Follow Making Money with OptionsStart the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
May is not known for being the kindest month to the markets.
And that sentiment is ringing true – as May 1 came and went ridden with volatility.
Now, there's a saying that has been passed down for years: "Sell in May and go away."
But the truth is, when you sit on the sidelines, you typically miss the biggest profit opportunities.
That's why today, I'm going to give you a new set of tools that will help you master your May trades.
Here's everything you need to know…
While the May market may bring more uncertainty – by looking into stock market charts, you can learn and anticipate what may come your way. So you don't need to take a break from trading. In fact, it's quite the opposite.
Stunning: New Innovation Will Be Like "Adding Twin Turbos to the Bitcoin Engine" – and Could Send Its Price to $100,000. Learn More…
Now, here's what we got…
Support and Resistance Levels: This technique helps you identify the next big move – whether it be higher or lower. It uses consolidation, double bottoms, lower highs, and more to help guide you through uncertain markets.
Channels: I do a lot of channel analysis – but I do something different than the rest. I don't look at the highs and the lows together. Instead I factor in whatever noise is in the market with the current highs and lows.
Probability Cones: When looking at probability cones, you look at what the market has done in the past, looking into the implied volatility through the options and then creating a statistical cone of probability that you can use in the market going far. Probability cones use standard deviation and statistical probability to predict where the market will stay over an extended period of time. Now, they won't tell you when the markets will go up and down, but they can tell you where the market may be heading next.
Overall History: As I said earlier, history shows us that the month of May isn't very kind to the markets – and uncertainty is high. Uncertainty doesn't tell us whether the market will go higher or lower, but it does let us know that volatility isn't necessarily going anywhere anytime soon.
And remember, over the next few weeks, be cautious, set your stops, and tighten your profit targets as well, so you can take your profits the second you get them.
Don't get overwhelmed by any "May market blues" – stick to your strategy, trust your plan, and use the education you have in place to help you make the best decision for your portfolio.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.