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Last week I pulled a rabbit out of a hat for my Zenith Trading Circle subscribers.
Truth be told, we've seen more than just a few tricks like that over the past year.
Last week's huge winning trade was a record for me, and it was a record for the financial gurus that are part of the famed Money Map team.
The gain was a 1,156% return on half of a call option position on Fossil Group Inc. (Nasdaq: FOSL) that we got into on Jan. 31, 2018, only two weeks earlier. We took off the other half of the position a day later for a 1,140% gain.
And that record I crushed was set by a 995% gain last year… By me, for my Zenith subscribers.
In truth, the way I pick my trades isn't magic. The rabbit was always in the hat, I just know how to find it time and time again.
Here's how I do it, and how you can, too…
It's Not Just Sleight of Hand
Making money in the market isn't a random walk; it's about having a track to run on.
It's about understanding the ups and downs of that track and about anticipating its twists and turns so you can ride its difficulties as profit-making opportunities.
The track we run on in my Zenith Trading Circle research service has mostly focused on retail. The "retail ice age" and the "Amazonation" of America has changed the sector drastically and has opened up the potential for hugely profitable plays. It's about how consumers' buying habits have changed, how we shop, where we shop, when we shop, and even why we shop.
The track we run on is all about how to make money from all the changes that retail is going through.
This idea of a "track" is an investing theme. It's a way to look at a slice of the market – what's in that slice, what's impacting companies in that sector, who's leading, who's following, who's failing, why it's all happening, and what to look for next.
When I look at an industry, a sector, or any slice of the market, I look at each of the companies in that slice that can be traded.
An Incredible Win Rate: Since April 2017, Shah's shown his readers total winning gains of 6,036% (counting partial plays) – including a record-breaking 1,156% return in just 14 days. Check it out…
For me, I only follow liquid companies. That's because I've been an institutional trader and used to throw around huge chunks of capital (still do for myself), and I have to be concerned about my readers getting into and out of positions in "size" because I have a sizable group of folks who follow me.
That means the stocks I target trade on good volume, which for me is an absolute minimum of at least 1 million shares a day. However, on average, the stocks I usually target have daily volume in the multimillions of shares – the more, the better.
The problem with thinly traded stocks is you might be able to get into a position easily, but getting out, especially when you want to – or worse, when you need to – can be costly to the point of eating up your profits or adding to your losses.
This Track Doesn't Come Without Its Hurdles
Thematic investing, using the track metaphor, means looking at each of the companies in your themed space as running in their own lanes.
I look at them individually as they "run." How fast or slow are they? What are the mechanics of their movement, meaning how do they operate and make money? What are investors' and analysts' expectations for a company's and a stock's performance?
And I look at them running against each other, how they're affecting and reacting to each other, as opposed to looking at each company. I look at how each stock is doing its own thing.
Translating that into the retail space, everything's been upended by Amazon.com Inc. (Nasdaq: AMZN) and online advertising, marketing, and selling.
That's given my Zenith Trading Circle readers the shot at a lot of big winners from betting on who isn't in the online selling game, who can't compete, who has too many stores, too much inventory, too much debt, and who's going out of business.
But there are survivors to play. There are hangers-on who are in consolidation mode, upping their game, pushing online, increasing sales, and making money.
Some are making money just because it was a great holiday selling season. We'll be targeting them for their next leg down; for some, that will be all the way down to zero.
And some companies, because they are making the right kinds of long-term investments, are raising capital conservatively and applying it smartly, will survive and thrive.
We'll be targeting them all, buying the ones on the way up the track and pounding the ones sliding down.
One odd phenomenon we've made a lot of money on is the tendency for beaten-up, left-for-dead retailers to see their stocks skyrocket.
In fact, that's exactly what we did with FOSL.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.