The prospect of market volatility can be daunting to many investors. It’s simplest when everything is ascending. However, trading in unstable markets can feel like a gamble. This is where the savvy advice of my colleague, Jonathan Rose, comes in handy. With over two decades of experience, he’s accumulated considerable expertise managing risk in volatile market conditions.
Jonathan Rose’s remarkable career spans a variety of roles, from being a floor trader at the Chicago Mercantile Exchange to serving as the Director of Trading at a multimillion-dollar proprietary trading firm. He also has the credit of mentoring over 100 traders, cultivating their professional trading skills. In the Masters in Trading Summit last Wednesday, Jonathan divulged one of his most successful and steady trading strategies.
Over the past three years, this strategy has proven itself with a whopping 90.3% of the trades recommended by Jonathan turning out to be profitable. This consistency is appealing to both novice and veteran traders alike. Additionally, Jonathan’s ability to simplify intricate trading concepts and managing risk make his insights and strategies even more valuable.
Jonathan’s teachings and insights are still available for those who missed the live event. One can watch the replay and learn about his massively profitable trading strategy.
If you are familiar with the renowned product pitchman Ron Popeil, you may recall his popular phrase, “Set it and forget it.” This simple catchphrase, stemming from his Showtime Rotisserie oven, expresses the essence of one of Jonathan’s favorite trading techniques. The idea behind this strategy is to make investment decisions that don’t require constant monitoring, thus eliminating emotional involvement – a common pitfall for many traders.
Sadly, irrational emotions often lead trades astray. This emotionally charged decision making is a weak link that needs to be addressed. The human brain, while a marvel in countless ways, can be detrimental in investment scenarios.
Jonathan proposes a solution – cutting out this weak link and replacing it with strict rules and automated execution. This strategy entails purchasing an out-of-the-money call or put. For instance, if a stock trades at $10, you purchase the calls at $12 with the premium at $0.50. The cost of this trade is merely $50 per contract.
This strategy – referred to as a SIFI trade – allows a trader to step away from constant monitoring while knowing the risk is capped at the initial $50 per contract. SIFI trades are a favorite of Jonathan’s because of their defined risk and clear upside.
A strong fundamental understanding of the market, the strategic use of options, and disciplined risk management are key to successful trading. The SIFI method is one such strategy that can help traders navigate the market without fear. Jonathan relayed these insights to a group of individuals at the recent Masters in Trading Summit.
For those who couldn’t attend, a replay of the event is available, in which Jonathan introduces a new market indicator that could impact your approach to trading. As he often says, the creative trader always wins.
It may not be feasible for us all to become a product marketing genius like Ron Popeil, but with Jonathan’s SIFI method, we can profitably trade options, knowing our risk upfront.
Let us know what you think. Please share your thoughts in the comments below.
