Steady Income Investments

Are You Prepared For a Crypto Tax Audit?

With tax season around the corner, and the IRS getting serious about enforcing taxation on crypto gains… you need to take the tax implications of your crypto investments seriously.

That’s why world-renowned cryptocurrency expert and former hedge fund manager Teeka Tiwari, editor, Palm Beach Confidential has been scouring the world for a solution—and he’s finally found it. Read on below for his answer to this important problem…

Teeka Tiwari - Palm Beach Research Group — Teeka Tiwari – Palm Beach Research Group

In 2017, I gave my accountant (who came highly recommended) my crypto tax file. He just about had a stroke when he saw how complex it was.

At $200 per hour, he billed me enough to pay for a nice addition to his house. And even then, he still gave me bad advice.

I asked my accountant about the Foreign Bank Account Report (FBAR). I wanted to know if I needed to file an FBAR with the U.S. Financial Crimes Enforcement Network (FinCEN).

The FBAR is a compulsory disclosure of a foreign account. According to the FinCEN site:

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.

My accountant assured me I didn’t have to file one.

But I was in for a big surprise. I learned that if I held more than $10,000 in a foreign crypto account, I would have to file an FBAR with FinCEN.

It was only through a new crypto tax service that I discovered I didhave to file an FBAR. The certified public account (CPA) I used was no slouch, either… But he clearly gave me bad advice. I contacted a new CPA, and we rectified the situation by filing an FBAR.

Over the past two years, I’ve received hundreds of emails from subscribers asking about cryptocurrencies and taxes.

I share their frustrations. Since 2016, I’ve wanted to offer my readers a definitive tax solution… I just needed to find the right one.

Today, I can tell you that I’ve finally found that solution. I’ll give you the details in a moment. But first, I want to tell you why you need to take the tax implications of your crypto investments seriously…

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The IRS Is Cracking Down

The IRS is useless when it comes to providing direction. (You can read its “guidance” on the tax treatment of virtual currencies right here.) To make matters worse, the agency is getting serious about enforcing taxation on crypto gains.

For instance, the IRS paid blockchain intelligence firm Chainalysis nearly $2 million to look for tax cheats. And in February 2018, crypto exchange Coinbase said it would turn over 13,000 client account records to the agency.

The writing is on the wall. Very soon, the IRS will be able to peer into every single crypto transaction on any U.S.-based exchange.

Another reason I wanted to find a crypto tax solution is that—as I found out myself—even trusted CPAs flounder when answering the most basic crypto-related tax questions.

That’s why I wanted to find a program that collects and organizes all of your crypto trade data into a usable format. Your CPA can use it to figure out your tax liability.

Now, I don’t provide tax, legal, or accounting advice. Keep in mind that this is general tax information. You should consult your own tax, legal, and accounting advisors regarding your specific financial situation.

But if staying compliant to the best of your ability is important to you—and it certainly is to me—I suggest you consider this new tax solution.

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A Leading Solution

It bears repeating: I can’t provide you with tax advice. I’m not qualified to do so. That’s why I’ve been scouring the world for a tax solution I could recommend to you.

In May 2018, I discovered a young man working on a solution to this important problem.

His name is Pat Larsen.

Pat has a chemistry degree from the U.S. Air Force Academy and an MBA from the University of Chicago Booth School of Business. (That’s the same Chicago Booth that has spawned more Nobel laureates in economics than any other school, save Cambridge University in the UK.)

As a mission commander for the U.S. Navy, he oversaw four search-and-rescue choppers. He was deployed to Iraq twice, and his mission was simple: to rescue wounded civilian and military personnel.

When I discovered he was working on a tax software for cryptocurrencies called ZenLedger, I was intrigued.

He told me about his project, and I immediately knew it was a service my subscribers needed to hear about. At the time, Pat asked me not to write about it. He said it wasn’t ready for primetime yet—but it would be by October 2018.

And Pat’s a man who can hit a deadline. To his credit, his project is now up and running… and it’s awesome.

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A Tax Solution for Crypto Investors

ZenLedger is a tax software for cryptocurrency investors. It makes it easy for you to import cryptocurrency transactions, calculate gains and income, and autofill tax forms like the FBAR.

Further, ZenLedger prepares a number of useful documents such as capital gains reports and income reports, and it’ll keep adding more in the future.

It covers all the major crypto and fiat currencies. And it works with major crypto exchanges such as Binance, Bittrex, and Poloniex.

ZenLedger also plans to release a tool that shows you which coins are in the black and which are in the red, by exchange. This will allow you to sell losers and harvest tax loss assets.

This is the only accounting program I’ve found that covers all coins, all major exchanges, and most major wallets—and provides actual, live customer support.

It’s given me a credible and defendable position to take if the IRS asks how I accounted for my crypto taxes.

To learn more about ZenLedger, click here. Come tax season, you’ll be thankful you used it, too.

Editor’s note: Tonight at 8 p.m. ET, Teeka will be making an extraordinary announcement. It’s about an event that will transform the crypto market in 2019… And, he will show you a leaked Wall Street document that reveals what this event is.

Plus, Teeka will tell you about his bold, new venture that could hand you the chance at an extra $81,624 per year.

You can still get your invitation for tonight’s free event.

Learn more here

Jeff Bishop’s Weekly Money Multiplier | Making Sense Of The Volatility Mess

The best time to plant a tree is 20 years ago…

When we see volatility spikes in the market like what we’re experiencing now, investors start to get nervous and start asking themselves if their portfolio is hedged enough to handle a downturn.

You see, when the markets are rocking and the bulls are in charge, volatility is generally low and the cost of portfolio protection is cheap.

No one wants to buy hurricane insurance when it’s blue skies outside, right? Everyone wants to buy insurance when the storm is coming their way!

On the other hand, when we have uncertainty and fear in the market, the demand for insurance increases, and in turn, pushes volatility higher.

There are a slew of volatility products that traders and investors can use to either hedge their portfolio, or even speculate on what volatility does next. That said, if you’re new to volatility products you’ll want to pay attention, and educate yourself first before diving into this wild and potentially lucrative space.

Now, I can’t guarantee you’ll have results as good as this… but even if you never end up trading a volatility product, I can promise you that it will help improve your decision making when it comes to making market calls.

Making Sense of Volatility

You’re probably wondering, “What’s the secret to trading volatility and the overall market?”

First, you’ll need to understand how the CBOE Volatility Index (VIX) works.

Now, the VIX – also known as the Fear and Greed Index, measures the 30-day expected volatility of the market, using mid-market prices of S&P 500 Index calls and puts. When VIX remains at elevated levels, it’s an indication traders are expecting increase volatility in the short term. On the other hand, when VIX is near the low-end of its range, the market is in a low-volatility environment.

Well, one secret indicator to trading volatility is the VVIX Index (VVIX). The VVIX measures the “volatility of volatility”. You could think of it as the expected volatility driving the price of the CBOE Volatility Index (VIX) near-term options.

Take a deep breath, and just think about that for a moment.

That in mind, if the market is experiencing some volatility, I watch this indicator as a gauge to see what traders expect the VIX to do in the future.

Don’t worry if this doesn’t click at first, just follow along with me.

Check out this daily chart of the CBOE VVIX.

If you look at the chart above, you’ll notice a blue horizontal line. This is the 120 area, and it’s often thought of as the “line in the sand” for this index. In other words, when VVIX spikes above 120, chances are it won’t stay above that area for long.

Notice what happens when VVIX falls below 90 (the purple horizontal line)…it doesn’t stay there for long.

It’s that simple.

Now, if you look at the chart of VVIX, in early October, VVIX spiked above 120, hitting a high of 147…however, just a few days later, it fell all the way back down to 109.

Strategy for Volatility Trades

That said, when the VVIX is approaching 120, I keep it on my radar. Now, if it breaks above that level, I typically want to sell out-of-the-money (OTM) calls on VXX and collect premiums since VVIX never holds that level long. Now, if you don’t understand options trading or strategies, make sure to check out this guide before getting into any options trade.

On the other hand, when it is drifting lower, I want to be a buyer of stocks in general. If you see gradual fade in VIX and a gradual climb in SPY, that is one of my favorite setups. However, when you see VIX start to go against SPY then it is time to reverse the trade.

Here’s what I’m talking about…

Notice how the VVIX (the chart on the top) is in a down trend. However, the SPDR S&P 500 ETF (SPY) is right at support. This is a scenario where I would consider buying stocks.

However, there’s one more thing you need to understand about volatility products – which exchange-traded funds (ETFs) or exchange-traded notes (ETNs) to trade.

Volatility-Tracking Exchange-Traded Products

Here’s a look at a list of volatility products.

Exchange-Traded Product	Benchmark
iPath S&P 500 VIX Short-Term Futures ETN (VXX)	S&P 500 VIX Short-Term Futures Index Total Return
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXXB)	S&P 500 VIX Short-Term Futures Index Total Return
ProShares VIX Short-Term Futures ETF (VIXY)	S&P 500 VIX Short-Term Futures Index
ProShares Ultra VIX Short-Term Futures ETF (UVXY)	S&P 500 VIX Short-Term Futures Index (1.5X daily performance)
ProShares Short VIX Short-Term Futures ETF (SVXY)	S&P 500 VIX Short-Term Futures Index (-0.5X daily performance)

Now, there’s one thing you need to understand about volatility products…they’re naturally going to lose value over time due to compounding of daily returns. That said, it is never something to put in your portfolio and forget about it.

Moreover, volatility products are designed to track the one-day performance of their respective underlying indices, or benchmarks.

For example, if you’re long VXX, and the underlying index spikes up 3%, VXX should be up around 3%. However, if you hold it for longer than one day…then your expected returns for VXX would not necessarily match the index’s performance over the day period.

That in mind, volatility products are best suited for short-term trades.

There are a few things to note about the table above: UVXY is a leveraged product and should not be used by beginners.

If UVXY’s underlying index falls by 5% one day, then the ETN should be down 7.5% that day. You could see how this could be dangerous is the S&P 500 VIX Short-Term Futures Index drops by 20% in a day…

Moreover, VXX will cease trading on January 30, 2019, and VXXB will trade in parallel to VXX until that date.

These volatility products are unique and offer so much opportunity you can either trade the underlying or with options. Now, if you’re looking for a good primer on options check this out (and yes it’s free).

Dr. Steve Sjuggerud: I’m Still Not Worried About the Melt Down

“U.S. Stocks Head to Eight-Month Low.”

That was in the lead headline from Bloomberg on Monday. The market has had a weeklong rout, falling every trading day since December 3.

The recent slide has investors asking the same questions once again. They’re desperate to know: “Is this the end?”

Of course, all this is nothing new. Folks have been fearful of the “Melt Down” for years. They’ve used every fall in stocks to push the idea that the next “big one” was here.

It’s no different this time around. And you shouldn’t buy into the fear.

I believe stocks still have plenty of upside ahead. We’re not at the start of the Melt Down. And I’ll share the simple reason why in today’s essay.

Let me explain…

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Here in DailyWealth, you all know my “Melt Up” thesis. At the end of a historic bull market, we tend to see a last, volatile push higher in stocks. And we want to be invested right now… while we can still capture this huge upside potential.

You might wonder why I’m so confident in such a tough environment. The reason is that I can tell you when the Melt Up will end… and when the Melt Down will arrive.

No, I can’t tell you the exact day. But I can tell you the circumstances we’ll see. Namely, one major event always happens alongside major market falls.

Major stock market crashes always occur during recessions.

If you want to know when stocks will crash, look at the economy. Stocks have a hard time rising when true economic turmoil strikes.

Because of that, it makes sense that the absolute worst economic times have led to the absolute worst stock market crashes – specifically, the Great Depression and the Great Recession.

But even looking outside of these instances, every major market fall has happened when the economy was in terrible shape. In total, we’ve seen seven stock market crashes of 40%-plus…

Stocks fell 86% from the peak in 1929 to the bottom in 1932.

We saw another 55% bust from 1937 to 1938.

The Great Depression included two more major falls of 45% and 41%.

Stocks fell 48% during the 1970s as inflation battered the U.S. economy.

Stocks fell 49% from 2000-2002 following the tech bubble.

And of course, the market crashed 57% during the Great Recession.

All of these 40%-plus declines had a common theme… They happened when the U.S. economy was in a recession.

This tells me we’re safe to stay long until a recession is looming. That’s the warning sign that the Melt Up is over… and the Melt Down is on the way.

This is also why I’m not worried about the most recent fall in stocks.

According to my research, we shouldn’t expect a recession anytime soon. I’ll share two reasons why in tomorrow’s DailyWealth essay.

We’ll check in on how the economy is doing right now… and the two key measures you should be looking at to gauge the health of the stock market.

Until then, know that no recession means no Melt Down. And that means we don’t need to stress out about the recent decline in stocks.

How to Buy Bitcoin and Ether With No Fees

Regardless of the type of investment you make, fees can negatively impact your portfolio’s return…

So in today’s essay, Palm Beach Confidential analyst Greg Wilson shows why it’s important to understand them… goes over the right questions to ask before paying them… and lets you know how to pay zero (or little) fees when buying cryptos.

Fees…

They’re boring. They’re annoying. And they may seem small and insignificant at first. But ignore them at your own peril.

As legendary investor Warren Buffett once said:

When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.

Bottom line: Fees can negatively impact your investments—whether you’re investing in stocks, bonds, or even cryptocurrencies. That’s why it’s important to understand them.

In today’s essay, I’ll show you the impact fees can have on your portfolio… and go over the right questions to ask before you pay them.

I’ll also show you how you can pay zero (or little) fees when buying bitcoin and ether.

You generally need to buy these two “reserve” cryptocurrencies before you can purchase any other coins in this emerging asset class.

But first, I want to show you why you need to be aware of fees—regardless of what type of investment you make…

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The Securities and Exchange Commission played no small part in opening the floodgates on a new investment…

By telling investors to be “open” to this new technology.

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Wall Street’s Dirty Little Secret

Generally, there are two types of fees you pay on your investments: transaction fees and ongoing fees.

Transaction fees occur any time you process an order. For example, when you buy, sell, or trade a stock, your brokerage firm will likely charge you a transaction fee.

Another type of transaction fee is a commission fee. That’s what brokerage firms charge you for their advice or for handling the purchase or sale of a security on your behalf.

Ongoing fees are charged on a regular schedule. Account maintenance fees are one example.

But the worst types of fees are those based on a percentage of your assets. They’re double whammies.

As your account grows, so does the amount you pay in fees. And each dollar that goes to a fee is one less dollar you can invest. You can see this in the chart below…

The chart shows an account that starts with $10,000, adds $10,000 every year, and makes 10% annually over 40 years.

The black line is a portfolio with no fees. The blue line is a portfolio with a 1% annual fee on total assets. And the green line bumps that fee up to 2%.

The portfolio with no fees will have $4.9 million after 40 years. Meanwhile, the portfolio with a 1% fee will have $3.6 million… and the portfolio with 2% in fees will have just $2.7 million.

While $2.7 million is great, your 2% in annual fees costs you $2.2 million.

There’s no doubt fees impact your investments. That’s why it’s so important to understand them.

Here are some questions you want to ask before you make your next investment:

What fees are related to my account?
What fees will I pay to buy, hold, and sell this investment?
How can I reduce the fees I’ll pay?
Do I need to keep an account minimum to avoid fees?
Are there any other miscellaneous fees I should know about?

It’s also useful to compare fees with similar products.

Below, I’ll show you how to do that for bitcoin and ether.

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How to Buy Bitcoin and Ether for Little or No Fees

Crypto is a unique and emerging asset class. But like traditional investments, crypto trading involves fees.

For example, bitcoin ATMs charge an average fee of 9%. LocalBitcoins, a peer-to-peer exchange, doesn’t charge fees, but its premium can be 5% or more.

Of course, there are other exchanges that allow you to convert local currencies to bitcoin or ether…

Coinmama charges a 5.9% trading fee… but tacks on another 5% for credit or debit card transactions. Bitpanda charges 1.49% to buy bitcoin. And Coinbase charges 1.49% to buy bitcoin and other cryptos.

Fortunately, we’ve found a way for you to pay little or no fees when buying bitcoin (BTC) and ether (ETH).

The two most popular exchanges for converting local currencies to BTC and ETH are Coinbase and Gemini.

While we like and recommend both, only Coinbase Pro (the advanced version of Coinbase) doesn’t charge a fee to buy BTC and ETH.

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So let’s start with Coinbase Pro…

On Coinbase Pro, you can transfer money from your bank account to the exchange with no fees. (Just be aware that your funds need to clear before you can make a trade.)

That gets your local currency into the exchange. You’ll use that currency to buy BTC or ETH.

Coinbase Pro uses a maker-taker fee model to determine its trading fees. A “maker” order is one that isn’t immediately matched by an existing order. And a “taker” order is one that’s filled immediately.

Here’s the most important thing to know: There are no fees for maker orders. But for taker orders, Coinbase Pro charges trading fees between 0.10% and 0.30%.

You can learn more about the Coinbase Pro fee schedule here.

Similarly, you can transfer money from your bank account to the Gemini exchange for no fees.

Gemini also uses a maker-taker model. But it charges a 1% trading fee whether you’re a maker or taker for all orders up to $25,000.

The advantage with Gemini is that you can place a trade as soon as you generate a transfer. (Just be aware that you won’t be able to transfer any of your coins until your funds clear.)

You can find Gemini’s trading fee schedule here.

If you don’t want to pay any fees on your BTC or ETH purchases, consider Coinbase Pro. Just make sure you’re a “maker” when you set a bid to buy or an offer to sell.

If speed is your priority, then consider Gemini. You’ll be able to use your funds right away… and for a reasonable, flat 1% fee.

Whether it’s stocks, mutual funds, or cryptocurrencies, fees can have a dramatic impact on the performance of your portfolio.

As I mentioned above, each dollar you save on fees is one more dollar you can invest. And as world-renowned cryptocurrency expert Teeka Tiwari says, it takes only one good idea to build wealth.

That’s why he’s making a special announcement tomorrow at 8 p.m. ET.

During this event, Teeka will give you the inside scoop on an event that will transform the crypto market in 2019… Plus, he’ll announce a bold, new venture that could hand you the chance at an extra $81,624 per year.

Learn more here

Jason Bond’s Millionaire Roadmap Strategy | How I used Merger Monday To Make A Fast $30K This Morning

Market opens…

… 15 minutes pass

And I’m now $40K richer, off trades I alerted clients about days in advance.

You see, while the talking heads are trying to figure out if we’re headed into a bear market or if an end of the year rally is on the way, I’m sticking to the basics.

For me, that means patterns, value, and catalysts.

By narrowing my focus, I’m able to have an edge.

Trading stocks can be overwhelming to anyone when they get started. However, I’m living proof that you can have success by being able to do a couple of things really well.

I Love Mondays!

While most traders on Friday are looking at their calendar and prepping for the weekend, I’m sifting through my watchlist of stocks trying to find Monday’s next big winner.

Why?

Well, I’ve noticed a pattern that’s been pretty darn consistent over the last couple of years – stocks that have had recent catalysts have a higher likelihood of coming out with news over the weekend or on Monday morning.

Here’s the thing, most small-cap and penny stocks get ZERO coverage from wall street analysts. Since these stocks don’t get coverage…there’s a lot of money being left unnoticed.

Chances are, you won’t hear about the stock until it’s gapped up massive.

You see, companies have an extra two days to put something together over the weekend. They’re working on deals, press releases, and corporate actions, whatever the case may be…and you never know which Monday you could be waking up to Wall Street’s biggest winner.

Here’s how my thesis played out recently:

Veritone Inc (VERI) had interesting price action on Friday and I actually traded it during the day…locking in $3K in early profits.

VERI has been a rumored merger and acquisition (M&A) stock for some time. Additionally, it’s an emerging artificial intelligence (AI) company, one of the hottest growth sectors in the market.

Heck, just a few weeks ago, VERI was on my watch list.

I spotted a pattern in it and figured this stock was going to be in play sooner or later. Now, if you want to see how I’m able to spot these patterns and trades, you can access your free training here.

I came back to this stock just the other day because it found some support – a price VERI had a tough time breaking below.

I saw a buying opportunity in VERI on Friday with the $5 area holding up well. Now, I bought the stock as a catalyst swing trade and here’s what I sent out to members in the MRM community.

I went into the weekend holding a couple of small-cap names into Monday. In a perfect world, I can be out of these trades in the pre-market, before the New York Stock Exchange officially opens for trading!

Well…here’s what happened with VERI.

This morning, Apis Capital Management announced its private equity fund submitted an all-cash offer to acquire VERI for $10.26 per share.

Well, the stock opened at $7.96 and I locked in over 40% within 15 minutes after the opening bell!

While most traders were chasing this gap up in VERI, members in MRM – and I – were cashing in on nearly a 50% win.

You see, it doesn’t matter what the positive catalyst is, you just need to remain confident and be positioned for these trades.

Now, don’t think of these trades as one-offs. These trades happen all the time…but you have to know when to hold em’ and when to fold em’.

Just understanding catalysts and knowing small-cap companies have a high probability of releasing positive news on Mondays has helped me build wealth over the years.

One Reason the Market Rout Will End Soon

By Brett Eversole

Editor’s note: Brett Eversole joined Stansberry Research in 2010. He worked alongside Steve Sjuggerud to develop True Wealth Systems. And he now works with Steve on True Wealth, True Wealth Systems, True Wealth Opportunities: China, and True Wealth Opportunities: Commodities.

The best time to buy is when average investors (the “dumb money”) are panicked.

Unseasoned investors tend to give up at the worst possible time… the exact time more seasoned investors (the “smart money”) begin putting new money to work.

This is exactly what we’re seeing right now in U.S. stocks. The dumb money is panicking, and the smart money is as bullish as it’s been in years.

Last month, the S&P 500 fell to its lowest level in more than six months. It’s no wonder many folks are worried. But those new lows also led to an important change in investor sentiment… one that says the fall in stocks is likely near its end.

Let me explain…

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Following the market trend is the safest way to make money in the markets. But understanding sentiment can give us insights into major turning points.

Nobody does a better job tracking market sentiment than our good friend Jason Goepfert of SentimenTrader.

Jason tracks hundreds of sentiment measures, including many of his own proprietary indicators. And we’re interested in one of his exclusive indicators today – specifically, the spread between smart and dumb money confidence.

In short, the smart money includes seasoned investors who do a good job timing the market. The dumb money includes fickle investors who sell when times get tough, near the bottom.

To make these categories more useful, Jason creates a ratio of “smart money confidence” divided by “dumb money confidence.” This highlights extremely positive and negative opportunities in the stock market.

When the spread is high, it means the smart money is bullish and the dumb money is bearish… which is exactly what we expect to see at a turning point for stocks.

Not surprisingly, sentiment levels similar to today’s have marked a bottom in stocks over the past few years. Take a look…

The circles show times when Jason’s spread was near today’s level. You can clearly see that these were fantastic times to buy stocks.

In total, we’ve seen Jason’s spread come near today’s level five other times in the past five years. On average, those instances led to roughly 10% gains over the next two months. And all five opportunities led to profits.

In short, we should expect a solid short-term rally when the smart money is buying and the dumb money is selling… And that’s the exact situation we have today.

It’s easier said than done. And I understand that it’s scary out there. Stocks have continued to fall in recent weeks. But remember that this can’t last forever.

We’re seeing market sentiment unlike anything that’s happened in the past six months. And this spread between the smart and dumb money means we’re likely near the bottom.

History says we shouldn’t be scared. This is actually a fantastic time to put money to work in the stock market.

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Traders Should Buy Into Weakness Today

By Jeff Clark – the editor of the Delta Report Newsletter

I hope the stock market falls today. If it does, then we’ll have the conditions in place for a mid-December rally.

Let me explain…

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First off, take a look at this daily chart of the S&P 500…

Remember, stock market corrections occur in three phases. There’s the initial decline. Then there’s the wicked bounce off of oversold conditions. Then there’s the final decline that retests the low, or makes a new low.

We went through that cycle earlier this year when the S&P dropped hard in early February, rallied straight up into mid-March, and then finally bottomed at a slightly lower low in early April.

The current correction isn’t following the exact same pattern. But, it’s similar.

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And since all of the various technical indicators are trading well above their October lows, if the S&P 500 dips to a new low on this current move lower then we’ll have significant positive divergence. That’s a really good reason to buy into any sort of decline today.

I’ll also point out that on Friday, the S&P 500 closed almost 70 points below its 9-day exponential moving average (the squiggly red line). The index rarely moves more than 30 points away from the line before reversing course. So we have an extended, oversold condition.

I’m not bullish about the long-term or even the intermediate-term prospects for the stock market. The market is changing character and is likely shifting from bullish to bearish. But, I am bullish for the short term.

The proverbial rubber band is stretched far enough to the downside to fuel a strong “snap-back” rally. There’s positive divergence on the daily chart of the S&P 500. And we’re entering a seasonally strong period for stocks.

So, for the short term, it looks to me like we have a good setup for a mid-December rally. Traders should be looking to buy on any weakness today.

Teeka Tiwari: A Tale of Two Crypto Markets

Editor’s Note: Despite a bevy of positive news in the crypto space, bitcoin prices remain mired in a slump. World-renowned cryptocurrency expert and former hedge fund manager Teeka Tiwari says that’s due to a gap between market fundamentals and investor sentiment.

While the fundamentals are bullish, sentiment is bearish. When will sentiment catch up to the fundamentals? Teeka answers below…

Editor: Teeka, you recently warned your subscribers to expect more volatility from bitcoin. Can you give us an update on what’s driving it?

Teeka: Absolutely.

As I’ve told you before, the Securities and Exchange Commission [SEC] spurred the sell-off by its recent decision to treat nearly every initial coin offering [ICO] as a security.

It’s the same way the SEC treats initial public offerings [IPOs] from private companies.

The SEC’s decision is causing many crypto projects to go out and raise dollars… because they’re going to have to hire a team of lawyers to keep the SEC at bay.

If they can’t defeat the SEC—or convince the SEC that they didn’t issue securities—then they’re going to face massive fines… and the possibility of repaying investors who bought tokens from their ICO sales.

When I first talked about this, I said, “Look, this is akin to forced margin selling. It will create panic-selling, and you’ll see prices go lower.”

Even last month, when bitcoin was at $4,400, I said it’s still too early. You’ve got to wait and be patient. Prices are going to go lower.

And we’ve seen bitcoin prices go as low as $3,200. As nasty as that is, I don’t think the selling is over yet.

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Editor: What makes you say that?

Teeka: What you have to understand is that there were only two funding currencies for these ICO projects: ether or bitcoin.

Now, we have widespread panic among ICOs that they’ll have to pay huge fines… married to the fact they’re some of the largest holders of bitcoin and ether on the planet. So you can understand why ether and bitcoin are dropping so violently.

Remember, they’re not dumping these assets because they want to. They’re dumping them because they have to. They need to raise cash.

Their lawyers won’t accept bitcoin or ether. Their lawyers want dollars. If they have to pay fines, the SEC won’t accept crypto. It will want dollars.

We already have very negative investor sentiment… And that’s compounded by thousands of projects that need to raise cash—dollars, yen, pounds, euros, etc.—and they needed it yesterday.

So you’ve got this mass, forced liquidation—almost identical to what we saw in the Great Financial Crisis of 2008… Hedge funds, brokers, and banks were in such desperate need of liquidity, they had to dump their equities at any price.

That’s how amazing companies like American Express dropped over 80% to below $10 per share. Today, it’s back over $107.

We’re seeing the same thing happen in the crypto space. Forced selling is bringing down prices, even as wildly bullish news is taking place. It’s like a tale of two markets.

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Editor: What do you mean by “a tale of two markets”?

Teeka: First, we’ve got this “external” market where there’s all this forced selling just hammering prices. I think we’ll see another week or two of basic pandemonium, turmoil, and volatility. Then, we’ll have wrung the market out at that point.

By then, if you wanted to or needed to sell, you would have already sold.

So the “external” market—the market we see—is very bearish.

But what I call the “internal” market is very bullish. The internal market deals with the bigger drivers of crypto prices. For instance, did you know transactional volume is exploding on the bitcoin network?

So more people are actually using bitcoin, even as the price is coming down. On top of that, not a single major institutional player has deviated from their stated desire to open their trading platforms to bitcoin.

In fact, the Nasdaq—the world’s second-largest stock exchange—went out of its way to confirm it will still launch a bitcoin futures contract sometime in early 2019.

And the owner of the New York Stock Exchange [NYSE] had to delay the launch of its bitcoin exchange by a month because the demand for the service was so high, it needed to spend more time training its customers.

So the piece that has to do with usage and adoption is thriving. And as we move forward, these “internal” levers will begin to impact the external market and ultimately drive the market to new highs.

Now, sitting here at the end of 2018 with the crypto market getting hammered, it’s almost inconceivable to think about new highs.

But it’s important you understand we’ll see new all-time highs again… just like we did after 2011, 2013, 2014, 2015, 2016, and all the different crashes that bitcoin and the cryptocurrency market have had.

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Editor: What will drive the market to new highs?

Teeka: Wall Street’s greed.

Wall Street was left out in the cold in 2017. While crypto companies like Binance, Circle, Kraken, and Coinbase made collective billions in fees… Wall Street made nothing.

The bet moving forward is simple: Bet on Wall Street’s greed.

Think about it…

If you go from a market that has only 35 million people who can access it—where the crypto market is right now—and you open it up to 500 million people through the NYSE, Nasdaq, Fidelity, TD Ameritrade, Citigroup, and many others… that asset price has to go up.

There are no ifs, ands, or buts.

Editor: So what’s the next opportunity in cryptos?

Teeka: This selling has really unearthed a very profitable opportunity. There’s a particular niche in the crypto market that I’m finding wildly interesting.

It’s an area I think can make investors a lifetime of income as the market recovers.

That’s why on Wednesday night at 8 p.m., I’m going to have a special event to discuss this very specific opportunity.

I’m not ready to reveal all the details yet… I want to talk to you about it in much more detail on Wednesday at 8 p.m. So make sure you tune in for that.

Of course, if anything happens that you need to know about right away, I will be in contact with you.

Editor: Thanks, Teeka.

Teeka: You’re welcome.

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All Successful Traders Follow This Simple Rule

Proper position sizing is one of the key tenets to successful investing over the long term. Today, we’re sharing an essay from Dr. David “Doc” Eifrig – excerpted from a brand-new special report – in which he explains how to put this idea to work…

By Dr. David Eifrig, editor, Advanced Options

Trading intelligently means trading the right position size. It’s as simple as that.

For your first options trades, you should trade one single contract until you feel comfortable. It doesn’t matter if you’ve got a trading account the size of Bill Gates’. Just start small.

Of course, when you understand how things work, you’ll want to size your position to make sure you keep your capital safe and grow it at the optimal rate.

Trading coach Van K. Tharp runs a test when he’s speaking to a crowd. He tells his attendees to imagine they each have $100,000 with which to trade. Then he starts pulling marbles out of a bag. Each marble has the results of a trade. The attendees can invest whatever amount they’d like before each trade. He plays for 50 rounds.

Now, everybody playing this game gets the exact same trades… but they all end up with different amounts of money. He’s seen people range from bankrupt to $13 million.

While you think that your success depends on picking trades that go up… your position size (or bankroll management) means even more to your wealth.

You need to come up with some position-sizing rules to keep yourself in the game and making money.

First of all, you shouldn’t be using your full retirement savings to trade advanced options. The term “play money” sounds dismissive, but that’s what it is. This is a speculative endeavor to boost your returns and earn some money.

How much you invest is an entirely personal question… $10,000 is one person’s life savings and another person’s blackjack bet. But you should segregate your retirement funds and only trade with money you can afford to lose.

Still, we don’t want to lose it. We want our options account to continue to grow over time. And you do that by position sizing intelligently…

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If you want to know how much of your options-trading capital you should invest in each trade, the simple answer is 5% to 10%.

We’re going to expound on that number so you can think about it intelligently, but that’s a starting point if you are not mathematically inclined.

Imagine that you have the ability to choose between a trade with a low probability of winning, but a high rate of return and another trade that had a better probability of winning and a lower return. These strategies can look somewhat similar on an expected-return basis, but the lower probability trades mean you will go bust more often unless you are careful about position sizing.

You need to keep trading long enough to hit your average gains. Consider a strategy that loses money 90% of the time but pays such a huge payout when you win that it’s worth pursuing. If you put 50% of your portfolio into each trade, you are likely to go bust before you get a win.

You may think that putting 10% into each trade will fix the problem. That gives you 10 tries to catch a win, and you should expect to win one out of 10. But in reality, you have a great chance of going on runs of 10, 20, even 30 losses in a row.

If you’ve got a lower probability trade, you have a higher chance of going on runs of losses.

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Let’s compare two strategies…

Strategy A: Win probability of 80%, and when you win, you collect 150% of your investment (a 50% return). The “expected return” is 120% of your money, or a 20% return.

Strategy B: Win probability of 20%, and when you win, you collect 600% of your investment (a 500% return). The “expected return” is again 120% of your money, or a 20% return.

On average, these strategies have the same expected return. But let’s simulate these portfolios to see what happens.

We assume that each trader puts 10% of his account into each trade and each trade runs one after the other (not multiple positions at once). Then we simulate each trader 1,000 times.

Both these strategies should make money, but we want to see how likely you are to go bust before you get the chance to go average. We’ll take a look at the traders after 10, 50, and 100 trades.

Finally, we define “going bust” as losing half of your account. (Since we invest a percentage of the portfolio, we can’t really get to zero.)

When you trade a strategy with an 80% win probability, you have a much higher likelihood of staying in the game and making money – even if the strategies have the same expected return.

We can flip this strategy on its head. Let’s say we have a strategy that has a 50% win rate and returns 50% on a winning trade. In this case, let’s vary the position size. The aggressive trader bets 20% of his account on each trade and the conservative trader bets 5%.

That’s amazing. You’ve got a strategy that is mathematically a winner. But if you bet too much, you’ve got a greater than 50% chance of losing most of your money.

Meanwhile, the conservative trader is almost guaranteed to be around after 100 trades and the average trader would turn a $10,000 portfolio into $25,500.

Position sizing is important. And the lower probability your trades, the more you need to think about how much you invest.

Fortunately, given our options trades, you can tune your probability of success and your returns. You can choose to be more aggressive. But if you want to stay in the game, you need to scale down your position size.

Editor’s note: This week, Doc unveiled a new way to make triple-digit gains in a short amount of time, on almost any stock you own… with less risk than simply buying shares. To learn all about this breakthrough technique, check out his Advanced Options service.