If you’ve been reading my updates for a while, you’ll know that I trade based on trends.
I find a strong trend and then I use that trend to help me place an income trade.
Now here’s the thing. When I say “trend” a lot of people think go to a chart and look to see a stock that has been on a steady uptick for the past few weeks or months.
That’s not wrong. I definitely do that.
But today I wanted to talk to you about a different kind of trend. A trend where a stock goes up on the same date year after year.
Before I started trading this strategy, I had never used that kind of a trend before.
But after my team presented the data to me… And I saw how the same stocks would rise on the same dates year after year…
I knew that a strategy built around this kind of powerful trend could help me nab some huge winners from the market.
Overview
Today I’m going to talk to you about a trade I placed on November 29th.
It was the Wednesday after Thanksgiving. If you’re like me, you were probably feasting on tons of leftovers.
But that day, my system told me that for the past 10+ years, stock ticker RH (formerly known as Restoration Hardware) was due to pop.
Now, I know it’s hard to believe, but these yearly trends tend to defy gravity. Even when bad news comes out about a stock, or the stock has been on a recent downtrend…
Something inexplicable tends to happen every year on these specific dates.
So I placed a trade.
Trade Details Unpacked
So, if you’ve been reading my updates, another thing you’ll know about me is that I don’t like directional trades.
There’s just too much working against you. A directional trade is when you buy a stock (or an option) and expect the stock to move in a certain direction.
When you place that kind of trade, there’s no room for error.
It’s like you’re a tightrope walker and you’re stepping out onto the tightrope without a net.
Everything — and I mean everything has to work in your favor. You have to be on your “A” game. The wind has to cooperate. You have to trust that whoever rigged the tightrope that day wasn’t careless.
The list goes on and on. I’ll say it again: EVERYTHING must work out perfectly in your favor.
Same thing with a directional trade: You have to trust that your indicator picked up on the right signals. You have to hope that no bad news comes out, sending the stock in another direction.
You have to hope that the stock doesn’t just move sideways and waste your time.
Because even if the stock doesn’t go down, you absolutely need it to go up — and by a significant amount — if you’re going to make any money on that trade.
In short: directional trades require a lot of things to line up. And that’s hard.
So I choose the much easier way to trade: I simply place a trade that allows several things to go wrong and STILL lets me win.
How’s that? Well, I like to call it “getting paid for a promise.”
It starts with collecting cash right up right. As soon as I place the trade. That’s already a good spot to be in.
So what’s the promise? Well, when I expect a stock to go up, I simply sell a promise to buy the stock if it drops to a certain price.
In the case of RH, it was trading around $275 when I placed the trade.
And, as I’ve mentioned the 10+ year trend told me that over the next week or so, this stock would be going up.
So the promise I sold was to buy the stock if it went down. In this case, it would have to drop down below $235 by Friday, December 8th.
Put another way, the stock would have to drop by $40 — that’s more than 14% — in just 7 trading sessions for me to have to make good on that promise.
Do you know how often that happens? I won’t keep you in suspense: Not very often.
Which is exactly why I love placing these trades.
And this next section where I walk you through how the trade worked out will highlight that for you
So How did it work out?
They say a picture is worth a thousand words, so here’s a picture of how the trade worked out:
As you can see, for about a day, the stock moved sideways or even a slight bit down.
But then on Friday, December 1st — BOOM like a rocket, the stock started shooting upward and it continued like that through Monday.
At that point, the stock fell a bit and started going sideways for a full 3 days.
If we had placed a directional trade with this stock, we would have been sweating. Praying for it to go up.
But because I collected my money up front, I would simply sit back and watch time waste away… knowing that every day that ticks off the calendar is another day closer I am to keeping the cash I collected without having to fulfill on that promise.
But wait — then we see two big bearish candlesticks. The stock slumped down below where we entered the trade.
Again I’ll point out that if we had placed a directional trade on this stock, we’d be hating life.
But because we placed an income trade — collecting cash for making a promise — we were 100% safe.
As you can see on the chart, the dotted line is where the stock would have had to fall to in order for us to chalk this trade up as a loser.
But it didn’t cross the line and we were able to keep the full premium.
In this case we collected 20% on our risk. All for just placing a trade and holding it over 7 trading sessions.
Conclusion
Some folks love big winners: 110% gains, 235% gains, 313% gains.
And listen, I get it. Who doesn’t love to log a huge triple digit gain like that?
But you have to look at the flip side of those kinds of trades: How often are they winning?
It’s not a lot of fun if you win 200% once and then have 10 losers in a row.
But with this strategy I’ve been sharing with you today, I’ve got greater than a 90% win rate. That means I’ve won more than 9 out of every 10 trades I place.
For my money, this kind of trade is the only way to go.
Smaller, more consistent gains are the.
Not big “moonshot” trades that might work out once in a blue moon.
Trade well,
Jack Carter
P.S. I’m going live Wednesday, December 20th to share the full details of this strategy — including how you can start trading it right alongside me. If you see the power of tapping into trends and putting the odds in your favor with these kinds of trades that I’m using, I urge you to click here to reserve your spot.
