Tom Gentile, America's No. 1 trader, joined me by phone from Florida, where Hurricane Matthew is coming ashore, to talk about why his trading has become so profitable lately.
Truth is, we've seen a truly eyebrow-raising string of wins in his trading services recently - Tom has closed out 31 trades for triple-digit profits this year alone, and he's closing fast on his 32nd. What's more, since his successful webinar on Sept. 28, he's putting on a retail sector trade that could deliver 916% in potential gains... before the 2016 holidays.
So we wanted to know exactly how someone could make this kind of money. On any stock, let alone one of the biggest companies (and most expensive stocks) on Earth. The stock itself is up nearly 25% this year, which is nice, but hardly 916%.
Turns out there's no mystery at all...
Greg Madison, Money Morning Managing Editor: We want to ask you about a trade you've got on right now, and we'll get to that, but first things first: We're hearing that some investors are reluctant to open trading accounts and begin actively trading. Is there any easier way to make this kind of money?
Tom Gentile: Faster, bigger money? Not that I know of. I think Wall Street has spun this kind of phony mystique around trading to put people off it because, well, you know, there's more money in it for them. I've always hated that. It's true that there's some trading lingo to learn, but that stuff is easy, and the strategies and trades aren't complicated, either. I should know, since 2009 I've taught 300,000 how to trade.
The truth is that short-term trading is the best way to capture quick money. You need a bit of discipline to stick with the right entry and exit points, to not "chase" a trade - that there is the quickest way to lose money. You need signals to tell you when to move and how the trade will go, too.
In my trading services, Money Calendar Alert and Weekly Cash Clock, for instance, I take care of this for my readers. They just need to follow some easy instructions. Turnkey profits; everything you need to make money is there; signals to follow, short-term trades - I always like to be in on Monday, collecting profits by Thursday, and relaxing by the weekend - and timely entries and exits.
GM: Why do you suppose this kind of trading is so powerful?
TG: The trades are powerful because they give the trader a way to take a bullish or bearish view of the markets with the maximum they're willing to risk built right in. You simply cannot lose more than the amount you purchase the option for, yet the returns can be unlimited.
I always like to be in on Monday, collecting profits by Thursday, and relaxing by the weekend
Now, this "limited risk, unlimited return" position isn't free, but we look for options in such a way that they have a highest chance to double than any other option in the chain. I do that with backtesting and modeling on 10 years' worth of data compiled on the 250 best-performing shares on the S&P 500.
GM: So you go in with a pretty high degree of certainty that you're going to be making some money in the very near future. Well, what's the biggest, fastest gain you've ever made?
TG: We have had quite a few doubles in 24 hours, often less. I'm proud of the recent gains we took down on bullish positions in Delta, American Airlines, and United...
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GM: Wait, sorry. I have to stop you there for a second - you made double your money on an airline stock? Three airline stocks? I mean, it's hard to grind out any profits at all with those shares, you know, considering the industry's frequent troubles and razor-thin margins. Plenty of investors wouldn't touch an airline with the proverbial 10-foot pole. I don't disbelieve you, but...
TG: [laughs] No, it's true, it's true. I'm not kidding. We better than doubled our money, in fact. And we did it all within 24 hours. Less in some cases. Three doubles from a Monday to a Tuesday. Investors probably shouldn't be in airline stocks, but when you're trading you don't have the same considerations. You're not holding some stock for five or 10 years, hoping it'll go up above what the taxman and inflation will take. With this particular strategy, you just need the stock to move a bit, up or down - it doesn't matter - to make huge profits. I actually love it when this happens. If you're a trader, you can take the rest of the week off!
And it's not all that unusual to make this kind of money...
GM: Even on airlines?
TG: [laughs] Even on airlines. That just goes to show you how powerful these trades can be. Those stocks barely budged up, but it was just enough that the movement translated to huge, quick gains on our calls. That's the right kind of leverage!
GM: OK, so you can make some pretty huge gains in very little time. What about folks who want to be a bit more cautious or conservative, who maybe want to supplement their Social Security or pension for a little something extra each month?
TG: Well, as I alluded to earlier, options have a kind of conservatism baked right in. The risk is built in to the premium, so it's a totally known quantity. There's no need to guess or hazard any more than the absolute minimum you're comfortable with.
And so if you want to trade for income, you just alter your strategy. Our "loophole" trades, spreads, for instance, are a higher probability/lower return trade that's absolutely tailor-made for income traders. They're fairly low-stress, too, because the trade is meant to mature over time - it doesn't fluctuate as much when the underlying stock prices move.
GM: Hey - you mention underlying stocks there. What kinds of stocks can people trade on?
TG: Here's the thing - there are more than 20,000 listed stocks. That's a big list of shares; it's daunting. But I only recommend stocks that trade on the S&P 500 (including the Dow) and Nasdaq.
What's more, I only look at the top 250 stocks and ETFs by volume. That gets us to the top 1% to 2% of all listed stocks. From there, it's as easy as figuring out how much money you want to make, locking on to a strategy for it, and executing.
GM: Once they've picked a stock, what can people do to ensure the best odds of a profitable trade?
And new traders - seasoned traders, too, for that matter - would do well to keep in mind that no matter how good something looks, no matter how great the setup might've worked in the past, there's no guarantee it's going to perform in the future. In other words, we can't control what the market does, but we can control, very tightly, the entry and the exit. That's why we have a limit on what we place in our trades and a "written-in-stone" exit plan before each and every trade.
GM: How can people get started?
TG: Don't just dive in - get educated. A savvy trader is a good trader is a successful trader. My free Power Profit Trades service is a great place to start; it covers all the basics of trading, like how to set up an account, what the different kinds of trades are, and the right trades to make for a given market - there's a lot. I'm working on an entire course on the subject for Money Map Press. I'm talking every imaginable strategy for every imaginable trade that's worth putting on.
GM: Now, what can you tell me about this trade with the 916% potential gains? What's the story there?
TG: Well, that's for my paid-up subscribers. I've got to be fair, now, I can't really give away specifics. I developed the trade along with my webinar on trading sideways markets last month. And if it pans out the way I expect it to, we could be looking at some of the biggest gains ever. It's a huge company, too. A good performer, but that's the way these trades work. Like I said, it's the right kind of leverage.
GM: Sure, you've got to play it close to the vest. This has been very helpful just the same. Thanks, and stay safe!
TG: Hey - anytime, Greg. Good trading!