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LEVEL THREE: THE COMPETENT TRADER
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Competent Level

Objective: To maximize the total ROI by trading multiple contracts, spreads, and writing options

Tools: Profitunity Trading Partner and Profitunity Planned Trading

At this level, a piano student can play exactly what is written on the sheet music. Passages that should be loud are played loud; up-tempo parts are played fast. Being competent means following the directions precisely as indicated on the sheet music. In trading, being competent means increasing your total ROI. You are reading the market script accurately. When the market says buy, you buy; when it says sell, you sell; and when it says stay out, you stay out. You are "bringing home the bacon" competently and consistently. In a phrase, you are not getting in the way of your profit-producing tools.

Level Three opens up another type of universe. In history, it is characterized by the Industrial Revolution, when new opportunities and benefits opened up because of new and different understandings about production and economics. In math, this level is characterized by algebra, which allows us to look for and solve problems with unknown quantities. It permits the finding of x, the "unknown" factor. It is the early beginnings of understanding chaos. Level Three begins to monitor what most people call "causes" rather than just effects.

The tools of the market at this level include Profitunity Planned Trading™, which allows maximum flexibility and profit from monitoring the underlying and unseen structure of the market. It allows one to get into the "rhythm" and to start "dancing" to the tune the market is currently playing. It also allows one to know whether an analysis is "wrong" or "out of touch" with the market. If wrong, the appropriate strategy is to stop and reverse. If "out of touch/' the best strat­egy is to get out.

The purpose of Profitunity Planned Trading is to squeeze the maximum amount of profits for a specified move, letting the market (rather than some arbitrary system) determine the most appropriate strategy. Profitunity Planned Trading provides the most profit/least risk formula for asset allocation.

The other primary tool at this level is the Profitunity Trading Partner™. The purpose of the Profitunity Trading Partner is to consider and prioritize opportunities and affix the most appropriate measures to protect the trader's investment. Expe­rienced use of the Profitunity Trading Partner allows one to do a complete analysis on any chart and know, in 10 seconds or less, what one should do on every bar: buy, sell, pyramid, stop and reverse, or just get out. At Level Three, you learn the tremendous advantage of being able to make an "instant and correct" assessment of any market.

You no longer spend hours each day analyzing the stock market. Most traders spend so much time in analysis they miss most of the opportunities the market offers daily.

Once you reach Level Three, you are a self-sufficient professional trader. You are acquainted with the always underlying and usually unseen structure of the markets. You no longer need or desire outside opinions. You don't need to read The Wall Street Journal, listen to CNBC-FNN, subscribe to newsletters, or waste money on hotlines. However, this is only half of the equation. The other half is the trader as a person.

There are thousands and maybe hundreds of thousands of musicians who are much more competent than Frank Sinatra, yet more of his records have been sold than anyone else's on earth. In live concert, he is often flat, and his timing is his own doing. But the difference that sells records and makes him profits is that he does not sing a song exactly the way it was written. He adds and communicates feeling. The largest leap in the entire five-step progression from novice to expert is between Level Three and Level Four. At Level Four, you have an "educated intuition" or a "gut feeling" about the market that is usually very accurate. You are manipulating your own struc­ture to correspond with the market's structure. At Level Four, winning becomes the path of least resistance.

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