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The 10 Secrets of Trading

Get to know the editor of Cabot Options Trader, Rick Pendergraft.

More from the Editor of Cabot Options Trader

Stock Market Analysis Video

In Case You Missed It


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Unlock the Secrets of Options Trading

Announcing Cabot Options Trader, our newest publication, which will help you leverage your investments. Get top options trading picks each week that can help you make money in any market. The first issue will be released this Monday, June 7--don’t miss it! Click below to order now.


We recently introduced you to our newest newsletter, Cabot Options Trader, and last week, I introduced you to the editor, Rick Pendergraft. I recently interviewed Rick so you can get to know him, just like you do all the Cabot editors. Enjoy!

(You can read last week’s issue here:

Question: What can readers expect in Cabot Options Trader?

Answer: With the test issues we have put together over the last few months, I have come to appreciate the idea of the Cabot Options Trader even more than I first anticipated. As we continued developing the concept, I realized it was more than just option recommendations. I think what we have put together is more comprehensive than any other options newsletter I am aware of.

Each week, readers will get a summary of the previous week and they will get my take on the overall condition of the market. I may make a recommendation that investors lower their equity allocation if I think the overall market is headed down or I may suggest they increase their equity exposure if the market looks like it is due for a rally. We also include a proprietary market indicator that I developed over the last couple of years called the Cabot Options Trader Barometer. The readings will move back and forth into positive and negative territory, but what we are looking for is extreme levels in the readings. In 2009, there were three times that the indicator went over 75- March 4, July 10 and November 2. If you look at a chart of the S&P and look at what happened following these extreme readings, I think you will see the value of the Barometer.

Another item in the newsletter each week is an economic calendar. My personal opinion is that you have to be aware of when important economic reports are coming out and you also need to know what the market expects since that is what the reports will be to be measured against. I will also give my opinion on certain reports if there is something that doesn’t make sense.

Finally, readers will get one or two put or call option recommendations each week. These recommendations come from my proprietary systems that I mentioned earlier. I look for stocks that make my bullish or bearish list and then select ones that have performed the best after previous readings. Between the recommendations and the barometer, subscribers should get their money’s worth.

Question: Who is best suited for Cabot Options Trader?

Answer: With the way the newsletter is laid out and the instructions that we give, I think any investor can use the Cabot Options Trader. As I mentioned earlier, I have been trading options for over 20 years and I try to explain things in very easy to understand language. A very experienced trader will benefit most from the recommendations and the barometer. A beginning trader will benefit by getting an education on the economy and the market and of course the recommendations and the barometer as well.

One thing we have done for subscribers is develop a special report on options that will teach the basics to beginning option traders. We have also developed a report on how to make the most of your subscription. We want subscribers to understand what they are getting each week and how to use the information to protect and grow their portfolios.

Question: What are your top investing rules?

Answer: You’re giving me a layup here. I’ve actually made a list of trading rules that I try to live by and I call them “10 Secrets of Trading.” Here they are:

1) Stick to your guns

2) Be Diligent, but Not Rigid

3) Trade Both Sides of the Market

4) Avoid Personal Attachments

5) Keep it Simple

6) Do Your Homework

7) Trade What You SEE

8) Breathe In, Breathe Out, Move On

9) View Each Trade Independently

10) Don’t Follow the Crowd

Question: What is your favorite investment book?

Answer: This is a much tougher question than the previous one. I have so many books that I like, but I would have to say my three favorites are “Reminiscences of a Stock Operator,” the original “Market Wizards and Sun Tzu: The Art of War for Traders.” I am sure you have heard those first two on numerous occasions, the “Art of War for Traders” is probably a little more unique. I have always been a fan of Eastern philosophies and have several versions of the original “Art of War,” but when I saw Dean Lundell’s version for traders I had to have it.

One book that I have to say that isn’t about investing that I love is Bruce Lee’s “The Tao of Jeet Kune Do.” While the book is about martial arts, I have found there are some very sound principles that can be applied to trading as well. I actually have approximately 30 pages of notes that I wrote about the book and how the lessons can be applied to trading. So who knows, one day you may ask a trader/investor for their favorite book and they may answer, “The Tao of Jeet Kune Do for Traders by Rick Pendergraft.”

Question: Any final words?

Answer: I would just like to say that I am happy to be a part of the Cabot family and I look forward to working with subscribers on helping them protect and grow their money. Hopefully they will learn to read the market better, to become better options traders and most importantly make money from my recommendations.

I hope you enjoyed getting to “meet” Rick!

If you want to learn more about how Cabot Options Trader can help you profit in any market, please click below.


And now for today’s Stock Market Analysis Video with Cabot Market Letter and Cabot Top Ten Report Editor Michael Cintolo.

Mike says that the market is a mixed bag right now: The indexes are down, but some leading stocks are doing very well. The market had a 15% correction from top to bottom, but many growth stocks resisted the damage.

So Mike is advising you to do a little buying IF you raised cash a month ago. However, if you’re still fully invested, you should probably look to sell some of your stocks. Mike recommends having a Watch List of stocks that have held up well and select from it when you do any buying.

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Timing is Everything

From the bear market bottom in 2003 to the bear market bottom in March 2009, subscribers to Cabot Market Letter made a stunning 94%. Compare that to the S&P, which LOST 18% over the same period!

If you’re a Cabot Market Letter subscriber, this will not be surprising. You know how Michael Cintolo helps readers conserve cash when the market is unsupportive and to invest aggressively when the market trend is up. But if you’re not a subscriber yet, you owe it to yourself to take a look at the Cabot Market Letter.


In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.

Cabot Wealth Advisory 6/1/10 - Welcome to the Wireless Future

On Monday, Chloe Lutts wrote about the dramatic shift away from landline phones and toward smart phones. As these devices become ever more popular, they are affecting many aspects of society, like poll results. Chloe also discussed a stock that could benefit from the growing smart phone movement. Featured stock: LG Display (LPL).


Cabot Wealth Advisory 6/3/10 - When Should You Average Down?

On Thursday, Timothy Lutts discussed why you shouldn’t average down in growth stocks, but why it’s perfectly OK to do it when investing in value stocks. Tim discussed his views on the current market situation and a leading stock, that’s holding up despite the correction. Featured stocks: Netflix (NFLX), Archer Daniels Midland (ADM), Research in Motion (RIMM) and Akamai (AKAM).


Until next time,

Elyse Andrews

Editor of Cabot Wealth Advisory

P.S. Don’t miss the very first issue of Cabot Options Traders, which will be released this Monday, June 7. Get started with us right from the beginning with our Charter Subscription rate!


Elyse Andrews, is a contributor and former editor of Cabot Wealth Daily, focusing on educational topics on finance, the stock market and individual stocks.