Bill Poulos – Instant Profits System
The Instant Profits Trading Course Has Been Back-Tested by TheOptionClub.com and Proven. Now We Reveal How To Incorporate Options!
For several weeks, members of TheOptionClub.com community had been engaged in the process of learning and back testing the Instant Profits trading system. We then enjoyed a couple hours of time online with Mr. Bill Poulos, who is the creator of Instant Profits. This was an opportunity for those members to compare notes with Mr. Poulos and reaffirm and clarify the understandings that they had developed during those weeks of hard work.
The heart and soul of Instant Profits, and any other successful trading system, is a tight money management discipline. Mr. Poulos echoed what we have heard many times before…do not risk more than 2% of your account on any one trade. That fundamental rule is the starting point for determining position sizing.
You must also be disciplined when closing positions. Losing positions can not be allowed to erode your gains.
Too often traders stay in losing positions “hoping” that the stock market will reverse course or simply rationalizing that they need to give the position more time to become profitable. It is far better to close positions that have moved against you and move on to the next trade.
Not only must you be disciplined when dealing with losing positions, but you must employ that same coolness with your winners. Develop a method for taking profits.
Once you have developed and tested your method of profit taking, do not allow yourself to deviate. Too often we allow ourselves to fear possible further upside. While we hold onto a profitable position, we risk losing those profits in a market reversal.
As you survey various trading systems, question whether money management is being properly employed. Too often it is not. Strong money management is the holy grail. Develop the discipline and employ it in your trading.
Trading System Design & Refinement
Bill Poulos began as a trader, not unlike many of us. What separates him from others is the fact that he has learned the hard lessons and has developed the discipline that is necessary to be profitable on a sustained basis.
Once he realized that the losing trades are inevitable, it allowed him to focus upon designing a system that would permit him to trade the markets effectively. Every trading system begins with a hypothesis, which must then be tested and confirmed using historical data. Skipping this step is dangerous, because you are entering the market without a reasonable expectation of what to expect in terms of profitability.
Once you have tested and refined your system, it is then possible to enter the market with realistic expectations. It is when we begin modifying our systems without first testing the changes that we risk unknown dangers.
Methodical system testing is a necessary part to successful system design.
Using Stock Options With Instant Profits
The first advice provided by Mr. Poulos is that anyone who is not well educated concerning stock options should not even think about trading them. It all begins with education. That education can be derived from self-study of various texts, home study courses, or live seminars.
If trading daily charts with Instant Profits, you would do well to focus upon the simple purchase in-the-money calls for bullish trades and puts for bearish positions. Look for a delta of .70 or .80, so that your option closely mimicks the stock’s price movement.
Most trades last seven to eight bars, which provides little opportunity for out-of-the-money contracts to appreciate absent abnormally large price moves. Spreads will also suffer from the short time frame.
Trading weekly bars expands the time frame considerably. This expanded time frame makes the use of out-of-the-money contracts a more viable strategy, especially with high beta stocks.
Advanced option strategies, such as spreads, not only become more viable with an extended time frame but may also become necessary considerations when evaluating risks in addition to adverse price movement of the underlying stock. Such risks may include collapsing volatility and theta decay.
Taking The Next Step In Our Trading Workshop
It was a short session, but a lot of ground was covered. The workshop participants combed contineud to work on ways to maximize the benefits of the Instant Profits system. Our back testing demonstrated that it is a profitable system, if properly implemented. Options can be incorporated into the system, but this should be approched slowly and only after you have mastered option theory.