Okay, so a bit ago the President reported that he had tested positive for Covet 19 and futures got destroyed. We've had some stabilization since then, but you need to know the risks moving forward because as you know, Covet isn't a one day deal. This is something that is going to drastically change October and has the ability to make or break your account even if the future sell off completely goes away. We are now in a period where there is constantly the risk of abrupt selling off hinging on how the President handles this virus.

Investors that were already fairly spooked by the upcoming election are now witnessing the incumbent President test positive for Covet 19 just a month before the election and with that brings a lot of new risks And it may be the middle of the night, but we need to talk about what this means for us as traders. I just had to make this video. of course before we get into it, let me just say that illness is something very serious and we do wish him and his family a fast recovery. but we do need to talk about what this means for us and the money that we have invested in the market.

So I thought about the possibility of the President getting the virus back during March and April and I tried to hatch a plan for how I trade the market if this was to happen. And to do this, I had to look for previous reactions to similar situations in the past. Now in many ways, this is very, very unprecedented. But the closest thing that I could find is that in September 1955, President Eisenhower had a heart attack and when the American people found out the Dow jones just got totally hammered six percent drop, which at that point was the worst one day drop since World War Ii, this started a broader downtrend that actually didn't rebound until several months later.

But the thing is that as Eisenhower was recovering, there was an unprecedented amount of volatility in the market as Americans awaited the news. There are other things that happened to American Presidents that obviously negatively affected the stock markets, but the reason that the Eisenhower situation is so relevant is because it most closely mirrors what is happening right now. In 2020, with the current President, Eisenhower had a heart attack and then had to recover in and out of the hospital and was treated by doctors and the American people were waiting on it to see what was happening. We are now in a situation where another President has got diagnosed with an illness and investors are going to be watching to see what this leads to because there are many, many, many, many different results that could come based on how this goes and this probably won't happen.

He'll probably be fine, but it doesn't need to happen in order for people to freak out that it might because the market's emotional. If the President has further complications, what does that mean, folks? Can you imagine how the market will react if it turns out that the President has gone on a ventilator? What will this mean for markets? If the President of the United States is on a ventilator sick with Kovid, much like during the Eisenhower Administration, people are going to be worried that this is going to thrust us into even more chaos. And obviously, chaos was already pretty much a guarantee. Again, we want to wish everybody a speedy recovery, but it's very, very serious when something like this happens to a leader of such a large and powerful country.

And it's our responsibility as traders to be completely aware of how this is going to impact us so that we aren't handed our rear end in abrupt sell-offs over the next few weeks. Okay, so first off, when it comes to any reaction, you have to understand that the market is emotional in the short term, but converges to logic in the long term. If you can grasp just that one concept, you can quickly start understanding why movements happen the way that they do. For example, when Trump tweeted out the announcement, futures dove relentlessly, people feared the worst, so they sold the worst.

Then what happens is that the news settles in and market rebounds because there's less fear spread around and there's less uncertainty and people start grasping at the facts. But still, this is over a very short time period and this is still an emotional short-term reaction symbolizes nothing more than quick speculation on what this catalyst means. The people buying during these periods still do not know what the impact of this catalyst is in the long term, so they're just speculating on it because the long-term logic or the long-term value hasn't converged yet. Remember, short-term it's emotional Long-term It converges to logic.

But this is where it gets very important because understanding that there's an emotional aspect to this means that you can be aware of how to actually play these catalysts when they come up and then how to protect yourself. But in terms of practical steps that we can take, let's talk about offensive. Before we get into defensive. So offensively speaking, there are three different things that we need to do.

Number one is play broader market over reactions. If you were looking to play the upside after a overreaction dip, Spx L is your friend. It helps you leverage and play the upside of a market correction. If you are looking to play the initial reaction itself as Pxs is your friend, it helps you make money on abrupt sell-offs Okay, and if you want to play volatility and you were looking to play an increase in volatility, Uvxy as your friend, anybody that diligently follows this channel is not shocked at these suggestions.

But Uvxy is one of your best friends folks when it comes to volatility. If you were looking to play a decrease in volatility which actually has been doing pretty well, Svxy is your friend. okay. And the other option in terms of playing the broader market is with the Biotech sector, so the biotech sector of the market has been extremely volatile.

The tickers for this is Labview and Lab Deep. You play Lab U for upswings in terms of Biotech and you play Lab D for down swings in terms of Biotech. And as we get closer to this vaccine, we start having more and more fluctuations in Lab U and Lab D. Okay, and on the defensive side, how can you protect your positions from pending catalysts both related to this news and related to the many other potential catalyst drops? And this is important because many of you are taking swing positions in many different types of stocks.

from Tesla to Apple to Nicola to Amd to different, S-pac plays like Dphc. Many of you are taking a slew of different stocks and you're holding them overnight and you're confused on what to do when these huge sell-offs happen out of nowhere. Well, when it comes to managing the probability of a bad catalyst killing your position randomly, you can never completely take out the risk, but you can manage that risk to a large extent. So my rule of thumb is to reduce the risk by reducing the time you are exposed to likely negative catalysts.

Let me explain. for example, if you are trading a high-risk play like Nicola that has been on a strange rebound from its huge fraud allegation drama, you may judge and find that it makes sense to play off the short-term price strength even amongst all that negative coverage. And in that case, if you've rationalized that it makes sense to play this short term price strength well, you're then absolving the risk of a bad piece of news dropping because to your analysis, the potential for price strength and the opportunity in price ranks that outweighs the risk of the opportunity for price weakness for the opportunity of a negative catalyst. But here's the thing, as you're playing that price strength, you also realize that the longer that you hold it, the more likely it is that something's going to drop.

Because you're holding it for longer, you're giving it more time for something bad to happen. So in order to reduce your risk, you well limit the amount of time you're holding it so that you're just allowing yourself to capture the run itself and not letting your wrist grow with the amount of time you hold it. In other words, it may be worth taking the risk and holding for a few minutes to trade the momentum, but it's certainly not worth holding overnight when you can't close out of your positions if something drops. And so what I'm saying is that when you have more risk of bad catalysts, you have to start reducing the time exposure on plays that are likely to be derailed massively.

And if if a catalyst drops and that doesn't mean that you have to day trade every play, I'm not saying that you have to force every single play to be closed out before the end of the day. I'm not saying that you can't hold plays overnight because there's a risk of a bad catalyst. Bad catalyst can happen at any time, but it's all about controlling your risk of when that happens. you can still hold stocks overnight, but you are managing your risk in these by trading ones that are a better deal.

You're trading ones that have a more appropriate setup. You're trading ones that perhaps are already trading really low and have relatively low downward potential as a result. The rule of thumb, though, is to emphasize the fact that you are not aimlessly holding stocks for as long as you can. A lot of people just love, love love to buy a stock.

They find that it's winning and they just hold it until the cows come home to bark. You do not hold stocks until cows come home to bark because cows don't bark so they'll never get you anywhere. You want to hold a stock for just enough to get most of the action, but don't unnecessarily hold it past your planned exit point. This actually serves two purposes: One, it protects you from negative catalysts, but two, it ensures that you are in shape tip top shape to trade off the catalyst that do indeed come because a good trader not only goes on defensive and protects their positions from bad catalysts, but also goes on offensive and exploits new catalysts when they do come.

So you're not only protecting yourself, but you're also exploiting. and this is how we need to handle this new catalyst as we edge into October. Anyways, folks, I hope this video was useful. If you have any questions, feel free to reach out to us in the comment section below or join us on Zip Trader circle.

And of course, if you appreciate this last minute midnight video, make sure to hit that ravishing like button. And lastly, if you are looking to learn how to trade if you want to be forged into a trader, we are offering 50 off if you type in Stay Home 2020 before checkout and that link is in the description below. Anyways, folks, have a great day and I'll see you in the next video.