THE 5 STEPS SUCCESS FORMULA

The Red and Blue Line Strategy outlined in the Smart Investor Strategy program is an effective trading approach to capture consistent gains without taking large risks. In fact, you can place this type of trade with as little as $100. This strategy involves two lines—one representing a fast-moving average (the "blue line") and the other a slow-moving average (the "red line"). When these lines cross, it provides signals for potential trades.

Here are the 5 steps using the red and blue line outlined in the Smart Investor Strategy program:

1. Set Up the Chart with Moving Averages

  • Choose your time frame for the chart (e.g., 15-minute, 1-hour, 1 week).
  • Add the two moving averages to the chart: the blue line and the red line
  • These moving averages are used to determine short-term and long-term price trends.

2. Wait for the Crossovers

The key signal in the Red and Blue Line strategy is when the blue line crosses above or below the red line.

It’s a Bullish Signal when the blue line crosses above the red line, this indicates that the price may be trending upward. This is a signal to buy a call option.

It’s a Bearish Signal when the blue line crosses below the red line, this indicates that the price may be trending downward. This is a signal to buy a put option.

3. Confirm the Trend

Confirmation is important to avoid false signals. You can use other technical indicators to confirm the trend such as the Relative Strength Index (RSI) to confirm overbought or oversold conditions, or the Volume (higher volume during a crossover can confirm the strength of the move or Support and Resistance levels (to make sure the breakout is occurring above resistance or below support).

4. Enter the Trade

Once the signal is confirmed, you can enter the options trade:

For a bullish crossover (blue above red): Buy a Call option at-the-money or slightly out-of-the-money, depending on your risk appetite.

For a bearish crossover (blue below red): Buy a Put option at-the-money or slightly out-of-the-money.

Be mindful of the expiration time for the options. You should select an expiration date that gives the trade enough time to play out.

5. Exit the Trade

  • The exit signal typically comes when the moving averages cross in the opposite direction.

Bullish to Bearish Reversal: If the blue line crosses below the red line, consider exiting the Call option and potentially taking profit.

Bearish to Bullish Reversal: If the blue line crosses above the red line, consider exiting the Put option and potentially taking profit.

  • If you automated your trade by setting up a stop loss and take profit, your trade will close automatically.

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