Trade Your Way to Wealth

Submitted by Book Library on 14 March, 2010 - 20:26

Successful trader and advisor Bill Kraft shows how to trade the financial markets in a way that limits risk and provides the potential for big profits. Kraft, who left a successful law practice to become an independent trader, explains his own educational process and how he arrived at a trading approach that primarily uses options to generate consistent income, limit risk, and participate in big market moves.

In simple and down-to-earth language, Kraft explains a variety of strategies including buying and selling options; covered call writing; collars; using closed end mutual funds for income; debit spreads, volatility-based straddles; ratio back spreads; condors; and calendar spreads. Kraft emphasizes that traders need to first develop a sound and reasonable business plan? in the same manner that any entrepreneur would plan a new business. Armed with the strategies explained in the book Trade Your Way to Wealth: Earn Big Profits with No-Risk, Low-Risk, and Measured-Risk Strategies (Wiley Trading) and a solid business plan, traders will have a blueprint for generating consistent profits in a relatively stress-free and efficient manner.

Positive Review of Book

I have read many trading books and have been a profitable active trader for many years. Mr Kraft's book, Trade Your Way to Wealth, is without question the best book on the market today from which to learn how to actually do the trades and be profitable. Mr Kraft's emphasis on the importance of entering a trade only when there is a close clear exit is simple but tremendously effective. This book truly teaches one how to become wealthy using systematic, proven strategies. It also teaches one how to implement no risk strategies such as collars to protect assets and achieve a reasonable return. The reason this book is different from the many others I have read is that it teaches one how to actually do the trades in a simple straight forward format rather than discussing theories. Can't recommend this book highly enough.

Negative Review of Book

If you are reading this book for options trading ideas, it can not be recommended. I was certainly interested in a "no risk" options trade which Mr Kraft presents as the collar using LEAPS. A collar is buying stock and puts while selling calls and with LEAPS it would be looking to use options with at least one year to expiration. I believe it is possible to find collars with time frames of one year or longer that have no risk however -- there is a cost - which Mr Kraft does not discuss and the cost may be greater than the risk!!! For example, consider a stock trading at 52, 730 days to expiration, 35% volatility, 5% risk free interest, no dividend.

The Black schools formula values the 50 strike put at $7.04; the 60 strike call at $9.32. It appears that one can make an easy $2.28 (=9.32-7.04) if the stock does nothing and ends exactly at 52; that would represent a 2.28/52=4.4% return. But 1) the cost of holding that stock and buying the put (theres no margin required for selling the calls against long stock) is 52+7.04=59.04*.05*(risk free)*2years = $5.90. The true net return is MINUS 3.62 =2.28-5.90. That does not consider the opportunity cost of tying up your money for two years. There may be some good ideas in the book on the trading plan and generating tax free or low taxed income but there do not seem to be any really good ideas on trading options..

Author Biography

Bill Kraft practiced law for more than thirty years before embarking on a second career as a trader. As he became proficient at trading, Kraft began helping others to trade, which eventually led him to create a seminar company, Cut loss, Inc., and to write about trading. Kraft is Editor of three online newsletters: Under $10 Trader, Option Trader, and Trend Trader, which are published by MarketFN.com, and a weekly newsletter alert, which is sent to about 75,000 people.

Table of Contents

  1. Chapter 1. Millions Can Be Made with Safer Trades.
  2. Chapter 2. Is the "Invest and Hold" Strategy Best for You?
  3. Chapter 3. Successful Trading Can Be Simple.
  4. Chapter 4. How Put Options Can Protect Your Money, and Make You Money Too.
  5. Chapter 5. How Call Options Can Really Make You Rich.
  6. Chapter 6. Combining Strategies for No Risk and Low Risk Trades.
  7. Chapter 7. Money Every Month. Earning Income.
  8. Chapter 8. Getting an Edge with Exchange Traded Funds.
  9. Chapter 9. What You Need to Get Started.
  10. Chapter 10. Comparison of Strategies.
    • Appendix A. Elements of a Basic Business Plan for Investors and Traders.
    • Appendix B. Closed End Income Producing Fund Examples.
    • Appendix C. Selected ETFs and REITs.
    • Appendix D. Strategy Comparison.
    • Appendix E. Recommended Reading.

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