Today – Set Up Your Next Double in 90 Seconds

Keith Fitz-Gerald Nov 12, 2014
18 

A big grin lit up my face when I opened my trading screens Monday.

That’s because I was looking at the chart for our first “Human Augmentation” target, Ekso Bionics Holdings Inc. (OTC:EKSO). It was trading at nearly $1.90 per share – close to a double from where it was at the time I initially released my “Unstoppable Trend” report on October 2, 2014.

If you’ve been following along with that recommendation, I want to congratulate you on being savvy enough to follow along. And if you’re just joining us, the company is still a great buy. You, too, have plenty of room for a double.

As the first stock profiled in our Human Augmentation trend, Ekso is making some really great moves of its own. We talked about those last week so I won’t repeat that here.

But here is what’s really got me smiling…

This gives us an opportunity to use my absolute favorite trading tactic.

My Absolute Favorite Trading Tactic

The “free trade” is one of the single most important tactics any investor can use to build wealth securely and with maximum efficiency – especially when you use it in conjunction with “lowball orders” and “ultimate trailing stops” we’ve already covered.

What’s really interesting, though, is not just the profit potential inherent in the tactic. There’s also a risk management component that can help you take all of the risk associated with a given investment off the table.

Here’s how a “free” trade works.

Let’s say you bought 100 shares of EKSO at $1.00, and that you now see it closing in on a double once it hits $2.00. If you’re like most people, your “greed gland” is in high gear. Under the circumstances, many investors find themselves thinking…

“Well if it doubled, then it could triple. And if it triples then it could…”

And they’re right… it could. What they don’t realize, though, is that with every “uptick,” the risk of losing those gains grows far faster than the probability of achieving further gains.

If you’ve ever been to Las Vegas or Monte Carlo, this should strike a chord.

The big casinos know that the longer you leave your money on the table, the higher the chances that you’ll lose it. So they ply you with free drinks, great music, and fun conversation – anything to keep you there.

That’s why harvesting your winners as fast and as efficiently makes tremendous sense – whether you are gambling or investing.

The best way to do that is to sell one-half of your position in any investment whenever it doubles and keep the remaining half open.

Pros call this a “free trade,” because you not only get back your original investment, but you maintain all the upside you can handle, essentially “for free.”  Even better, because you’ve now “paid” for your investment, you can stay in the game with not an additional dollar at risk… even if the stock has a sudden reversal in fortune and goes from hero quite literally to zero.

A free trade works in all market conditions, on any investment and can be set up well in advance. That means you don’t have to be planted by your computer nor be an aggressive day-trader to make it work.

No other technique I know of comes close in terms of simplicity or effectiveness.

Now here’s the best part about “free trades”…

The Power of Free Trades

There are many benefits to free trades, and they’re pretty straightforward:

  1. They help you capture major winners.
  2. They pay for their initial investment.
  3. They help grow capital faster.
  4. They control risk.
  5. They inject automatic discipline while removing emotion.

Take 90 Seconds to Set Up Your Double Now

The best part about “free trades”, though, is that you know exactly what price is required to book your gains in advance. That means you can set up a “free trade” the moment you buy a stock you’re interested in. Or any investment for that matter. There’s no emotion, no hemming or hawing and you don’t have to wait by your computer screen.

You simply call your broker or get on your favorite online platform ahead of time and enter a “sell limit order” that will kick into effect when your stock trades at a certain price or better. For our purposes, that’s when it hits a double.

If you purchased 100 shares of EKSO at $1.00 for example, your limit order would read something like the following:

“Sell 50 shares of EKSO at limit $2 or better GTC – all or none”

In plain English, that means that your broker knows to keep your order on his books to sell all 50 shares for $2 or more until you cancel it.

While limit orders are not guaranteed to be executed because they specify price (as opposed to market orders which simply trigger when a price per share is reached), they can be structured to meet very specific conditions like the ones we’re talking about.

Limit orders really come into their own with smaller, low volume stocks and under high volatility when others are having their orders picked off by professional traders whose job it is to separate you from your money.

It’s worth noting that limit orders can be used to buy or sell securities, too, even though we’re just talking about them in context of creating “free trades” today. If there’s a drawback to limit orders, it’s a small one namely that the price of a given investment many never reach the price point you’ve set. Or, it may fluctuate above the limit price for such a brief point in time that your broker could not execute your order. In that case your order simply goes unfilled at which point you can cancel it or simply adjust the order to reflect conditions in effect at the time.

Some people don’t like limit orders because they can cost more than market orders in terms of the commissions you pay. I think that’s splitting hairs considering the protection of not buying or selling for more or less than you intended.

Don’t Overthink It

Many investors have trouble with this concept.

With Ekso, my price projections for the stock are over $21/share. So it may seem uncomfortable or downright stupid to take profits at only $2/share when there’s potentially so much more upside ahead.

I hear ya.

But that’s a mistake I don’t want you to make like millions of investors will.

When properly done, the “free trade” is not about reducing potential at all. That’s because you can then take the money you’ve pulled out of a free trade and immediately lateral it into another opportunity while letting the rest ride.

Imagine how fast your money will grow if you do this once, twice, three times or more and how fast your capital can grow – all from a single move made at the right time.

Successful investors set profit targets in advance because they expect to win.

They know (like we do) that you never go broke taking profits. They also know – most of the time from personal experience and the school of hard knocks – that big winners can turn into monster losers if you don’t periodically take your money off the table. Usually that comes from pressing your luck when you shouldn’t.

I don’t ever want you to be in that position.

If today is your first exposure to the free trade concept, chances are good you’ll be kicking yourself in the butt right about now because your mind is probably wandering to all the great trades that “got away” over the years. Don’t be too harsh on yourself – we’ve all been there.

The important thing to do now that you know about the “free” trade is to use it every chance you get and with every investment you have.

You’ll be better off for it.

Best regards for great investing,

Keith

P.S. I like free trades so much, I recorded a video last year on the topic for my Money Map Report members. I’ve arranged to get you access to it. Just click here to watch.

18 Responses to Today – Set Up Your Next Double in 90 Seconds

  1. H. Craig Bradley says:

    Keith,

    Does the principal of “free trade” also apply to a long term stock like Alibaba if the momentum players push it up too far, too fast? I think these “fast money” guys all are on Alibaba right now because it is already showing real numbers and growing by high double digits. I would be surprised to see it become a $180.0/ stock in the next year, but you never know these days with all the global Central Bank printing that keeps going on. If the FED raises interest rates that might slow it down for awhile.

    • Keith says:

      Hello Craig.

      That’s a great question and point, too. A stock like Alibaba is perfect for the “free trade” tactic because you already know big money traders are all over it and likely gaming the price. In that instance, creating a free trade or even a series of free trades then gives you the flexibility to pick even better entry points – something they can’t do because they don’t have a long enough attention span.

      Incidentally, I think BABA is good for $200 a share or more.

      Best regards and thanks for being part of the family,

      Keith 🙂

  2. Bill says:

    Keith,

    I hear you, I like the free trade a lot but in this case of ESKO I’m thinking of putting a 25% stop on half and letting the other half run. I would like your thoughts.

    P.S. I can live with a 75% gain.

    • Keith says:

      Good morning Bill and thanks for being part of the family.

      There’s no hard and fast rule – if 75% works for you, then by all means use it. the key (and what most people miss) is the discipline that a technique like this introduces. I’ve known traders, for instance, who routinely exit on as little as 2% and others who think just 10% is worth taking off the table.

      With regard to EKSO, remember that it’s a smaller cap stock and that means at least for the near future it’s going to be attractive to day traders. They love to run the stops which is yet another reason come to think of it that creating a free trade makes sense. Then you’re not subjected to their whims.

      Best regards, Keith 🙂

  3. Barry Sorkin says:

    Hi Kieth,

    Done, I like this practice for a free trade, used it before

    On another Issue Re KTOS, my 25 % trailing stop was hit and thus it was sold automaticlly

    Can u please explain 1 thing Re: Trailing stops

    I thought they were designed to follow the stock and take u out if it went 25 % in this case below the highest the stock had gone intra s day since one bought it if indeed it went up at all

    Is it common practice to have the point where a trade is executed then on whatever a companies platform is to perform this, that is the sell is triggered when the bid hits the 25 % point asone always sells at bid

    This is fine when the spread between the bid and ask are close but can becom,e an issue with low priced stocks OF the spread is wide –

    Is my understanding correct that the bid price rules when that 25 % point is hit ?? Thanks

    Barry

    • Keith says:

      Hello Barry.

      That’s an interesting question and one that I’d like to tackle completely in an upcoming column. However, here’s where you might be mixing apples and oranges. A trailing stop price using a limit reflects actual price. However, a trailing stop “on quote” lets you set a stop order at a percentage or dollar decimal spread away from the market price.

      That said, each trading platform is unique and conditional order delivery varies from “as is” to “best efforts” so it’s best to check with your broker for exactly what applies.

      Best regards and thanks for being part of the family,

      Keith 🙂

      • Barry Sorkin says:

        Thanks Kieth

        appreciate answer, used it as background info, spoke to broker,

        I hope i explain this right ! !

        and found out broker that set me up used quick method that always is triggered when bid hits that 25 % trailing point and not another window that lets u pick triggering point based on when the 25 % is off the bid as above or , ask or last price. Hoiwever once triggered u always sell at the bid so pending the spread at the time triggered u can sell at higher or lower price with all 3 option trigger points , that is the bid u sell at may be lower or higher at the time the bid, ask, or last triggers the sell. OI actuallu gained a little as the bid at days start for a split second was far below my triggering bid that was set yet by time executed was above the 25 % trailing stop. If i set at last or ask the next day it would of executed below where it did.

        So for stocks with wide premarket trades one must be aware if set off bid to watch things closely, just worked out for me but if sold faster when triggered instead of getting 5,45 I would of got 5.01, the bid tighten up that fast . My sell point was 5,30 based of intraday high of 7.07

        Kope that is clear, u r teaching me and thank u and i know i learned more for use use of this techniguie and how to use it

        I like the company and was unfortunate had such a swing with the finacial release which i always hate as 1 quarter isnt always the big picture

        For those that have stopped out which should be everyone if following your instructions, perhaps in the fure , beyondf the 30 day wash rule u may suggest to go back in if price is right

        Regards, Barry

  4. Lisa says:

    Hi Keith,

    After applying the free trade to the initial EKSO position, do you still recommend the initial plan of buying 25% in November and the last 25% of EKSO in December?

    Thanks.

    • Keith says:

      Hello Lisa and thanks for asking.

      My take is that EKSO is one of those stocks with a great long term perspective and potential. Therefore, adding a little over time makes absolute sense because it can help dollar cost average in resulting in a more efficient position that helps mitigate volatility.

      25% a month or even 10% a month really doesn’t matter too much…just make sure that you execute your plan consistently.

      Best regards and thanks for being part of the family.

      Keith 🙂

  5. harry fithian says:

    keith bought ktos at 5.80 has some more down side before hitting stop your thoughts going forward love your expertise and compassion for the little guy I also subscribe to money map press energy advantage thanks for all you have done in the the past

  6. Robert Leier says:

    Hello Kieth
    I am new to this and am wondering how you would go about finding a broker.
    What do I need to watch out for when looking for a broker?
    Can I invest in stocks without a broker?
    Thanks
    Bob

  7. Allan says:

    When and where did you recommend a buy on BABA? I sure missed your recommendation.

  8. Gene Bahlman says:

    HI Keith,
    I love the concept of the free trade. It IS hard to sell when a stock is going up so like you say, you have to discipline yourself. Lots of talk about trailing stops here and I have a question. My broker cancels all “good til cancelled” orders after 30 days. Is this a common practice? I have a ton of maintenance going in and resetting all my trailing stops every 30 days. Am I just being lazy or should I look for a new broker?

  9. Michael Mullen says:

    I executed the Ekso free trade and obviously love this strategy.

  10. John McCabe says:

    Kieth,
    At what position size would you consider the addition to the trade set up of writing calls on the half position that is on the trading block?
    John

  11. CeeCee Dyrdal says:

    Hi Keith,
    I understand the concept of free trade but I want your thoughts on Stacking shares.
    When should you stack shares (add to your position)?
    CeeCee

  12. Emmanuel Eyssautier says:

    Hello Keith, please comment on EKSO’s competition RWLK.
    Is it worth guying them as well?
    Best regards

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