Have you ever wished for a trading strategy that stands the test of time, one that’s been a guiding light through five years of market ups and downs? Today, I want to share with you the only strategy that has been my guiding light throughout my five years of trading. This approach has never failed me, and it’s the same strategy I would use if I had to start over from scratch.
1. Getting Started with Ballinger Bands:
To kick things off, we need a reliable charting platform, and for this demonstration, I’m using the free and user-friendly tradingview.com. The key indicator we’ll be focusing on is the Bollinger Bands. These bands, set at a length of 200 and a standard deviation of 2.1, provide us with a clear visual representation of the market’s normal trading range. When we’re within these bands, it’s time to deploy our income-generating strategies.
2. Selling Options for Reliable Income:
Inside the Bollinger Bands, I prefer to sell options, specifically puts. Selling puts allows us to collect income with a remarkable win rate of 90% or more. I usually employ strategies like selling puts, selling strangles, or utilizing the 111 or 112 trades. These strategies are geared towards generating reliable monthly income while trading within the market’s expected range.
3. Adapting to Market Breakouts:
However, the market doesn’t always play by the rules. When we observe a breakout, either above or below the Bollinger Bands, it’s time to switch gears. A breakout signals that the market is deviating from its normal range, indicating potential significant moves. In these instances, I cease selling options and instead shift to buying options to profit from the expected snap pullback. Whether it’s buying puts for a downward move or calls for an upward move, adapting to market breakouts is crucial for successful trading.
4. Realizing Profits and Managing Risk:
No strategy is complete without a plan for realizing profits and managing risk. For my income-generating options strategies, I aim to manage positions at a 25-50% profit level, ensuring consistent wins. Additionally, I implement a 3X stop loss to safeguard against unexpected market swings. This disciplined approach has been a key factor in the strategy’s success over the years.
The Bollinger Bands
The simplicity of this strategy lies in its adaptability and clarity. By using the Bollinger Bands as a guide, traders can confidently navigate the markets, switching between income-generating strategies and protective measures during breakouts. Whether you’re a novice or an experienced trader, incorporating this straightforward approach could be the key to steady growth and success in your trading journey.
Remember, the market may be unpredictable, but with the right strategy, you can navigate it with confidence and achieve your financial goals.
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Thanks for reading 🙂
Austin Bouley
CEO & Chief Strategy Officer