WAITING LIST IS AVAILABLE - Please email me at Kunal@Stockshaker.com to be put on the waiting list.

Just check your email, and you should see a response asking to confirm your request for information. Quickly click the link, and you should be good to go.

I have put together a quick video showing you the full process:

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Put both of above points together and you can quickly see why it is pretty tough to start an investing business (even if it is just a part time business, where you are only looking after your own portfolio).

So, how do you overcome these two monstrous obstacles? That … is where you have to really exercise discipline and patience – two characteristics which are commonly thrown to the curb by the average investor.

First, focus on ONE stock. Forget what all those guys who tell you to “diversify.” When you are actively managing your own portfolio, you definitely do not want fifteen stocks to watch on a daily basis. When you focus on one stock, you only have to worry about two things – when you ENTER a trade, and when you EXIT a trade … just two prices. All of a sudden, when you start dealing with 20+ stocks, you have forty prices to constantly be watching for.

Second, focus on making your first $100 profit NOT $1000 profit. Lofty dreams of big payday profits are usually what get people into trouble. Remember, you cannot dictate how much you can make, but rather, you can dictate how much you are willing to lose. Rather than focus on a fat win, focus on consistent profits (even if they are smaller in value). I would rather grow my portfolio from 1 contract into 10 contracts, where each contract is netting me $100, rather than hope to have one option contract net me $1000.

Focus small and scale larger when things begin to work out. Start with one stock, grow into two stocks, then five, etc. Start with one option contract, grow into two contracts, then five, etc.

Remember, the turtle always wins the race … even if it’s not the most exciting path to take.

The Slow and Steady Investor,
Kunal Kalsani

I really like this video because it explains the whole crisis in easy to understand terms (something which seems to be lost whenever I find articles in regular financial publications).

I can relate this to being back in school. As a youngster, your primary focus is to cultivate friendships – more friends the better. As you get older, many friends come and go, but you would rather focus on a few close friends who inspire you. This is similar to investing – rather than playing 20 or more stocks, spend time with just a handful of stocks and understand how they move. Remember, long-term trends are much more profitable (and less time to maintain) than constantly entering and exiting various equities.

In my email, I had boldly stated, “The Hottest Stock Tip On The Market and How To Play It (The Right Way),” which is: you are already in it.

Before getting into what exactly that statement means, let’s focus on long term successful investing. True long-term success is not about having a bunch of positions and monitoring them all the time. And really, let’s be realistic, the stock market should be a vehicle where you let your money work for you (not the other way around). True long-term investing is really focusing on three things:

Let’s say you play just one stock and you know it inside and out. Because you understand how it moves, you can position yourself for breakouts, trend reversals, support bounces, etc. Basically, you are no longer chasing trends, but rather, positioning yourself for when trends are about to start.

By doing so, you are miles ahead of the crowd. Have you ever noticed that when a stock breaks out, price accelerates as momentum builds? That is because more people are getting into the stock, and bidding up the price. Can you imagine being in the stock before the powerful momentum starts kicking in? Believe me, it is a great place to be!

So you want the hottest stock tip right now? You are already in it! Learn how your current portfolio moves, and really hone in on being at the right place at the right time for when your stocks breakout for you.

Talk to you soon,

Kunal Kalsani (who is keeping an eye on his portfolio)

Jesse Owens was a great American sprinter … but … what does this have to do with the stock market? Well regardless if you are a sprinter or not, if you are to run a race, you can usually gauge how well/horrible you are doing in a race by how large the distance is between you and the next guy. In other words, you have a point of reference to relate to.

Similarly in the stock market, what will determine how successful (and how long you will stay in the investing game), will depend on how well you limit your losses (and naturally, maximize your gains). Digging even deeper, I would even venture to state that your success can actually be calculated BEFORE you enter the trade … If you don’t know what I’m talking about, don’t worry, you are in good company. Read on.

When I first heard the buzz phrase, “risk to reward ratio,” I’ll be honest, I had no idea what it meant. But before getting into that, let me show you how most people trade (and for sure I have done this many, many, many times in the past as well.)

How (Most) People Trade:

1. Finds a hot stock aka a buddy tells them about a hot stock tip.
2. Salivates at how much the stock has gone up, and naturally, doesn’t want to miss the party.
3. Gets into the trade, almost immediately.

It all looks something like this:

The Result:

1. Goes down.
2. (If you are lucky, then it continues to go up, and the hot stock tip did its trick. But will ride the stock too high, and won’t know what hit him when it does eventually go down.)

… And this is the conclusion to the story of the picture above …

How To Avoid This Mistake

It all lies in the point of reference.

We all know stocks move in trends, and what you should do is base your trade on something that has happened in the past. For example, if I am in a stock that I want to go up, I ALWAYS (ALWAYS, ALWAYS) look for some type of pullback that was last made (like a previously made low before the stock resumed to go upwards), and calculate how much I could lose if I got into the trade.

Looking at a previous trade I made in Freeport Mcmoran*, we can quite easily see that the stock has an upwards bias. However, what is more important is that this stock has recently (look what has happened in the last week) come down quite a bit from the high it made in early April.

This is a very good thing. Why? Well, because we can see where the stock had its last pull back before pushing upwards. I have drawn a horizontal line at this previously low point in end of March-early April, where the low of $36.49 was established prior to pushing up higher.

Similarly, with the recent pullback, we now have a new reference for the recent high that was made in mid April of $46.22 (I have also drawn a horizontal line at that point).

Recapping:

1. Low of $36.49.
2. High of $46.22

On April 24 the stock closed at $40.93. That means, the amount of money I could lose before it hits my Low is $40.93-$36.49 = $4.44. Similarly, the amount of money to my upside is $46.22-$40.93 = $5.29

While there is a little bit more money to be made if the stock goes up (i.e. $5.29 vs. $4.44), to me, it seems pretty equal. I would prefer to have more upside potential (and therefore limit the amount I could lose to the downside). To achieve this (i.e. limit more money to the downside), you have a choice of either:

1. Wait for the stock to go down some more.
2. Get a new point of reference.

Luckily, (1) occurred first since on April 27 the stock closed at $39.68. Using the same simple math, the loss I could incur is $39.68-$36.49= $3.19, and gain is $46.22-$39.68 = $6.54. This is a much better ratio to the upside – almost a 2:1 reward to risk. I like these odds, and I would definitely take this trade.

Lesson learned:

So in the third paragraph when I probed, “would you believe that your success can actually be calculated BEFORE you enter the trade,” really means that if you can calculate how much you can lose in a particular trade (the risk), and compare that to how much you can make in particular trade (the reward), then you can calculate your “risk to reward ratio.” And if that ratio is skewed more to the reward side, and you can afford the amount you could potentially lose if the stock continued to go downwards, then the trade makes sense.

Now, I walk around with a calculator - all the time.

See you next time,

Kunal Kalsani
The Risk To Reward Analyst

I’ve been on trades which I thought the market should go up. But didn’t. I’ve been on trades when I thought the market should go down. But didn’t.

There are so many variables to consider when investing that personally, I would not be surprised to hear that the period where most investors lose their money will probably be in the first year of trading/investing. To me, this just makes sense – you really have to go through a tremendous drawdown in your account before your really respect the power of the market.

Sure, I’ve been there as well.

I don’t know about you, but I find it really tough to predict the future. So I’ll accept that I cannot pick the direction of the market. Every single part of investing is completely uncertain – which stock will go up or down, what earnings will be, when will a surprising news article be released, upcoming analyst upgrades/downgrades, company bankruptcies.

It’s just tough.

The only factor that I can control is my own personal risk involvement. I can choose how much I want to invest in a particular position. While this sounds like common sense, it is so easy to get carried away and invest the whole farm on a particular “hot stock tip.”

What does it mean to “manage risk”? It’s actually a combination of things like entry and entry strategy, how many dollars to commit to a trade (based on portfolio size), which stock to invest in (and why). If you map out all these factors before entering a trade, you increase your winning percentage.

How is this possible if you cannot predict the direction of the stock?

To map out a strategy beforehand will allow you to cut losses quickly, and keep winning trades longer. It’s completely win-win: your net profits will increase, and you remove emotion out of the trading strategy. If you don’t know by now, emotion is the main factor that causes most people to lose a ton of cash as feelings can usually overcome logic and reason when there is money on the line.

Listen, investing is not tough, but developing a winning attitude is.

Kunal, The Risk Manager

Everyone wants safe and secure: safe job, secure paycheck. And 98% of the population seems to be fine with that. I’ve always felt “safe and secure” is just short for “safely secure your position in the unemployment line.”

Your creativity skills allows you to blossom as a child – you do better in school (another gold star means the parents by you new toys, yay!), make more friends, and ultimately, feel better in life. As you get older, (and I don’t know if this is because we just get more lazy, or just like being told what to do) everything seems to be mapped out for us already: you have to graduate high school, finish college, get a job, get married.

Do we just become a heard of wanderers heading toward the life of trading time to make money? What happened to the creativity? I’ll tell you what happened to the creativity – it got tucked away in the back of the mind, along with all those memories of monkeying around on jungle gyms or playing tag.

Today’s bear market has really proved to be catastrophic on retirement/investment accounts. And while it is easy for me to sit here and type The Secret To Making Money In This Market, it really isn’t as simple.

Why?

Because we are programmed to be wanderers. We have to do things a certain way, expect a certain result. If we are put in a situation where we aren’t following a certain line that we’ve grown accustomed to – well, all hell breaks lose.

Well, all hell isbreaking lose. And I feel that those who will get out of this the quickest (and safe their sanity) are the ones who are willing to adapt to change the soonest (which most of us are not).

Maybe it’s time to bring out those crayons and connect the dot pictures – because if you cannot change your mind on how to react to the volatile markets we are facing you could be losing a lot more than just financial losses – you could be losing a bit of your soul as well.