying on stop orders, ever. 

Here's a real-life "perfect" example:
Two trades I did SHOULD resulted in a net loss, but instead made me nearly $1,000.

Read on to learn how to limit your losses so that even when you're wrong, you're right!

Success as a trader isn't about BEING right... it's about TRADING right. Limit losses like a BOSS, and let winners run ~Kurt Frankenberg, Founder of RadioActive Trading

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In one twelve-month period, I traded ALTR stock 2X, with about the same amount of capital invested ($15,500).

Both times I expected ALTR to go up.

Once I was right... the other time I was DEAD wrong.

The chart might lead you to believe that I lost overall. Behold:

Playing stock without protection can get you into trouble

So I sank about $16K into ALTR according to the timing on the chart, TWICE.

You'd think this was a net loss, but because of the tiny tweak that we use at RadioActive Trading,
...I netted almost $1,000 profit instead!

Before I reveal the tiny tweak that changed everything, let's analyze everything that's wrong with this picture ๐Ÿ˜‰

  • Some folks think that you have to be right more often than wrong to win. But I won one, lost one... a miserable 50/50 record... and still cleaned up!

  • Some folks think you need to win bigger than your losses. But it APPEARS that I lost bigger than winning, just looking at the chart above ^ 

  • Some folks think you need to be a wiz a chart reading or fundamental analysis. But I pay less attention and still win overall

Okay, so I said that I WIN overall, and that's true. 

But it's not because of my crystal ball, fo' sho'.

Here's the tiny tweak that, if you grasp it.. will change the way you trade FOREVER.

Because forever, you'll never take a loss more than 4-6%.

Okay so here's the scoop. The beginning setup for a RadioActive Profit Machine (RPM) play is this:

  1. Buy stock in 100 share multiples
  2. For each 100 share "round lot", buy a put option for protection (about 5 months out or more)
  3. Buy the put AT or slightly IN the money
  4. Make so the difference of the total invested and the strike price of the put is 4-6% 

So in the case of ALTR, I bought 500 shares plus 5 put options; and spent about $15.5K. This trade from September 2011 is an oldie but goodie:

Risk per 100 shares = $1.85 per share, or 6% of total investment. Scaled to 500 shares + 5 puts

Some folks will criticize me for buying put options.

  • "Why'dja did you buy stock AND a put? You're trading against yourself!"
  • "You coulda had 17.3%, but seriously cut into your profits by buying that put!" 
  • "Why din'tcha just put on a stop order? That would do the SAME THING AS A PUT and not be as expensive!"

Heh. Well, in truth.... no.

I'm not trading against myself, a married put is still a "net BULLISH" play.

I did still profit well from the first trade. 12% may sound less sexy than 17.3%, but remember that it was 12% on the entire invested amount rather than just the stock.

And in case you didn't know... a stock CAN dip in the morning... wipe out your stop-loss ... then go back up in the afternoon as though nothing had happened. 

Except, you know, WITHOUT you ๐Ÿ˜‰

But by using put options as ABSOLUTE stops, you can guarantee your exit like so:

Adding a put guarantees your exit, while leaving unlimited potential in each play

In the first trade, ALTR went up 17.3%. NICE. I "only" made 12%, but that's still good.

But in the next trade, the stock crashed 21% duing the time that I was holding... it even continued crashing, hitting a total loss of 31%!

But this kid was still smiling. Why? Because the paltry 5.6% loss barely made a dent in my bank account. 

Let's examine that trade record again, comparing "stock only" with "RPM".

  • It's the same stock both times. So success is not about stock picking.
  • It's the about same capital both times. So it wasn't like I put more in the winner, and less in the loser.
  • It's one win, one loss... so 50/50. It isn't like I have to win more than I lose to make money overall. 

First Play: $15.5K times 12% = $1860 win.

Second Play: $15,500 times 21% loss SHOULD HAVE cost me a loss $3255...
...but the put protected me at 5.6%. So the actual loss was only about $  868!

Making the total for both trades $1860 - $868  = $992 profit instead of a loss!

This is the benefit of the RPM: Same stock, same timing, same trading record...

...WILDLY different results!

Nearly $1000 profit instead of a loss of $1395. 

Get this principle, and you will be way ahead of all your investing friends:

The difference was as simple as using a put option as a stop-loss on both trades.

So, Traders? What do you think of this simple, tiny tweak?

I hope you enjoyed this short article as much as I enjoyed sharing it with you. 

Share this idea with a friend whose account could stand to have lower losses!

You might just make his whole day... or year.

Til next time,

Happy Trading!


This post is the first of a series in a free mini-course to uncover how you can enjoy lmited risk, high-yield trading. Also, these prinicples unfold in full in our flagship product: The Blueprint.

To make sure you get all the lessons, click here.

About Kurt Frankenberg

Kurt Frankenberg is an author and speaker about entrepreneurship, martial arts, and trading the stock and options markets. One of several "Biznesses" he founded as a teen, The Freedom School of Martial Arts, has been in continuous operation since 1986. Kurt lives in Colorado Springs with his wife Sabrina, German Shepherd Jovi, and his ninja cat Tabi.