Energy Has Been Beaten Down—Way Down.
Many opportunistic traders/investors are contemplating taking advantage of these low-energy prices.
After all, starting off the week, U.S. oil benchmark crashed to $1 per barrel for its lowest close and biggest one-day fall on record.
This just might be a juicy opportunity for investors willing to ‘buy and hold.’ Needless to say, we are more than likely setting the stage for a significant bottom in oil.
The old adage “don’t catch a falling knife” should generate a healthy dose of fear to any consciously wary trader. And at the very least, it should trigger a responsible flight instinct.
Nevertheless, the reason investors are eager to place their financial necks on the proverbial chopping block is because oil is down—and by a lot. The price of each barrel is off more than 70% from December 2019.
The shale drilling revolution unleashed a production rush that eventually allowed America to become the number one oil-producing nation on earth—and that includes the U.S. out producing Saudi Arabia and Russia, too.
U.S. oil futures have dropped to their lowest prices since early 2002. Gas prices have hit a 10-year low. The average national price for regular unleaded gas stands around $1.785 per gallon at the time of this publication. Prices throughout the energy sector are down across the board. But, indiscriminate, unfocused buying is not a prudent approach to responsible investing—especially in today’s extreme market environment. Picking bottoms never work.
With a proper technical and fundamental understanding, a spectacular opportunity of gain may await those ready to wade into the bloodied oil fields of today.
But for some, placing hard-earned profits in the energy sector makes a stomach a bit squeamish—and rightfully so. Many analysts are expecting a wave of bankruptcies that will keep the lawyers, courts, and accountants busy for years dealing with the aftermath.
Companies were formed, loans were taken, equipment was purchased, and wells were dug. Companies are being murdered in this environment. The question is, who will die on the vine and when will it happen?
Six years ago, a basket of stocks from the oil services group (OIH) peaked at $57 per share—up from $20 in 2008. EOG Resources (EOG) went from $20 to $120 during the same time. Yummy, right? Well, today it hovers around ~$40.
The breakdown of the energy sector was technically obvious to us skilled traders. Longs were closed out when key support levels were violated. The savviest of traders have been short in this sector and now looking to buy-to-cover to lock in some nice profits.
The opportunity we may have before us to buy oil right now is certainly tempting, and crude oil lows may be getting close to being set. When it’s time to buy, we expect gains to deliver significant upside potential.
Entering this market will require a high skill level in technical analysis. Price action will show us a trend reversal pattern to key on. This is critically important.
Here is what we know: oil will not go to zero. Today we crashed below $1, down from $107 only a few years ago. The growing pursuit of alternative energy will not wipe out international demand for oil for decades. And a few select companies, even operating under incredible stress, will thrive and survive for decades (e.g., Anheuser Busch survived prohibition).
Keep in mind that bottom fishing, to this degree, requires more than simply buying a basket of energy stocks and hoping for the best. We must be more intentional and savvier in our investing approach.
Although, XLE and OIH are down an incredible amount from their 2014 highs, over the next several years, large buckets like these are not expected to outperform the stronger sectors such as technology and healthcare. In other words, it might be smarter to target individual equities instead.
Consider the following technique to potentially increase your probability of success:
Within three years you will most likely have made a barrel of money.
In short, if you are short term look at the daily charts. If you are more long term, watch the weekly charts and identify a sector bottom, place an equal dollar amount into six stocks, and wait two to three months or roughly three years or so.
This strategy is not a spectator sport. Watch the charts on various timeframes to when to buy, and when to exit to maximize profits. Expect a short-term payoff in as little as two months. But the big play is waiting, say, three years after purchase. And, if Christmas comes early, reallocate your profits into other juicy trading opportunities.
To help you, below are six securities for you to research (in no particular order):
You NEED a professional trader to mentor you. That’s the secret. This is precisely what Mark (the Meerkat) and I have found to be true in our own trading development. We both have been mentored. Matter of fact, I had two mentors. Successful traders are developed by other successful traders. Period. You can’t learn to ride a bike in a seminar or ask a book a question. It’s about being mentored. https://www.groktrade.com/tradingmentor.html
Delivered by a Trader with 20-Years’ Experience --- Des W Woodruff
First, please give me the grace to make a brazen comment.
Well, studies show that you probably should NOT be trading in the live markets.
Your odds of success are as low as being a consistent winner in the casinos. The fact is, you will always have wins, but the odds of consistent net-positive profit gains are just not with you. Those “wins” that you experience keeps you gambling.
I’ll make this notion even worse.
Your mental makeup as a human being is likely to be the biggest sabotage to your success.
As human beings, we are not intrinsically wired to trade well. Our brains are created to assure survival, not to make money. For example, traders run away due to fear and run towards greed. Said another way, it’s hard to buy when everyone else is selling. Likewise, it’s equally difficult to sell your positions when they are making you money.
Intellectually speaking, traders usually understand what to do to make money in trading (ex. buy low; sell high), but they demonstrate the opposite and fail to measure up in their trading.
The odds of you being successful as a trader are sobering low.
Below are four (4) tips to fix your mental game and increase your profits.
Tip 1: ‘Mad Scientist’ Suicide
Most traders act a lot like how a mad scientist would act.
Chances are this is you. Your crazy decision-making in trading seems like correct-thinking to you. However, your decisions prove to be anything but clearheaded thinking. You demonstrate a chaotic methodology. You try every new trading idea under the sun. You test every new concept that you learn about. You try all the new indicators; you match them together striving for better results; you read all the books and try all the guru systems; you listen, learn, and experiment with anything and everything you can find. Your understanding becomes a boiling pot of chaos and confusion. Your Frankenstein of a trading system cripples your effectiveness in your trading. Losses become a certainty.
These mad scientists always wash out of the market.
What can you do? Find a trader who you trust/respect—someone with many years trading experience and someone whom actively trades in the markets. Find that person and learn their system—and learn it better than anyone else. Start there. (We highly recommended a mentor. Don’t let this get by you.) Let this step be the beginning of your foundation as a healthy trader.
You will have to mentally divorce yourself from your own trading ideas and beliefs. This will be the hardest obstacle for a mad scientist. Eight out of ten of them will find a way to lose money using a winning system. …let that sink in.
Tip 2: Out in ‘Left Field
For clarity, the idea to savvy successful trading is to begin your trading off with a winning trading system. Let’s assume you have been formally educated in your trading and have a great basis to start your trading. Now you want to optimize your trading system to better match who you are as a trader and to make more money.
To do this, the best thing to do is test one specific change in the system’s plan at any one time to validate whether it is a good change, or bad. Once it’s deemed to be a profitable change, keep it and test the next change.
On the flipside, the worst thing you can do is bastardize your winning trading system by making multiple changes while testing your system. If you do, you quickly become disoriented to what is working and what is not. When this happens, your trading methodology drifts off into the proverbial left field—somewhere near Jupiter. When it does, you find yourself becoming that revolting mad scientist once again. Don’t do this.
Tip 3: Map it or Trash it
The fastest way to stay grounded in developing as a trader is to map your plan and do so in painful detail. In other words, establish a foundational trading plan that will guide your every step. The problem is that most traders don’t have a trading plan and will barely even give the notion a nod.
It’s psychologically impossible to optimize and test your trading system without being bound by a written plan. You can only successfully test via a trading plan. If you make an excuse for yourself to NOT create and adhere to a trading plan, the best trading advice that I can give you is to trash the very idea of you being or becoming a trader. This will save you much money and unnecessary heartache.
Tip 4: Be Judged and Like It
This will be the hardest thing for you to do--- and for several reasons.
First, we need to make several assumptions before proceeding on. Let’s assume that you have been formally trained, you do have a proven trading method that you adhere to, you are faithful to trading that method, you do only test changes to that method via a singular tweak (before testing more), and you are a “good” student—one who follows instruction well.
Assuming the aforementioned, the single best thing you can do for your trading (at this juncture) is to allow another trader to review your trades. You need a rock star trader to review your trading.
The reason you need to have your trading judged is because trading in darkness breeds contempt. In other words, people who trade without accountability quickly take on the “island mentality,” and their peril is in the belief that they are self-sufficient due to their intellect. This is mad scientist thinking.
These traders fully believe that they can figure out their trading problems on their own. This is a trap that even the brightest individuals fall victim to.
The answer is to find a trader who has many years of trading experience and is an active trader. Get him/her to analyze your trades. Give them permission to be brutally honest with you and have them judge not only your profitability but your adherence to your plan.
This will be very hard for you to do because: 1) it’s virtually impossible to find a successful seasoned trader who is actively trading, 2) these traders will probably not want to do this for you, 3) your ego will more than likely not want someone else looking at all of your trading inadequacies, and 4) any lack in your resolve to be disciplined will cause you to fail at doing the hard work required to find someone to judge your trading skills and performance.
Everything you need to know is in the above text. It has been edited down for quick reading consumption.
Oh, one last thing.
The easy solution to all the problems highlighted in this article is found in the Grok Trade Mentorship program.
When Satoshi Nakamoto invented Bitcoin, he never thought he was inventing a currency. Nakamoto’s ultimate goal was to develop a system for digital cash without requiring a central entity to control and regulate it. This decision led to the birth of the world’s first cryptocurrency.
HISTORY AND GROWTH
Since the emergence of Bitcoin in 2009, many other cryptocurrencies have entered the market, namely Ethereum, Litecoin, and Ripple. According to the Global Cryptocurrency Benchmarking Study 2017 by University of Cambridge, the combined market value for all cryptocurrencies until April 2017 was around $27 billion.
As soon as Bitcoin gained popularity, it required a market price to compare it against the traditional currency. It also required a trading exchange where users could trade it against actual money. The first trading exchange for trading Bitcoins and establishing a market price was founded in early 2010.
Today, more than 100 exchanges are dealing in cryptocurrencies. The major trading exchanges include Coinbase, Bithumb, Poloniex, and Kraken.
In 2015, Bitcoin secured its place on the New York Stock Exchange creating a proprietary index to track Bitcoin with the ticker symbol NYXBT.
At the time of this blog post, NYXBT has spiked more than 600% in the past year!
The trading volume for all cryptocurrencies has increased significantly and hit $4.3 billion in May 2017.
Currently, Bitcoin leads the market share due to its wide coverage and financial stability. Bitcoin (BTC) breached the $2000 mark in May 2017, which means that one Bitcoin was valued at a whopping price of $2000! It can be safely said that Bitcoin remains the safe haven for traders and investors alike.
Running second, Ethereum (ETH) was formed due to a new blockchain alliance by Microsoft, Intel, Accenture, and other major tech companies. It is called the Enterprise Alliance. Ethereum gained traction due to its incorporation of digital contracts into the cryptocurrency world. Being called the silver to Bitcoin gold, it has risen in the past years and currently trades at around $380.
Why is "Blockchain" Important to Cryptocurrency?
The vital reason for the growth and popularity of cryptocurrency is its innovative, secure ecosystem, backed by blockchain technology. The mechanism ruling blockchain technology is simple.
Any transaction uploaded in the database is locked and encrypted. These encrypted transactions are uploaded onto the existing ledger which becomes a “block” in the system.
A “block” is a public ledger that is shared among all the peers on the network. Once encrypted on the block, the transaction becomes permanent and unalterable. Each new transaction created becomes part of the chain of all encrypted blocks called the “blockchain.”
Future Prospect of Cryptocurrency
A $10,000 purchase of Bitcoin in 2010 would be worth around $300 million today. Said another way, a mere $100 purchase of Bitcoin in 2010 would be worth a whopping $3 million today.
But there is still a lot of hope for insane growth.
The past gains in Bitcoin are certainly not over, nor are these kind of gains just limited to the cryptocurrency Bitcoin. There are more than 800 cryptocurrencies in existence today — and a few of them, like Ethereum, Ripple, and Litecoin, will likely see similar growth.
By 2030, 15% of all global financial transactions are projected to use Bitcoin or a Bitcoin-like cryptocurrency. What this means to us is that anyone who still thinks Bitcoin is an interesting anomaly has been, and continues to be, dead wrong.
Bitcoin developer, Jimmy Song, has compared the cryptocurrency trading volume to major stock exchanges like NASDAQ. While this seems like a far-fetched comparison, the growth in cryptocurrency is predicted to continue its growth exponentially well into the future and therefore, provides a solid investment opportunity.
It's a fact that cryptocurrency has revolutionized the way money is portrayed. It's highly probable that digital currencies will integrate into our current systems and do so sooner than later. Armed with this knowledge, it would be prudent to do some serious research on how to get into the crypto game.
6 Things To Stop "Short Trolls"
So, you've heard of 'Pump & Dump,' but have you heard of 'Short & Distort?' Both are equally-- criminal.
Traders can make money by selling short a stock, which is different than going buying long a stock. Those who short sometimes go rogue and publically trash a stock in hopes for it to drop. These people are (now) known as "Short Trolls." A 'Short Troll' is identified as an ugly public nuisance who rapid-fires posts of criticisms about a stock in various investment forums or trading chat rooms. You know them well. They are loud and obnoxious and post often--too often. Every post is negative and they only criticise and do so unmercifully.
Traders/investors who analyze both fundamental and technical analysis to base their decisions to go long or short a stock is considered to be savvy. On the other hand, 'Short Trolls' are mental midgets who choose to go the path of least resistance and smear others. Perhaps they should wear brighter colors.
The daily deluge of never ending assaults can be nauseating. It's especially grand when 'short trolls' team up together and wage a collective assault. These trolls are like the boisterous town drunks who group up and stumble over to your party.
WHY Do Short Trolls Do This? Money-money-money! 'Short trolls' are short the stock and the only way they make money is if the stock decreases in value. For this reason 'short trolls' veer off into criminal territory and say and publish inaccurate information and even defames to adversely manipulate the stock price.
WHAT CAN I DO ABOUT SHORT TROLLS?
For more information read this and consider going on the offensive.
AUTHOR: d-seven owner of Grok Trade (@GrokTrade)
PS. If this article has helped you, share it with others.
WARNING! 'Short and Distort' Crime
The "short and distort" is a known scam that is being actively prosecuted. A "short and distort" scammer first short-sells the stock, and then fraudulently attempts to lower the stock's price via posting criticisms or negative predictions about the stock's business, products, management, alliances, etc. The scammer then covers their short position buying back the stock at a lower price to gain a profit. The crime is when the investor benefits financially by posting negative posts with the intention to harm the credibility and trust of a publically traded company, its stock, its products, and/or its management. Litigation can be brought against anyone suspected of such fraudulent activities.
REGULATION: Short and Distort manipulators are being targeted--especially in the the category of stocks most often associated with this scheme---pink sheet and OTC stocks. In general, penny stocks have been the target of heightened enforcement efforts.
The following (unedited) email was received from a user on Thursday, August 27, 2015. d-seven's response follows.
"My wife and kids do not know how much money I lost yet."
I have been following you on Youtube for the last month. I did complete your 101 course.
I am new to trading and I really screwed up. I wish I would have found you earlier. I started trading in July with $17000, now I have less than $7000 left. I wish I would have known about you and taken a few thousand and got training from Grok Trade first. I really blew it. I had some folks training me on how to trade options and I did pretty good picking trades. Almost every trade would have made money on if I had know how and when to exit, but I left them too long each one lost large amounts of money. I played Facebook and Apple on earning and got burned big time! I did not know any better. I am a Mechanical Engineer so I am very use to analyzing data, but this kind of analysis was not as easy as I thought. I really need to turn this around, a large chunk of this was borrowed from my 401K. I can't seem to catch a break lately. I want to be a turnaround story but now I am tapped out. My wife and kids do not know how much money I lost yet. It took years to save this money up. What can I do?
Brian G. (Last name removed)
(City removed) Georgia
"Some say that “trading is the hardest easiest thing to do.” "
By no means are you in a boat all alone. We all have taken a hit in our trading accounts when we began trading. As we delve into the world of trading, we quickly realize just how expensive "market tuition" can be. It's NO fun to lose, but sometimes losses are necessary as the pain delivered by drawdowns tend to awaken us to the very real risks that we face as traders who trade the live markets. You broke some major rules (i.e. trading leverage (options) before you are a proficient trader, playing earnings, not having a trading plan, etc.) Amatuer mistakes.
As a former mentor for Rich Dad, Poor Dad and being the owner of my own education company, I have personally mentored over 800 traders. You cannot begin to imagine the horror stories that I would hear from my new student mentees. By the time these traders had their own "coming to Jesus" talk with themselves to finally get mentoring, they had unfortunately already relinquished their hard earned capital to those more savvy traders who were opposite their losing trades. If I had to guess the tally of losses before their mentoring, it might be between $50-75 million in losses.
Like you, virtually every student would confess to me, like a parishioner to a priest, that their losses were due to their own "stupid mistakes" and hard-headed risk taking. It was seldom lost with a student that their losses were a derivative of their own negligence of failing to first establish a basis of education. If I had a nickel for every time I heard a student say that they had wished that they came to me for mentoring before taking their relatively large hit, I would have much more capital to trade.
Oh, the dreaded disclosure to the wifey. ouch. The fear of telling your wife how much you are down in the markets is very real. Back in the day, before I got trained, I had more losing days than winning days. EVERY DAY, my wife would ask me how I did in the markets. After the markets had concluded for the day, I dreaded walking out of my office. It was excruciating to divulge the truth about the constant losses. Just confessing my gambling sins, in dollars lost, was like salt in my wound. I was hard enough on myself, but having to tell my wife (whom I had to previously convince that trading would be a great side business) was nothing short of gut wrenching. Coming clean with your wife will not be easy, but its the right thing to do. Again, I (and the rest of us) all have been right where you are today and it can be both maddening and frightening at the same time, but you can overcome.
Some say that “trading is the hardest easiest thing to do.” This is right. Trading really is not overly complex or taxing for most traders, BUT it can be very difficult to master. Because you are new to trading and have much to learn, can actually work to your benefit. You see, some of the more seasoned traders who come for mentoring have a hard time applying new principles due to the difficulty of being 'rewired.' You, on the other hand, are fresh and there is NO rewiring necessary to slow you down. You just need to learn the rules, strategies, principles, concepts, and calculations that significantly stack the odds in your favor when trading in the live markets. Boom. The you're golden.
Please hear me. Do NOT beat yourself up too badly. This is the time to have a "coming to Jesus" talk with yourself. Maybe trading is not for you and this hobby is just too expensive and its time to put your time into something else. That's OK.
For me, I knew I had to either quit trading altogether, or go get formal training the right way to work through my mistakes and trading deficiencies. I chose the latter, and that was one of the best business decisions of my entire life. When I first began to trade (17 years ago), I blew through two small accounts ($2k and $8k). Because I was only 25 and that was all my trading cash at the time, it was hard to stomach. Today, on the other hand, things are much different. For example, the recent volatility the past few days made me some nice profits. Yesterday, I ordered my broker (Interactivebrokers) to cut me a check for $20k of those profits. It's funny how differently the norms are compared to what they used to be.
Before progressing further, ask yourself these questions:
1) Do I want to be a trader?
2) Should I be a trader? (Too lazy to learn, a gambler, etc.)
3) Can you trade slow with minimal risk for minimal gains?
(If you answer NO to any of these, find another less expensive hobby.)
4) What will your wife say when she finds out about your problem?
5) Will your wife want you to fix your problem?
6) What will you do to fix your problem?
7) How much money will your wife want you to spend to fix your problem?
Regardless what you do next, stay positive and do what's best for you and your family. We care about you and your tomorrow.
PS. What is it that we can do to help you? I (strongly) suggest taking our mentorship in Vegas in November (see here). We also do online mentorships monthly, too.
It's all about being more educated than the next guy: Dumb vs. Smart; Hope vs. Strategy; Gambling vs. System. Like it or not, but when trading, you are competing against other traders.
It's not too late-- Start off 2015 the right way and decide that you WILL BE more educated and better prepared than other traders who you are trading against each and every day you're in the markets.
Overall, even the uneducated investors (who were long the market) fared well in 2014. They say, "Everyone is a genius in a bull market."
As you know, stocks end the year bullish. Most indices did fairly well, unless you were in small caps. Below is the breakdown of the final tally of the 2014 stock market results.
2014 Final Numbers
As a trader for 17 years this February and an educator of more than 800+ traders, I can tell anyone who will listen that trading is about 1) education and 2) experience-- and in that exact order. If you mess up this important order , you will pay dearly in 'market tuition.'
Ex. The secret to a successful trading career is much like the secret to properly flying a plane. When flying a plane, it's imperative that you get your education (ground school) first and then log your experience second; It's costly, in more ways than one, when the order is wrong. In other words, do NOT try to fly a plane without first enrolling in excellent education. It's a simple concept that even the smartest of wanna-be-traders get wrong.
PS. Make 2015 all about formalized trading education. Make it your goal to be more educated and better prepared than any other trader out there.
Des Woodruff (aka d-seven)