Over the last several weeks while markets have been falling, a specific type of trade has been raking in cash. Here are the details
What if making huge returns by trading stocks didn’t require you to pick the right direction a stock would move?
In fact, what if you could pick the exact wrong direction a stock would move, yet still rack up a double-digit gain in just weeks … or even days?
Sounds ideal after the market volatility of the last two weeks, doesn’t it?
That’s not only possible, it’s what’s been happening recently with a specific type of market strategy that only a tiny fraction of investors knows about.
The lack of awareness is for good reason — the investors who use this strategy generate millions of dollars every year, and aren’t exactly wild about the information getting out. In fact, I’d say not one in 1,000 investors knows about this market approach — and not one in 10,000 are able to benefit from it.
I’m talking about Dark Pool trades.
***How to trade the “stealth” stock market
We profiled the “Dark Pool” in our March 4th Digest. If you missed it and want to dig into all the details, click here to access that issue, but I’ll provide the highlights here so everyone can follow along today.
For you and me, buying stocks is easy. That’s because the amounts we deal in are tiny relative to the number of shares outstanding, and relative to the market values that public companies have.
But institutional investors — think pension funds, large hedge funds, and insurance funds — they don’t have it so easy.
The large institutional investors of the world have a ridiculously large amount of money to invest in stocks and bonds and other assets. For example, a single large institutional investor can manage over $20 billion in assets.
But moving $20 billion into high quality investments at good prices is a logistical nightmare.
Think about why — giant fund managers can’t place orders to buy or sell their entire positions at once. That’s because those massive orders would overwhelm the amount of interest from the other side of the market … which would cause massive share price swings up and down. This would make it impossible for the big manager to get a good price on his position.
The reality is that when an institutional investor makes a big move in a stock, it can easily push that stock’s price around by 5% – 10% in the span of a week.
So, how do the big boys make their massive trades without tipping off other investors in the market?
The Dark Pool.
***What is the Dark Pool, and how can you benefit?
Dark Pools are private stock exchanges where the “big boys” on Wall Street place their trades. They’ve existed for decades on Wall Street.
Regular investors buy stocks on public exchanges like the NASDAQ, AMEX, and the NYSE. But big Wall Street institutions like Goldman Sachs and JP Morgan don’t. They trade on private exchanges — that regular investors don’t have access to — known as the Dark Pools.
In today’s market, the Dark Pool is a series of networks that allow traders to buy and sell large blocks of shares without running the risk that other traders will see their hand.
How does Goldman Sachs sell 20 million shares without moving the market down? They don’t have to report one single share being sold until their entire order of 20 million shares is filled.
Large traders given up to three hours to report their trade to the trade reporting facility (TRF) that trickles down to the consolidated tape.
Now, wouldn’t it be great if you could monitor the buying and selling activity of giant institutions and anticipate what stocks and ETFs are poised to move 5% – 10% in the span of a week?
It turns out you can — which is exactly how one analyst is generating huge returns with her trades.
***Meet Stefanie Kammerman — a legendary Dark Pool trader
Stefanie Kammerman has devoted the past 26 years to studying the Dark Pool market phenomenon.
After college, she made her way to Wall Street, where she went to work for the biggest proprietary trading firm in the country. It was there a legendary trader took Stefanie under his wing and taught her all about something called the Dark Pools.
It’s a mysterious sounding term that few investors truly understand. But those that do, know the Dark Pools are one of the market’s most powerful forces.
Not long after learning about this hidden corner of the financial world, Stefanie became one of the top traders at her firm. But after several years on Wall Street … Stefanie left her lucrative career to raise a family.
However, she didn’t completely leave the financial world behind. She took the knowledge of the Dark Pools with her, and began making a Wall Street-sized income, trading from home.
Soon, she began teaching others to do the same, and they achieved incredible results. We’ve begun to post her results here in the Digest so you can see them for yourself — in real time.
It turns out, Stefanie has achieved a 92% success rate picking winning trade recommendations.
We’re thrilled to be able to introduce you to her, and continue to profile her trades here in the Digest. We know of no other financial newsletter bringing you this information.
***We introduced you to the Dark Pool and Stefanie several weeks ago
Based on what Stefanie was seeing in the Dark Pool at that time, she had recommended a trade on oil services giant, Schlumberger.
It wasn’t clear which direction the stock was headed. All we knew from the notice was that a big move was coming. So, the instructions were to buy both a bullish and bearish position — that way we’d be covered regardless (and it’s why you can be “wrong” on the direction of the stock, as we noted above, yet still be profitable).
By the end of the trading day, Schlumberger’s stock price was sliding. The next day, it fell further …
Just two days after the “buy” notice, Stefanie sent word to close half of the bearish side of the trade … for a ROI of 108%.
The following day, she sent instructions to sell the second half of the bearish trade. This time, locking in 180%.
A simple, blended return of 144% on the bearish side of the trade … in just three days.
Now, to be clear, the bullish side of the trade didn’t go anywhere. So, that invested capital went to $0; but as you know, the blended return on the bearish side of the trade was 144%. So, even factoring in the loss on the bullish side, the total return on the entire trade was still nearly 75% … in three days.
***Stefanie did it again just days later with the SPDR Select Energy Fund, XLE
As with Schlumberger, Stefanie liked establishing two positions in this trade — both bullish and bearish. It appeared something big was coming, but exactly what, we didn’t quite know … until news broke of chaos in the oil markets.
As you recall from two weeks ago, oil crashed 31% in the wake of OPEC infighting. XLE fell 20% alongside it.
Just one trading day after issuing the buy alert, Stefanie sent out instructions to close half of the bearish trade. Because markets were moving fast, she provided a sell-price-range that would have hit an ROI of 160% – 550% depending on the price an investor locked in.
The following day came notice to sell the second half for a 370% gain.
Let’s assume Stefanie locked in the lowest gain on her first leg — 160%. That means the simple, blended average of her XLE bearish trade was 265%.
After factoring in the bullish side of the trade that didn’t go anywhere, we’re still looking at a Dark Pool winner of more than 130% — in two trading days.
***The latest trades
In the last two weeks, Stefanie has recommended two new trades.
The first is on the iShares MSCI Japan Index Fund, EWJ. The second is on the SPDR Select Financial Fund, XLF. Now, both of these trades are still live today, so we don’t have new results to share with you.
Also, please note we are explicitly not recommending readers place any trades today on these two ETFs. They’ve already made big moves since Stefanie’s recommendation dates. We’re merely bringing you these trades as an illustration of how Dark Pool trading works.
As Stefanie closes out her positions in the days/weeks to come, we’ll share with you the results.
As we noted earlier, this Dark Pool market strategy is how a small group of professional traders make millions of dollars every year. Given the huge gains from Stefanie’s first two profiled trades, even during times of extreme market volatility, it’s easy to see why.
We’ll keep you updated.
Have a good evening,
Jeff Remsburg
