Trade Tutorial & Getting Started
The Evolution of a Trading System: Blue Line PRO
Everything below the Executive Summary describes our original trading system, based upon daily price bars and 4-6 week trades. As of May, 2019, we introduced our new flagship service, Blue Line PRO. Here, we use our same pattern recognition set-ups but we apply them to hourly price bars. In addition, we use weekly option expirations to minimize the time premium on the recommended options. The result is a robust short-term trading system that trades those first frenzied says of new trends, where options pop big and exits are used to strategic advantage. This is an email only service and quick on the draw scalping 35-50% gains within days of entry. Best of all, signals swing in both directions as this chart of IWM illustrates:
To put it simply and succinctly, we trade in the direction of the major trend, using the termination of a smaller counter-trends as a trigger to get back on board the major trend. This involves first identifying the major trend (we do that for you), then identifying a counter-trend, usually a small retracement of the major trend (we do that too) and then as price reverses back in sync with the major trend we buy calls (for uptrends) or puts (for downtrends) to profit from that next big leg up or down.
The entry signals into the major trend as described above are virtually always profitable, but by how much and for how long is largely out of our hands, as we are basically riders of the trend. Options can be a trend traders best friend, or worst enemy, and sometimes both. The key to getting the most out of this system is to capture as much of that intra-trade profit as possible without overstaying the welcome. The rules below are designed to do exactly that, but when it comes to risk:reward profiles, not one size always fits all. Feel free to tweak the numbers below to suit your own tastes, but without deviating too much from the general idea, i.e., limiting losses while allowing profits to run as far as the trade allows.
- From inception of a trade until option rises +35%: Use a 50% trailing stop, based on highest price the option trades after the signal;
- After a trade reaches +35%: Use a 30% trailing stop, again based on highest price the option trades after the signal;
- The three-trailing stops levels, 50% - 35% - 30% are all modifiable per personal preferences. Examples: Widen the initial stop to 75%; or lower the threshold profit target from 35% to 25%; or tighten the profit trailing stop from 30% to 25%.
- Partial profits (or even all profits) can be taken at +35%, and/or any level thereafter. Historically the more of a position that is kept on after +35% and then managed by the 30% trailing stop, the better average return per trade.
Time Driven Trade Management
Some of our more active traders have been finding success using time as opposed to profit levels to manage the trades. As an example, the shorter-term trades (PRO Service) are given just s set numbers of days (for example, 5 trading days) to reach +35% or better and if that level is not reached the trade is closed and the capital is freed up to place in the next trade. We do not have performance numbers on this kind of time-driven strategy, but it does make sense on a theoretical basis since some of our biggest winners have been big winners from the outset of the trades.
Updates are posted online and sent out via email during the daily trading sessions, either to announce a new trade or to alert subscribers to a special situation or opportunity unfolding in real time. It is recommended that subscribers enable Notifications from Blue Line Trading System to get an instantaneous notification that something new has been posted on the site. All updates and alerts will also be emailed to the email address we have on file for each subscriber, usually within 10-15 minutes of website posting.
Website Access: If you have not done so already, here is the link to create your login.
Weekend Updates, in addition to announcing any new trades for Monday and will include market commentary on a wide variety of issues, including big picture analysis as well as an occasional special situation trade opportunity that falls outside the parameters of the trading system.
Once you have signed up for our trading subscription service you will receive a welcome email with brief instructions for making sure you have access to the website, billing portal, and trade alerts via automated email. A separate email invite will be sent from Chargify to manage your subscription/billing through the BILLING PORTAL. Please be sure to take the time to set up your login for all systems!
RISKS ASSOCIATED WITH OPTIONS TRADING
Please be aware of your broker’s requirements for trading options. Before you decide to invest in the options market you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a substantial loss which could total more than your initial investment in a short period of time. Options involve substantial risk and are not suitable for all investors. Options investors may lose the entire amount of their investment in a relatively short period of time. Therefore you should not invest money that you cannot afford to lose. If you have any questions or concerns regarding the risks associated with option trading, you should confer with a trusted and reliable independent financial advisor.
None of the information provided by Blue Line Trading System or AllanTrends, LLC constitutes a solicitation to trade any investment or security of any kind.