COVID Stock Trading

How to Succeed with Options Trading in This Volatile Environment

COVID-19 and the stock market do not mix well. The global pandemic has turned into a slow-burn black swan event. Trading in such a volatile environment is not easy – but it is possible. In this article, Bob Lang offers practical advice on how to approach trading during corona so you don’t lose your shirt.

Before we get started, do us a favor: Wash your hands thoroughly and clean your keyboard. Then text a friend or family member – especially one who may be socially isolated – to check in.

Okay, now we can get started.

COVID stock trading: managing a volatile environment

 

Trading-while-panicked is not a winning strategy. Take a deep breath – and a break from your screen and news if you need to. A clear mind is always a must when trading.

Be cautious

Back in February when markets were hitting one high after another, I advised caution. Now more than ever, you need to take your time. Step back, wait for trends to develop and then place a trade.

Explaining Options Trading: Important definitions

Follow the indicators

Technical indicators provide us with invaluable guidance on what is happening in the markets. They are far more valuable than any talking head or pundit on TV, so turn to them for information. They’ll tell you the truth, every time.  

The top indicators to follow are:

  • Price
  • Volume
  • Option flow
  • MACD
  • VIX
  • Put/call ratio

bob lang - options trader - advice on coronavirus and the stock market

React – don’t guess

Good luck guessing as to what the markets’ next moves are. You might get lucky once, but it’s not a viable long-term strategy. Accept that you have zero control and focus instead on reacting to market moves.

Join a community

On top of dealing with coronavirus news, a bear market and working-while-parenting, you may be craving human interaction. Seek out and join a community of like-minded traders. Our lively and welcoming chat room is just one option of many.

Trade like a contrarian

 

Many traders lose money in a bear market because trading to the downside feels so … wrong. Here at Explosive Options, we are happy to trade to the downside. In fact, our portfolio is up right now. If you can’t beat ‘em, join ‘em.

Explosive Options performance against the S&P May 22, 2020

Explosive Options is outperforming the S&P by 33% 

 

*as of May 22, 2020

Hit pause

Fear has gripped traders and investors around the world. You may become so paralyzed that you can’t think straight. If you get to that point, it’s OK to pause your trading and take a break. Better to maintain your capital than needlessly risk it.

Read, learn and grow as a trader

Successful traders trade less during a bear market. Use the extra time to read (articles, books), study your past trades and jot down new strategies and insights.

Stay safe and healthy, friends.

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