Challenge Fed Market Influence With ‘Quick Hits’


Simpler Trading Team

7 min read

There are few times in the life of a trader when an epiphany ignites the engine that fuels a consistently winning trading plan.

The unheralded phenomenon behind Simpler Trading is that the founder continues to amaze even the most seasoned traders who have followed him through thick and thin of a wild stock market.

Tomorrow begins a new era of trading using a strategy that has been described as “boring” in its consistency and a “quick hit” plan to grab profits.

Options with Sam Shames
Futures with Neil Yeager
Voodoo & Fibonacci with David Starr

Trader challenges Fed market influence with new strategy

For more than a decade traders could count on the “Fed” (Federal Reserve) to set things right in the stock market.

Whenever the market fell too much the Fed stepped in with a rate cut or a reassuring narrative. This Fed market influence was designed to avoid a recession at all costs. And traders learned to automatically “buy the dip” – execute trades on assets at lows and ride the rally higher to profits.

That is a recipe for pain now because the Fed is more concerned about stopping inflation than avoiding a recession. The Fed is holding to a schedule of raising benchmark interest rates to rein in inflation (at a 40-year high), no matter how much financial pain it causes or the extent of economic losses.

“Truth is, assets are under attack,” said John Carter, Founder of Simpler Trading. “The Fed’s mission is to deflate the market until inflation is back within their target range again.”

Many traders in the past rode along with Fed policy to new heights in an ever-climbing stock market through swing trading. This strategy fell in line with “buy the dip” and allowed for traders to sit back and watch as bull market setups produced results over time.

This year, swing trading has been brutal. Losses mounted and traders had to adapt to a bear market.

“All this has been a rude awakening for experienced traders,” John said. “This bear market is different from anything we’ve seen for 40+ years.”

Traders can overcome Fed doom, gloom

Ironically, new traders who improve their skills in current market conditions have an advantage over seasoned pros who cling to strategies that no longer work.

What does all this mean as the market appears to be in a downward trend, possibly through the end of the year?

“Just accept that the Fed is not going to save the market,” John said. “Far from it, you should be ready for more attacks on asset valuations.”

Unlike mainstream media news, this stock market environment isn’t all gloom and doom for savvy traders who develop specific skills. 

“Unlike investors, we can profit from the volatility by catching moves in both directions,” John said. “That’s why I’ve shifted my focus from swing trading to generating daily income.”

Son shocks dad with question about trading

Making a sudden shift in trading strategy may not be an easy task for some traders. But a shift is possible for those who want to continue trading no matter what the market delivers in the days to come.

John has changed his time frames and set specific profit goals that he targets daily. Instead of targeting 2.5% to 5% returns each week (as he’s done for years), he focuses on 5% gains daily.

“I’m going for ‘quick hits’ rather than holding on for home runs,” John said. “All without overnight risk or having to fight with the Fed with directional swing trades.”

“My goal is to help others avoid the mistakes that so many traders have made this year (including myself), and adapt to what’s working so well now,” John said.

Other than the Fed and a sinking stock market, what prompted this sudden change in strategy?

The impetus was a bit of classic teenage angst.

Anyone who reads Mastering The Trade, who has heard John speak somewhere on the globe, or follows him online, knows he’ll do anything for his family.

His two youngest children have shown interest in the trading world, not not his oldest son who rolled his eyes at the thought of stock market endeavors.

Until this summer when, like so many teenagers, his interest suddenly shifted.

“Uh, Dad, would you mind if we did some trading together until school starts?” was the simple question to John. He just wanted to learn how to make $100 per day trading.

A proud father, John was instantly excited for the opportunity and at the same time horrified at the prospect of teaching his son.

Questions raced through John’s mind: What if I make it too complicated and he loses interest? What if his first five trades are losers and he quits? What if I try to explain “options theta decay” and he goes back to playing video games?

“I really didn’t want to screw this up,” John acknowledged. “So, I outlined a ‘stripped down’ trading plan for him.” 

Here’s the plan:

  • Simple to understand (nothing complicated)
  • An attainable goal – like $100 on each trade
  • Setup has to be specific (with no guesswork)
  • Setup has to work intraday (no waiting for days or weeks)
  • Only watch tickers to watch – SPY, QQQ, UNH, SNOW and PYPL     

“I set up a simple chart for him with a simple tool and we got started,” John said.

On his son’s first trade, he bought 50 SPY shares and made $100. Not bad for the first “quick hit.”

John guided and his son followed through with the trading plan.

“After three weeks, 13 of his 14 trades hit his target!” John shared. “And it wasn’t just long trades. He was selling short, too.”

The results of this summer trading scenario would have been rewarding enough thanks to the father-son bond that developed. What trader wouldn’t want to share with a loved one the experience of talking about the dollar, interest rates, commodities, the next Fed meeting, walk-down valuations, and “dead cat” bounces?

Along the way, John continued with some more advanced strategies for himself. He made some solid trades, but he quickly noticed that his son took profits on some days when John didn’t.

“That’s a great reminder to us all to keep it simple, especially in this market,” John said.

Epiphany leads to large-scale trading plan

The solid results and simplicity of this “boring” trading plan gave way to an epiphany to John while mentoring his son.

Why not scale it larger?

“I tried the same setup on GOOGL – with a much larger position,” John said.

The trade generated $458,324 on a single “quick hit” day trade.

“That was just from the typical price rotation that we see almost every day,” John said.

This strategy is very different from the explosive squeeze setups John normally targets over days or weeks.

John, who has multiple million-dollar trades over the last couple of years, took a simple day trading strategy designed for his son and pushed the envelope.

He upgraded the strategy to target six-figure gains in options trading and the futures market

“These setups aim to catch the typical price rotation that happens nearly every day,” John said. “Nothing fancy or complicated.

John’s goal was to make 5% of his large account value per day, about $300,000 per day, and he did this 10 days in a row. He also applied this to a $50,000 account and generated $2,000 per day there. 

Not all of his trades worked out – that’s the risk in trading – but the consistency was a revelation that prompted him to continue applying this strategy to the current market.

“What impressed me is how consistently this strategy performed even though the market was extremely volatile,” John said.

Life-changing experience prompts trading strategy

“Boring” never looked so exciting thanks to this new strategy John developed.

“The entries and exits are objective and there’s no guesswork – that’s how my son achieved a 92% win rate without any prior experience,” John said.

John shared this life-changing experience with his son during several free webinars. With all the  interest in this strategy that followed, he developed a new class to walk traders through the process.

Check out how John turned something boring into a quick hits trading strategy. Learn more here.