9d (edited) • Monthly passive income
How to make "high probability" trades
Friends,
I want to share my learnings on how to enter into high probability trades based on technical analysis and trade selection criteria. This is what I personally try to follow myself.
Stock Selection:
From the top 30 SPY stocks (based on market capital), set a filter to identify stocks that are:
a) oversold on RSI: Which means their RSI is below 30 (you can choose below 35 to get more)
b) MACD Bullish Crossover: The MACD indicator of the stock is showing a bullish crossover (MACD line crosses the signal line). Showing a reversal
c) Stock's business and fundamentals are still intact
d) There is a strong accumulation of the stock (i.e., even though stock is falling it is being accumulated or bought more)
Trade Entry:
When all the above filters are met you can make any of the below trades
a) Sell a 365DTE put on the stock at 50 delta setting a 25% profit target (my favorite and has 90%+ chance of success)
b) Sell a 30-45DTE put at 30 delta with a 50% profit target
c) Sell a 30-45DTE put spread with the short leg at 16 delta and long leg 5 or 10 points below. 50% profit target
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How to make "high probability" trades
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