Using Low Priced Stocks for RadioActive Profit Machines

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– November 26, 2008Posted in: RadioActive Profit Machines

Spread Trade Systems did a great job of teaching you HOW to set up trades. You probably understand all kinds of ways to set up calendar, credit, and debit spreads. What they did NOT teach you was position sizing.

Your question shows that you are interested if you just don’t risk too much, right? Well, I don’t recommend trading stocks priced at $5 or less as you’re suggesting, although you can…What I would suggest is trying medium sized stocks but with a very low amount AT RISK. Note: All 3,300 optionable stocks and ETF’s are at average share prices about $20 right now.

Here’s an example: TODAY during the Webinar I bought TEVA for $42.35 and a Jun $50 put for $9.50. That’s a total cost of $51.85, of which I will definitely get back $50. SO… ALL I can possibly lose is $1.85, a tiny amount.

If all you have to trade is $9,000, you could easily have gotten in this same trade as well as another stock priced in the $20-$30 range… with only a few hundred bucks AT RISK… but taking your whole stash and betting it on low performing, $5 stocks will put a huge amount AT RISK.

If you’re still sore from those STS trades, consider paying attention to the money management side of your trading. Most folks look for stock picks and timing… your assignment, should you decide to accept it… is to now pay attention to risk management first and foremost. You’ll play stocks that are more likely to get you a return and keep your risks low… which is the aim I THINK you’re trying for with the $5 stocks idea.

About admin

How a Karate Instructor learned to limit stock trading risk to 5%:

I'm Kurt Frankenberg, and I have discovered how to truly put the odds on the side on the individual investor.

It uses a principle that's been in front of our eyes all along, but is rarely used or understood.

Other systems advocate treating the stock market like a business. My system really does.

After making and losing what seemed to me like a fortune many times over, I finally decided to step back and see what it was that made some stock investors fail and others succeed.

I found that there are certain skills that successful investors have in common, even though their personality and approach to the market may be different.

I also found that the approaches that emphasized longer terms of holding, trading with the long-term trend, and having money management rules did the best.

One thing was lacking, however, and that was a true understanding of how to reduce one's risk by managing time. It is this principle that all RadioActive Trades are founded upon.

After learning my story and seeing my RadioActive Trading methodology, Ernie Zerenner, President of the Power Financial Group, Inc. publishers of PowerOptions®, started using it and decided to buy it for his PowerOptions subscribers, many of whom were trading covered calls, naked puts, collars and calendar call spreads with no protection against a downturn in the market (like most of 2008).

We pledge to give every investor the knowledge, services and tools that they need to be successful investors.

Whether you prefer to use self-directed tools to find and manage your trades or you prefer to trade along with our picks and management we publish in Fission - Power Financial Group, Inc. has what you need to be successful and protect your invested assets (capital preservation).

This site offers some free and some "pay-as-you-go" investor eduction, and the implementation products so you can quickly and easily start using this methodology to start trading.
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- The Best Options Tools Ever (that also happen to support the RadioActiveTrading Methodology)
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