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The goal is to become rich, not just look rich. But honestly and up front, this is not a get rich quick scheme. You have to put some work every month, won’t be much time, but some.
Last month I made over $600 in profit on Robinhood. My small account started with just $500 in February 2019 and sits as of today 10 May at just over $2,000.
I wanted to get this simple trading system together to show you that it is really possible to earn income on Robinhood. To give you a quick overview of the platform, just for opening an account they will give you a free stock. They are commission free for stocks and options. If you start with a small account commission eat away too much of your gains. Making it harder for you to profit.
Now, on to the system.
This is one of the systems that I learned over the years. It consists of trading the SPY ETF. The SPY follows very closely the price on the S&P 500. Follow the steps below to create yours:
1. On the first trading day of the month (which is not necessarily the 1st day of the month if it lands on the weekend), you will box in the range of the candle for the day.
a. Note: The range simply means how high and how low the price moved on that day.
2. You will wait for the price to close completely outside the box that you just drew.
3. Entry: When price trades and closes outside the box, you will buy options (puts or calls) on the direction the price momentum is moving. It usually keeps moving that way for 1-3 weeks.
a. Note: There are several things you need to keep in consideration when buying. You need to choose the price and expiration date. Personally I buy the closest (ATM) at the money option and I go out 1-2 months. Buy calls when price closes above box, buy puts when price closes below box.
b. E.g. On April 1st, SPY closed at $285.83. I drew my box and waited. On April 4th, price traded and closed completely above the box closing at $287.18. I bought the May 17th, $287 Call at $4.36. On April 22nd, I decided to sell those options at $5.60 for a 28% gain. Price did go higher after I sold, and it will happen to you also. But I made 28% in a month, while many people don’t make that on a whole year.
4. Exits: You need two types of exits. One is your target where you want to get out and be happy with your gains. Stop #2 is a stop loss, in case you are wrong and trust me, you will from time to time. I know I am. No system works 100% of the time. My stop loss is the opposite side of the box.
a. E.g. If price started going up and you buy calls, you should not see that price break below the low of the box (another way to see it, is price should not trade below the low of the price on the first trading day. If you are short, then price should not trade above the box).
5. Next month rinse and repeat the process.
Note: For year 2018, this system was profitable 10 out 12 months. That is an 83% accuracy.
There you have it. A simple trading system that does not take long to set up and does not keep you glued to a monitor.
Hope it helps! Leave your comment below.
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