Andrew Baxter

Like all traders and investors, I periodically review the performance of my portfolios and check in on whether they are getting the job done. I say periodically, because the temptation – a dangerous one for many – is to be constantly watching and let’s face it, this is a long term game, not a get rich quick punt, right? For the sideways to slightly bullish market As such, over the past few months, one of my personal favourites – the covered call, has continued to deliver the cash flow I seek from that particular portfolio. For example, this calendar year, in the Australian market, FMG being the one blot on the ledger, we have had only one loser from 13 closed positions. For those that obsess about win/loss ratios – a flawed measure in my book – that is a 92% win rate for the calendar year. Of course, this is a reflection of the underlying market conditions, which have been supportive of the strategy. * Market conditions have been more “choppy” in the US, howe...

  The goal for any investor is to make money. Most of us would prefer to make a lot of money, and in a short period of time. But the shorter the time-frame, and the more money you want to make, the greater the Risk in being able to achieve those goals. For this reason, investment strategies have nearly always focussed on Buy and Hold approaches where the selection of a sound businesses should have the ability to produce a capital gain, if not, at the very least a dividend return. But the traditional method of investing may not provide the returns you ‘need’ to achieve your financial goals. Hence more speculative strategies are adopted in an effort to make more money quicker. Some become quite adept at achieving this, but for the majority of us, the elusive ‘key’ that unlocks this universal goal remains well out of reach. What are the methods of investing? Investing has several different methodologies that can be adopted. Traditionally, Value or Growth invest...

  Being able to joint the dots between news and decisions for trades, is a learn able and very lucrative skill. This morning is a case in point where last night’s dreadful earthquake in Japan, reminded us all of the painful memories from the Tsunami of 2011.  On seeing the news, and checking in with our neighbours, to make sure their family in Japan were OK, it was also time to get the trading weaponry lined up. Fukushima and Uranium Trading 2011 saw a run on Uranium stocks, not surprising, given the disaster at the Fukushima power plant.  This time round, sentiment should see a similar perception and subsequent reaction by the market.  By being able to get a bead on the market, what is likely to drive sentiment, particularly recent history from just 4 years ago, there were likely to be many profitable opportunities in the Uranium sector. In particular, the prospects for shorting (profiting from the potential fall in stock or commodity prices), wa...

  This European debt situation is a rudderless ship on course to crash against the “rocks of default”! It seems like it has been months that we’ve been talking about the European sovereign debt situation, but in fact it has been years. The current problems are not a new situation that has all of a sudden appeared and investors have had to face quick decisions as to what to do with their investments. No. The debt situations that Portugal, Italy, Ireland, Greece and Spain are undergoing are the result of years of “kicking the can down the road” – the phrase that has been coined to explain how economic problems have not properly been dealt with from the outset, creating a situation where unless there is a massive upheaval to the financial system, then we could be faced with the largest financial crisis the world has even seen. The European Union was developed as a means for freer trade amongst partners to fight the power of the United States in controlling glo...

  Fundamental analysis is often considered to be a “top down” approach to investing.  Specifically, look at what is going on in the economy or in the news, and then base your investment decisions around that. Personally, I have always enjoyed the study of fundamentals and their impact on the trading environment.  Being an avid news reader and with an interest in current affairs, it does not feel like work – more simply personal interest.  There in itself is an important message – find your niche – the area of the market that you enjoy. However, technical analysis is just as crucial a component for trading success too.  If you like, one crude way of looking at them is that fundamentals tell you the why (try explaining the chart of 9/11 using technicals) while technicals tell you the when – the timing and levels of your trades. Over the past couple of weeks we have had events of the most gigantic proportion taking place in the world’s econ...

  For some investors, options trading is something they never truly enjoy the benefits of for multiple reasons. Most of this centres around have a lack of understanding on how to use these powerful instruments properly. When asked the question posed above, as I have been many times, my response is simple. Imagine the stock market is a board game. Most investors are stuck playing checkers. In other words their only strategy is to try and make money by guessing correctly the direction the shares are to move in. Massive flexibility and control As a professional options trader, I play the board game equivalent of chess. Through a broad range of options strategies, I can manage, profit from a move up, a move down or even no move in the shares. I can generate an immediate and upfront income from my trading, I can capture an increase in market volatility or, in contrast, profit from a fall in market volatility. In short, by trading options I have an incredible amount of f...

  Emotions are the key driver of the stock market. Yes, fundamentals and economics are the “Why” prices will rise or fall, but Fear and Greed are a here and now action that causes prices to fluctuate despite the underlying factors of a company, commodity or market. Hence, the reason why Technical Analysis has become such a prized and popular method in modern day investing. It’s not a market crash that causes investors to lose their wealth. Ok, so a 30% fall in the markets within a few days wipes out tens of Billions of dollars in value, but unless you sell stock and exit the position/s, you have an unrealized loss due to the crash. And in most “Flash Crash” situations, the markets rebound very quickly, resulting in stock positions bouncing back to previous crash levels, if not within weeks, then within a couple of months. What loses wealth for stock market investors is holding onto stocks during an extended Bear market, and then selling at the bottom. Markets move ...

 For more than a year now, we have been talking up the notion of getting your money working in the Australian and US stock markets, using our number one cash-flow strategy. In this time , our trading floor has provided countless trade examples, released hundreds of investment reports, made multiple trade recommendations and provided over 120 hours of interactive training for our clients. We’ve also been able to help every day Australians, the action takers to, get up and running successfully in the market. However, even with as much as we’ve done, we haven’t done enough because some readers of this report have yet to get started. Some have been too busy, others not confident about the market and others, have elected to stay in the “safety” of cash . Market Steam Ahead To New Highs As such, I have done some soul searching over the past few days, and I remembered a conversation I had with a complete stranger just over a week ago… I was sitting next to a very inter...

  On the 2 nd October, we recommended to traders who trade US positions, to adopt a Currency Hedge as the Risk of a rising Australian dollar had increased. For traders who participate in US trades, if the Australian dollar rises, the value of the US dollar based positions will decrease. At close of Thursday in the US, the Aussie Dollar was at $0.9633 – a gain of 2.02% in only 2 weeks. What this means, is that if you had made 2% on your portfolio in your US trades, this would be negated by the currency change. Our analysts are evaluating on a daily basis whether or not the need to hedge against a currency change is required. There’s no point giving back what we make in the markets, when we can easily hedge against a rise in the dollar. It’s the reason why it is so important that when you receive the alert, you contact the broker and place the position. If you trade in US positions, contact the brokers  on 1300 304 500 today to discuss placement of a Currency...

 We entered an Iron Condor position on FaceBook (NASDAQ:FB) on the 23rd October 2013. This strategy is a non-directional outlook for the underlying share price. Using both Call and Put options, we sell the strategy to receive premium, and benefit from Time Decay and declining Implied Volatility. In fact, the strategy has very little to do with directional outlook. Facebook Trade Recommendation (NASDAQ:FB)Entry Video Click Here To Receive Free Trade Recommendations The position we entered was to sell the Nov 62.50/65.00 Call spread, and to sell the Nov 45.00/43.00 Put spread. We received an average of $0.80 per share, with a maximum risk of $1.70 per share. Earnings for FB was scheduled for the 30th October. Following this, Implied Volatility declined sharply, working in favour of our position. With expiration of the November option contracts on the 15th November, and as the value of the position declined to a mere $0.10 per share with more than a week and a half be...

  Trading US stocks from Australia has never been easier. The development of online trading platforms, faster internet access, and electronic transactions means you can be set-up within a week, and buying some of the most well known companies from the largest stock exchange in the world. Investors need to be aware of the risk of a fluctuating currency when trading US stocks from Australia. Once you have funded your account with Australian Dollars, purchasing shares from a US exchange will either be on margin with a RegT account, or will require US dollars for a Cash account. Cash Accounts For Cash accounts, you can transfer funds into USD as you need to purchase shares. Or, you can transfer a lump sum across (which will reduce fees), and have your capital sitting in US dollars in preparation of entering stock positions. If the Australian dollar rises while you have US dollar exposure, the value of your cash/stock in Australian dollar conversion will decrease. This...

  Market Trend, The trend is only your friend if you are in the market! Over the course of a trading week, there is a huge amount of data that flows around, most of it relevant in some context, some more important than other for stock market investing .  Two things that captured my attention last night was the move down in iron ore prices and the move up in the US market – opposite indicators, yet both seem to be having a similar effect!  The rising US market is making people nervous (albeit not the US consumer, who seems to be out in force) as is the drop in iron ore prices. Let’s start by looking at the US – the world’s largest economy.  The Dow Jones index has continued its longest rally since 1996.  What that means, folks, is the stock market is going up.  However, how many out there remain unconvinced, arms folded and are wearing their Bearskin hats? The thought of “better get out now, before it collapses!!” mindset reminds me of a ...

So, you have an interest in investing or generating Cashflow? One of the most common trading strategies used by successful traders, for generating cashflow, is covered calls or buy/writes.  This is a strategy that has the potential to significantly increase your returns – above and beyond that of simply shares. According to the ASX, a recent study* has shown that “through a range of active and passive covered call strategies, you can make your shares work up to 7.25%pa harder” Often, investors spend a lot of time working out the relative benefits and weaknesses of using this stock options strategy on either Australian or US stocks. Some use clumsy tools and even the newspaper to try and find out the best opportunities for them. At times they don’t know what do next, if the share price moves up, if it falls or if it stays static. When it all gets too hard, most investors seek input from a specialist advisor to assist them with placing or managing the position. But, ...

So, you have an interest in investing or generating Cashflow? One of the most common trading strategies used by successful traders, for generating cashflow, is covered calls or buy/writes.  This is a strategy that has the potential to significantly increase your returns – above and beyond that of simply shares. According to the ASX, a recent study* has shown that “through a range of active and passive covered call strategies, you can make your shares work up to 7.25%pa harder” Often, investors spend a lot of time working out the relative benefits and weaknesses of using this stock options strategy on either Australian or US stocks. Some use clumsy tools and even the newspaper to try and find out the best opportunities for them. At times they don’t know what do next, if the share price moves up, if it falls or if it stays static. When it all gets too hard, most investors seek input from a specialist advisor to assist them with placing or managing the position...

Quite often I speak to clients who have just seen on the news or read in the paper that XYZ company is looking to merge with ABC company, and is willing to pay a phenomenal price per share. The commentary will usually include an expectation for the share price to rise, and that investors in XYZ are likely to make a fantastic return. Headline If a headline is in the newspaper, then the stock market has usually already reacted. Whether that is in a positive or negative sense. While the newspaper in years gone by was the key information source, the Internet now provides us with instantaneous assimilation of newsworthy data. Stock prices will rise and fall as investors perceive company announcements, industry news, or economic data to be influential on the future profitability for the business. For example, a scheduled earnings announcement from XYZ will cause investors to buy or sell shares depending on how the results are perceived. If they exceed expectations,...

For those that follow the stock markets closely, the past month or two has seen nervousness rise, with events in Crimea, North Korea and Turkey all turning up the heat, in terms of geo-politics. For some, this has meant pulling on the crash helmet and getting in the bunker. However, not for those who have attended our Options Trading Course Australia. These times of volatility are what skilled, trained options traders look for and love. I guess it’s a bit like is the cup half full or half empty! Volatility Allow me to explain. Volatility is one of the Greeks – the complex mathematical components that go into an option’s pricing. It is a major element of what we look for in certain strategies. As a rule of thumb – again something we teach at our Live Options Trading Course – is during times of low volatility (where you expect it to rise), traders should look to buy options – volatility being low and rising should help push the price of the option up. Equally, whe...

Australian Resource stocks have been hammered recently, with share prices falling and driving the broader ASX (Australian Stock Exchange) to 2-month lows. With fear of a global economic slowdown, are Australia’s leading Mining stocks likely to fall any further? Two sectors drive the Australian stock market : Banking and Mining. While they may not be the largest employing sectors, they produce a large proportion (through royalties) for state governments, and when these sectors decline, the average investor feels the pinch. Statements from the World Bank, released last week, suggest that global economic growth will slow more than previously expected in 2014. Global growth forecasts have been cut from 3.2% to 2.8% following a ‘sluggish’ start to the year. Expectations are that the US will continue to slowly improve while the Eurozone remains in a slow recovery. The Developing countries are also feeling the pinch, with sub-par performance expected, with China GDP expect...

Emotions are the key driver of the stock market. Yes, fundamentals and economics are the “Why” prices will rise or fall, but Fear and Greed are a here and now action that causes prices to fluctuate despite the underlying factors of a company, commodity or market. Hence, the reason why Technical Analysis has become such a prized and popular method in modern day investing. It’s not a market crash that causes investors to lose their wealth. Ok, so a 30% fall in the markets within a few days wipes out tens of Billions of dollars in value, but unless you sell stock and exit the position/s, you have an unrealized loss due to the crash. And in most “Flash Crash” situations, the markets rebound very quickly, resulting in stock positions bouncing back to previous crash levels, if not within weeks, then within a couple of months. What loses wealth for stock market investors is holding onto stocks during an extended Bear market, and then selling at the bottom. Markets move in ...

Ok, so it seems wherever you look on social media these days there are people with the blue banner yelling this at you. The latest multi-level marketing pitch is all about lifestyle, best get in quick! As someone that travels a bit – just a lazy 10,000 Km’s in the past 3 days, I’ve had the opportunity to share a very straightforward message regarding cash flow generation with a great group this week. Interestingly, one of the attendees had seen this presentation back in November at another event. He had joined, stepped off the program and then came back to us this week. Human nature is a funny thing – second guessing decisions and then falling back into old behaviour;, that in some cases are largely responsible for the financial predicament that people find themselves in. Being comfortable feels like playing it safe. However, as we all know, growth only happens when you step out of your comfort zone – across all areas of life! So far this year… After the e...

Trading Strategies that work. I’ve heard numerous clients and colleagues over the last 18-months describing how the current markets are the hardest they have experienced in a decade. One of the key lesson’s I’ve learnt in nearly 15 years as an analyst is that no matter what the markets are doing, you have no control over what tomorrow will bring. Hence, Risk management and choosing the right Trading Strategy are the absolute keys to success in the markets. You might think it simple, but how I view the markets is that they can only trend in one of three directions at any one time: Up, Down or Sideways. So while most people are trying to second guess which way the markets are likely to go, I already know! Fact is, I don’t know what is going to happen in the future, I just know that the markets will either be Up, Down or Sideways. For this reason, my focus (as a professional analyst and advisor) is not on trying to choose what direction the markets will be on a day to d...

Andrew Baxter from Australian Investment Education looks at the Stock Market vs The Economy with a focus on what's happening right here in Australia. We have an economy right now that is in a lot of pain and we've got the stock market that has pushed up over 25% in just 6 weeks. How can that be? That's exactly what we are going to explore in this show, more importantly, how can you make sure you don't get caught in the risky side if things change and the stock market runs out of puff.