Strategies for Growing an Account DENNIS W. WILBORN, SR.

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1 Strategies for Growing an Account DENNIS W. WILBORN, SR.

2 Clarify, Simplify & Multiply This has been the Motto of Active Trend Trading from the beginning! We continuously work to Clarify & Simplify through refinements to the system to make it objective and easy to both learn and use. The purpose of all presentations is to provide our fellow Active Trend Trader Members a jump start to accelerate progress up the Learning Curve. We welcome suggestions on how to improve the learning process! Trade Wisely & Profitably, Dennis W. Wilborn Founder & Lead Technical Analyst

3 Disclaimer U.S. GOVERNMENT REQUIRED DISCLAIMER COMMODITY FUTURES TRADING COMMISSION FUTURES AND OPTIONS TRADING HAS LARGE POTENTIAL REW ARDS, BUT ALS O LARGE POTENTIAL RISK. YOU MUST BE AW ARE OF THE RISKS AND BE W ILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND OPTIONS MARKETS. DON T TRADE W ITH MONEY YOU CAN T AFFORD TO LOSE. THIS IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES OR OPTIONS. NO REPRESENTATION I S BEING MADE THAT ANY ACCOUNT W ILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED IN THIS TRAINING. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS H AVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESU LTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF AN Y, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PRO GRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED W ITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT W ILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOW N. ALL MATERIALS PRESENTED ARE FOR TRAINING PURPOSES ONLY. TRADERS SHOULD PAPER TRADE ANY NEW METHOD PRIOR TO RISK OF PERSONAL CAPITAL.

4 Objectives - Define Specific Strategy to Grow an Account - Define Entities to Use & Not To Use - The Tools

5 Setting the Stage - Account Size = $ Entities to Trade: Non-Leveraged or Leveraged Index ETF s - Entities not to Trade: Foreign Index ETF s or Stocks - This strategies requires patience and planning

6 Strategies - Buy 100 shares of the Index ETF But! - Buy One Contract of a Leap on the Index ETF or Leveraged Index ETF - ATM Calls or in some instances Puts - Sell Weekly Options against the position owned

7 Tools - Use ATTS Triggers to enter long Option (All Strategies come back to the System) - Use the Weekly, Daily & Intraday Charts to plan where to sell the weekly option - Similar to a covered call but its called a spread - Calendar and Diagonal Spreads that are timed! - If executed properly it doesn t matter if the long option expires worthless! - Next Plan the trade..

8 Next Plan the trade.. - Which ETF? Choose between SPY, QQQ, IWM or their leveraged ETF s SPXL, TQQQ, TNA which ever one allows us to buy 1 contract with our $2000 (preferably we don t want to put all the capital into one position) - How Far Out Jan 16 or Jan 17 - Go to the Option Chains - Look for open interest, IV & Premium Cost - SPY, QQQ, IWM all work for an ATM Money Leap Call - SPXL doesn t work no weeklies, TQQQ & TNA work

9 Next Plan the trade.. - Which Option Weekly Option to sell? - It depends on how much we need to bring in each week to pay for the Long option Example Calculations: Buy the Jan 16 IWM Days left to expiration: Weeks left to expiration: = weeks ~ Round to 37 weeks - How much premium do I need to cover cost of Long Call? = per week ~~ Round to.21 to cover some of the transaction fees -.21 x 100 = / Week - Multiply the amount to breakeven times 2 for how much per week desired -.21 x 2 = 0.42 / Week -.42 x 100 = / Week - Add.05 because we will have a standing order to buy back at a nickel. We re looking for.47 per week

10 Next Plan the trade.. - How much premium do I need to cover cost of Long Call? = per week ~~ Round to.21 to cover some of the transaction fees -.21 x 100 = / Week - Multiply the amount to breakeven times 2 for how much per week desired -.21 x 2 = 0.42 / Week -.42 x 100 = / Week - Add.05 because we will have a standing order to buy back at a nickel. We re looking for.47 per week - Ideally we want to collect $42 / Week which multiplied by 37 weeks is: $ Initial Investment = $ Expected Return = ( )/750 = 107.2% - Even if the value of the long option is worthless at expiration the total account is now worth ( ) = $ a 40.2% return in 8.5 months - Which Weekly Option to sell?

11 Next Plan the trade.. - Which Weekly Option? - Define Trend - Define When To Sell (Preferred Thursday or Friday for the next week) - Define When To Sell (Based of Intraday 1 hour or 2 hour charts using daily and weekly charts for support and resistance) - Does the Weekly Strike price meet the weekly goal? 42 cents per week - Uptrend - Wait for the Intraday reversals at identified levels of resistance or forecast up to an strike price with a greater than 70% probability of closing out of the money OTM. - Downtrend - Wait for Intraday reversals at identified levels of resistance or ATTS reversals including candlesticks Sell ATM or slightly ITM Weeklies - When cumulative collect premium equals what was paid for the original long position buy another and keep doing the same thing!

12 Next Plan the trade.. - But the bugaboo is TIMING! A weekly option that meets all the criteria but has the intraday chart getting ready to bounce will lead to increasing ones pucker factor and diminishing results. Fight the urge to sell at the wrong spot! IWM 1 Hour Chart

13 Next Plan the trade.. - But the bugaboo is TIMING! A weekly option that meets all the criteria but has the intraday chart getting ready to bounce will lead to increasing ones pucker factor and diminishing results. Fight the urge to sell at the wrong spot! IWM 2 Hour Chart

14 Next Plan the trade.. - In case of emergencies! - If done properly rarely should we see price go above the strike price of the weekly short call but - Use a stop loss of 50 cents above the strike price of the short call as a conditional stop - Buy back the short call when it gets to a nickel have this as a conditional order combined with the stop loss - Loosing Patience! It might take a few day to get filled define what price action has to do - Price goes big in the way of your Long Call - Price goes big opposite you Long Call Go More Towards ATM or ITM - Start with Small Bites like 90 days (This also works well with individual stocks)

15 Track Results

Pin Point Entries or Intraday Charts for Non-Intraday Traders

Pin Point Entries or Intraday Charts for Non-Intraday Traders Simplicity is the secret of seeing things Clearly. ~~ Oswald Chambers WWW.ACTIVETRENDTRADING.COM DENNIS W. WILBORN, SR. DWW@ACTIVETRENDTRADING.COM